WASHINGTON (ICIS)--Wholesale export of liquefied natural gas (LNG) could checkmate the US manufacturing renaissance by tightening domestic supply and triggering natgas volatility and price spikes, a senior Dow Chemical official said on Tuesday.
Appearing before the House Subcommittee on Energy and Mineral Resources, Dow special advisor Carol Williams cautioned that “the manufacturing resurgence we are experiencing right now because of abundant and competitive natural gas is not guaranteed to last”.
She told the panel that while newly abundant supplies of shale gas have fuelled the US manufacturing renaissance, they also are accelerating LNG export efforts, an issue that has generated some unease among chemicals producers.
“The current [LNG] export debate is not an academic exercise,” Williams said. “Rather, it will directly affect the competitiveness of American manufacturers going forward.”
She cautioned that federal policymakers should move carefully on LNG exports.
“We have the chance to get this right and turn the manufacturing resurgence into a full-blown manufacturing revolution,” Williams said, adding: “But we can also get it wrong if we enact policies that increase [natgas] costs, introduce volatility in supply and stifle growth.”
She noted that in just over a year, the Department of Energy (DOE) has approved seven export license applications, representing up to 9.3bn cubic feet per day (bcf/day) of potential LNG exports, a volume equal to more than 50% of US allies’ natgas imports.
Noting that additional LNG export applications pending before DOE would represent another 20 bcf/day of outflow, Williams warned that the US could energise foreign competitors at the risk of undermining its own domestic manufacturing renaissance.
“The energy advantage we have today, and the energy advantage that is driving this tremendous resurgence in manufacturing, would be lost as supply tightens further,” she told the subcommittee.
She said that domestic manufacturers would be facing higher energy costs and higher feedstock prices. “That would create an unsustainable situation for manufacturers similar to what we saw a decade ago,” she said.
Williams cited a January 2013 study by Purdue University which concluded that “Increased US natural gas exports will reduce energy costs for industry and consumers in foreign countries and increase those costs for the US”.
“To be clear,” Williams said, “there is nothing wrong with liquefying and exporting natural gas - as long as we do it in a prudent, responsible way that recognises that there is no free and fair market for energy.”
She urged that “as remaining [LNG] permit applications are considered, Dow believes the Department of Energy’s analysis should also include the cumulative impact of each permit on the overall US economy”.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy