Dow is a member of America’s Energy Advantage, a group of manufacturers and gas distributors that says unfettered exports of liquefied natural gas may undermine the benefits of rising output from shale rock. Companies such as Dow want a return to government controls on gas prices that ended in the 1980s, said Stephen Pryor, president of Irving, Texas-based Exxon’s chemical business.
“That’s what they are calling for,” Pryor said yesterday in an interview in Houston. “It’s basically a price cap.”
Dow isn’t seeking a cap, said Kevin Kolevar, the Midland, Michigan-based company’s vice president for government affairs and public policy. The Department of Energy needs to consider effects on manufacturing, consumers and energy security before approving LNG exports, he said by telephone today. Dow isn’t calling for gas prices to be a trigger in the decision-making process, he said.
Exxon is considering exporting U.S. gas from LNG terminals in Alaska and Texas. Pryor said most studies forecast exports equal to 5 percent to 15 percent of U.S. gas demand, consistent with Exxon’s outlook. Production will rise with exports to keep price increases “moderate,” he said. He declined to provide a specific price forecast.
“We must oppose protectionism in our home countries,” Pryor said yesterday at the IHS World Petrochemical Conference in Houston. “These proposals to block LNG investments, justified by artificial price caps, represent a selective and harmful departure from free-market and free-trade principles.”
LNG exports may contribute to a gas shortage by 2030 that would triple prices, according to a study by Charles River Associates posted on the America’s Energy Advantage website.
Export applications before the DOE would, if approved, collectively export gas equal to more than half of current U.S. consumption, Dow’s Kolevar said. While not all those projects will ultimately proceed, gas demand may still exceed production later this decade if some are approved without considering the “public interest,” something the government is legally bound to do, he said.
“We do have concerns that there is a tipping point at which LNG exports turn from a net positive for this nation to a net negative,” Kolevar said. “The problem is, once you hit that point, it’s too late to go back.”
Dow, which plans to spend $4 billion on new chemical plants on the Texas coast, uses gas to run its factories and as a raw material for making plastics and other materials.
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