Price and market trends: Dow Chemical seeks to limit US LNG exports

15 February 2013 09:46  [Source: ICB]

"It is incumbent on the government to consider the impact to consumers that use gas for heating as well as US industrial consumers that now have a competitive advantage"

Kevin Kolevar, vice president of government affairs and public policy, Dow Chemical

"Dow supports a thoughtful, step-by-step approach to approving LNG exports to non-FTA countries"

Kevin Kolevar, vice president of government affairs and public policy, Dow Chemical

Vice president cites energy department's public interest duty to restrict deals with countries lacking free trade agreements

The US Department of Energy (DoE) should limit approvals of LNG exports when those shipments are destined to countries without free trade agreements (FTAs) with the US, a Dow Chemical executive said.

"The law on the books says that the Department of Energy must consider the public interest when reviewing applications to export LNG to non-FTA countries," said Kevin Kolevar, vice president of government affairs and public policy at US-based Dow Chemical.

"It is incumbent on the government to consider the impact to consumers that use gas for heating as well as US industrial consumers that now have a competitive advantage," he added.

ECONOMIC BENEFIT

A study commissioned by the DoE and conducted by NERA Economic Consulting concluded that LNG exports would result in a net benefit to the US economy.

The study "severely underestimates" the impact of unchecked exports on consumers and manufacturing competitiveness, Kolevar said.

The DoE notes on its website that "federal law generally requires approval of natural gas exports to countries that have a free trade agreement with the US".

However, for non-FTA countries, the DoE "is required to grant applications for export authorisations unless the Department finds that the proposed exports 'will not be consistent with the public interest'. Factors for consideration include economic, energy, security and environmental impacts."

Japan is one major country with which the US does not have an FTA. Japan is also a major importer of LNG for its fuel needs. In 2012, Japan's LNG imports jumped 11.2% to a record 87.3m tonnes.

The US DoE has approved 20 out of 23 applications to export LNG to FTA countries from the lower 48 states with the remaining three pending.

It has only approved one application for LNG exports to non-FTA countries - that of Cheniere Energy's Sabine Pass Liquefaction project in Louisiana. There are 16 other applications for these exports under review.

"Dow supports a thoughtful, step-by-step approach to approving LNG exports to non-FTA countries," said Kolevar.

While Dow is opposed to unlimited US LNG exports from the US Gulf coast, it supports exports from Alaska and the US west coast.

"The US should move forward on LNG exports from Alaska, as this is stranded gas that cannot support other uses. Exports from the West coast make a lot more sense than Gulf exports," said Kolevar.

He said Dow supports a balanced approach rather than unfettered US LNG exports.

"For the past two decades in Washington DC, people have talked about US energy independence. It would be a shame to cast that aside in less than a decade," Kolevar said.


By: Joseph Chang
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