Former energy secretaries make pitch for LNG exports

Two former energy secretaries today joined forces to argue that the United States would benefit by selling more of its natural gas bounty overseas.

“Exports can buttress U.S. geopolitical leadership and trade, while at the same time continuing to support low domestic natural gas prices and a renaissance in domestic manufacturing,” said Bill Richardson and Spencer Abraham in a Financial Times opinion piece.

Richardson was former President Bill Clinton’s energy secretary. Abraham served under former President George W. Bush.

The Obama administration’s Energy Department is weighing whether to approve requests from 15 companies to begin exporting liquefied natural gas to countries that don’t have free-trade agreements with the United States. The pending applications could put the United States on track to export 21.5 billion cubic feet of liquefied natural gas each day to those nations — nearly a third of what the U.S. produced at the end of last year — though many analysts predict far fewer exports would ever be realized.

Earlier this month, a report commissioned by the Energy Department concluded that the United States “would experience net economic benefits” from selling more natural gas to China, Japan and other countries. But the study also predicted that climbing prices caused by steadily increasing exports would squeeze electric utilities, energy-intensive companies and manufacturers that rely on the fossil fuel as a building block to create fertilizers, plastics and other products.

Manufacturers are pleading with the Obama administration to limit foreign natural gas sales — or block them altogether — for fear exports would spike the competitive advantage they now enjoy from low natural gas prices.

But Richardson and Abraham insist that thriving domestic manufacturing and natural gas exports can go hand in hand.

And they make the case that foreign sales — particularly to U.S. allies — could diminish the power held by hostile countries who now sell natural gas to Europe and Asia:

“By becoming an exporter, the U.S. would fill a vital role for its allies in Europe and Asia, many of which are dangerously dependent for natural gas on foreign powers frequently hostile to U.S. interests. Reliance on Russian gas in Ukraine and the EU would be likely to diminish, for example.”

The former energy secretaries also argue that if U.S. oil and gas producers had broader access to foreign markets, they would have extra financial incentive to capture natural gas now lost through flaring at drill sites in some parts of the country.

Environmental regulations and other economic concerns are likely to decrease flaring even without exports or a boost in natural gas prices.

The Energy Department is conducting its own analysis of the study it commissioned. And critics, including manufacturing leaders and their allies on Capitol Hill, have already outlined numerous problems with the report, which they say relied on old data about energy demand.

The domestic drilling boom is spurred by technological advances, including the combination of hydraulic fracturing and horizontal drilling techniques, that allow oil and natural gas to be extracted from dense rock formations across the United States.