US chemical execs ask Congress for even-handed energy rules

20 June 2013 18:55  [Source: ICIS news]

WASHINGTON (ICIS)--US chemicals industry leaders and other manufacturing representatives on Thursday called for a more even-handed federal energy policy and urged caution in authorising new export terminals for liquefied natural gas (LNG).

Testifying before a joint committee hearing in the House, Dean Cordle, president of AC&S Inc, noted that newly abundant supplies of US domestic natural gas from shale plays have revived the nation’s petrochemicals industry.

Speaking on behalf of the American Chemistry Council (ACC), Cordle noted that “In a few short years, the US chemical industry has moved from an industry in contraction to an industry facing an era of unprecedented expansion.”

He said that the advent of shale gas supplies “has transformed the US chemical industry from the world’s high-cost producer five years ago, to among the world’s lowest-cost producers today”, giving the domestic chemicals sector a major competitive advantage over European and other foreign producers.

But to continue that industry’s expansion and the developing renaissance in the broader US manufacturing sector, Cordle said that producers need a level playing field and fair treatment from regulators.

Speaking before the House Subcommittee on Energy and Power and the Subcommittee on Commerce, Manufacturing and Trade, Cordle said, “Government policies will play a key role in ensuring that we optimise our competitive advantage.”

He said that federal policymakers should “implement a true all-of-the-above energy policy that enables all energy sources, including energy efficiency, to fairly compete in the market”.

Although the Obama administration frequently declares its all-of-the-above policy toward domestic energy, critics in the oil and gas sectors have charged that the administration has in fact suppressed energy production on federal lands while promoting alternative, non-fossil energy sources.

Cordle also asked that federal energy policies be aligned with demand, for example by streamlining production permits and expanding access to onshore and offshore resources.

He asked that regulatory authority over unconventional oil and gas production - such as hydraulic fracturing - be left in the hands of state governments rather than be absorbed by Washington.

Cordle said that regulatory authorities move to expedite permitting procedures to accelerate construction of infrastructure needed to get gas and gas liquids to market.

Cordle said that ACC supports exports of American-made products and consequently has no objection to LNG exports, and the council opposes “imposition of any new LNG export bans or restrictions”.

Many in the US chemicals sector worry that steadily increasing demands on now abundant natgas supplies could ultimately create shortages and drive up prices.

Paul Cicio, president of the Industrial Energy Consumers of America (IECA), said that IECA member firms - many of them chemical producers - do not oppose LNG exports, but they want an open and transparent regulatory review process when federal officials consider whether to approve some 27 pending LNG terminal proposals.

He charged that the Department of Energy (DOE) has failed its responsibilities under existing law to ensure that the broader public interest, including the effect on domestic manufacturing, when the department considers LNG terminal applications.

Cicio urged Congress to provide greater oversight and public input for DOE review of LNG export applications.

“Decisions on LNG export applications need to be done on a case-by-case basis and sequenced to avoid price spikes and give producers time to increase production,” he said.

“Doing it right can be a win-win,” Cicio said.  But, “doing it wrong will be a win for exporters of LNG and their overseas customers, and a terrible economic loss for all domestic consumers and manufacturers”.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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