Support Broadens For Common Sense Natural Gas Export Policies

U.S. natural gas production continues to soar, driven principally by the safe development of unconventional shale gas. In fact, as the Bipartisan Policy Center (BPC) notes, “U.S. production of dry natural gas reached the highest levels ever recorded in 2012, according to preliminary estimates released recently by the U.S. Energy Information Administration (EIA). Natural gas production rose to approximately 65.9 billion cubic feet per day (Bcf/d) in 2012, which represents a nearly 5% growth in annual production from 2011.” At the head of the class remains the Marcellus Shale, which, according to recent Pa. DEP reports, produced more than 2 trillion cubic feet of clean-burning American natural gas during 2012 alone. Staggering indeed by every metric.

This week, President Obama nominated Dr. Ernest Moniz, a Massachusetts Institute of Technology scientist, as U.S. energy secretary and Gina McCarthy, a longtime environmental regulator, to head the Environmental Protection Agency. “They’re going to be making sure that we’re investing in American energy,” said President Obama. And as the President has made clear – especially in his State of the Union Address – the safe, tightly-regulated development of American natural gas continues to play an increasingly important role in meeting our nation’s growing energy demands.

Dr. Moniz’s nomination is especially important, though, in the context of leveraging these abundant resources to drive down our trade deficit, create more American jobs and strengthen our standing and competitiveness, as well as our diplomatic might, around the world. How? Well, the U.S. Department of Energy (DOE) is currently reviewing a limited amount of permits for the export of liquefied natural gas (LNG) from America to our friends and allies around the world. In January, the Marcellus Shale Coalition (MSC), through a public comment period, urged DOE to embrace common sense LNG permitting policies (see that letter here). And last week, this important subject was addressed at a Philadelphia City Council where the MSC testified, as StateImpactPA reports.

For his part, as the Washington Post reports this week, Dr. Moniz was co-chair of an MIT study that recommended that “the U.S. should not erect barriers to natural gas imports or exports.” And a recent BPC study reinforces that same common sense approach, as Dow Jones and the Houston Chronicle report. Support for common sense, pro-growth, pro-jobs LNG export policies is cresting. Here’s what others are saying:

The Economist: “Better out than in; If Barack Obama wants a cleaner world and a richer America, he should allow natural-gas exports(3/2/13)

Miles of twisting stainless-steel pipes and huge storage tanks gleam uselessly in the sun. They are a reminder of the hundreds of billions of dollars that America has invested in terminals for handling imports of liquefied natural gas (LNG). Thanks to the boom in domestic shale gas, those imports are no longer needed. America produces nearly as much gas as it consumes, and will soon produce far more. … Instead of receiving shiploads of liquefied gas and re-gasifying it, they should be taking American gas, liquefying it and loading it onto tankers. Converting these plants will not be cheap. But the potential rewards are much larger. … In America gas sells for around $3.40 per million British thermal units (mBTU). In Europe it costs around $12. In gas-poor Asia, spot cargoes change hands for as much as $20 per mBTU. Since it costs roughly $5 per mBTU to liquefy the stuff, ship it and turn it back into gas, America could be making a fortune from gas exports. To the extent that such exports displaced dirty coal, they would also help curb global warming. … [Natural gas prices] will remain much lower than elsewhere, because other countries have failed to frack as deftly as America. If Mr. Obama prevents companies from exporting American gas, it will be left in the ground. The world will be a dirtier place, and America a poorer one.

Bennett Johnston, former Democratic senator from La. & Senate Energy and Natural Resources Committee chairman: “Natural Gas Exports and the Mythical ‘Sweet Spot’ (Wall Street Journal op-ed, 3/4/13)

My 24 years on the Senate Energy Committee also involved dealing with the government’s efforts to regulate price and supply. In the early 1970s, the Federal Power Commission sought to protect consumers by regulating the price of natural gas. Instead of hitting a price “sweet spot,” the effort produced massive shortages. … In the record cold winter of 1976-77, hundreds of thousands of workers in the Midwest were laid off for lack of natural gas to power manufacturing plants and other companies. The crisis was such that it took just five days for Congress to introduce and pass the Emergency Natural Gas Act of 1977 authorizing President Jimmy Carter to suspend antitrust laws in the industry to address a shortage in supply. Five days! The epic fight for the deregulation of natural gas was the most controversial issue of the day. … The regulatory community predicted a terrible price explosion on this date with a calamity for consumers. Instead, the nation experienced lower prices and an adequate supply. … The free market might not always lead to everyone’s definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians. … We should heed the admonition of Adam Smith that demand begets supply: Allow the free market to allocate the nation’s newfound energy bounty.


Natural Gas Exports: A Geopolitical Game Changer?
(U.S. News & World Report, 3/5/13)

The discovery of massive deposits of natural gas in shale formations across the United States has turned the nation’s energy discussion on its head—policymakers are no longer frantic to find new import sources, but instead are now mired in heated controversy over what to do with all the excess supply. But beyond the economic benefits touted by domestic gas producers—job creation, improvement of the trade balance—there are also broader national security and climate benefits to large-scale exports of natural gas, according to a study released by the American Security Project. For starters, a more diverse pool of natural gas export sources has the potential to reframe many of the tenuous geopolitical relationships across the globe centered on energy supply. Europe remains highly dependent on Russia for its natural gas, a country that is no stranger to using energy as a political tool, says Nick Cunningham, policy analyst and author of the ASP report.

Have LNG-related questions or others about shale development? Please visit LearnAboutShale.org. We hope to hear from you. And please join the conversation online using #LearnAboutShale.