Natural Gas Export Review Needs Revamp, Senator Says
The U.S. process for approving natural gas exports may need revamping to ensure that the domestic economic implications of more overseas sales are fully considered, the chairman of the Senate’s energy panel said.
Senator Ron Wyden, an Oregon Democrat, said today expanding exports can benefit the U.S. economy and aid allies such as Japan that are seeking cheaper fuel. The U.S. should weigh its decisions carefully so as not to lose the advantage offered by cheap gas, which is burned to produce electricity and as an ingredient for fertilizer and chemical products.
“Energy is different,” Wyden said today at a committee forum on exports. “It is not the same as blueberries.”
The Energy Department’s export-review process may not be “right for the times,” he said.
The department is weighing 19 applications from companies seeking to build export terminals and sell natural gas, converted into liquid form, to nations without free-trade agreements with the U.S. That list includes Japan and most of Europe. The department has so far approved two applications.
An application must be approved unless the department determines the exports aren’t in the national interest.
As recently as five years ago, energy companies were building terminals to import fuel as U.S. demand was projected to outstrip domestic supplies. Hydraulic fracturing, the drilling process in which water, sand and chemicals are shot underground to break apart shale rock and free trapped natural gas, has sparked record domestic production.
Companies seeking new markets for U.S. natural gas have encouraged the department to act quickly to approve the applications, setting off a lobbying fight with companies including Dow Chemical Co. (DOW) in Midland, Michigan, and New York-based Alcoa Inc. (AA) that oppose significant exports.
On May 17, the department gave conditional approval for the Freeport LNG project in Texas, the second export application approved under President Barack Obama’s administration. Exports are automatically approved to countries with free trade deals with the U.S.
Freeport would be able to export as much as 1.4 billion cubic feet of natural gas a day for 20 years. It still must win regulatory approval from the Federal Energy Regulatory Commission.
Octavio Simoes, a senior vice president at San Diego-based Sempra Energy (SRE), said at the forum the U.S. should expeditiously approve export terminals or risk losing out to other countries moving to sell gas outside their borders.
The nation’s window of opportunity is “narrow and closing fast,” Simoes said. Sempra applied for an export terminal in 2011.
Harry Vidas, vice president for ICF International Inc. in Fairfax, Virginia, said 63 liquefied natural gas export projects are planned or under construction globally. LNG exports may create as many as many as 452,300 jobs from 2016 to 2035, he said.
Wyden said the U.S. could probably export about 8 billion cubic feet of gas a day without significant price swings that might harm manufacturers such as Dow Chemical.
“It’s important to recognize that things might not go according to that script,” and the U.S. should be careful not to sell too much natural gas overseas, Wyden said.
The U.S. produces about 70 billion cubic feet of natural gas a day.
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