As US LNG export permits continue, debate does as well

11 February 2014 23:51 Source:ICIS News

US industry reacts to LNG export approval on TuesdayHOUSTON (ICIS)--Petrochemical industry members debated on Tuesday whether the Department of Energy's (DOE) latest approval of a permit to export liquefied natural gas (LNG) to non-Free Trade Agreement (FTA) countries gets the US closer to shaky ground, with producer Dow Chemical again urging caution in approving further permits.

With the Cameron LNG project approval, the amount of LNG approved for export is more than 8 billion cubic feet/day (bcf/day) -- a level that many researchers and financial analysts have concluded US LNG exports at that level will cause natural gas prices to increase dramatically, Dow said in a statement.

“Dow has consistently advocated for a measured and balanced approach to permit approvals,” the global petrochemical major said.

Dow urged the DOE to strongly consider taking a pause in the LNG export approval process.

The advent of shale gas in recent years has brought about a renaissance in natural gas production, with the Energy Information Administration (EIA) forecasting record natural gas production of natural gas in the US of 72 bcf/day for 2014.

But how much of the burgeoning gas production to allow to be exported has been a contentious question in the chemicals industry, which relies on natural gas for about 85% of its feedstock requirements.

Six applications have been approved for non-FTA exports of LNG since 2011.

The abundance of natural gas has been a boon to the manufacturing industry in the US, attracting investment from around the world and helping grow the economy and create jobs, Dow said.

“However, by shipping our own energy resources abroad and without fully understanding the implications to domestic manufacturing, this renaissance and our economic growth could be potentially threatened,” Dow said.

Natural gas prices have nearly doubled since approval of the first LNG export terminal in 2011, and the latest approval raises the cumulative volume of LNG export capacity to more than 10% of domestic production, America's Energy Advantage (AEA), a trade association of manufacturers and commodity producers, said in a news release on Tuesday.

“We remain very concerned that exporting such a large volume of this strategic commodity, which is vital to US competitiveness, is contrary to the national interest,” the AEA said.

But it does not have to be one or the other, said Brendan Williams, vice president of advocacy for American Fuel & Petrochemical Manufacturers (AFPM) association, in a telephone interview on Tuesday.

Rather than look at policies that impact what the US can do with its vast supplies of crude oil and natural gas, regulators should look at policies that impact the infrastructure producers and manufacturers need to utilise those supplies for both exports and domestic markets, Williams said.

“I think Congress really needs to look at it holistically, to make sure we have the ability to do both,” he said.

The Jones Act, which restricts crude oil shipments, and the hotly contested Keystone XL pipeline, which could bring more crude oil to US Gulf Coast refineries, are some avenues lawmakers need to explore to best use this abundance, Williams said.

“I think the resource base is there. We do have to get the policies right,” Williams said.

By Jessie Waldheim