The United States can safely export more of its natural gas bounty without causing prices to skyrocket, 110 lawmakers told Energy Secretary Steven Chu on Thursday.
The assertion directly responds to the biggest argument mounted against more foreign sales of the fossil fuel, mostly by a cadre of chemical makers and manufacturers that rely on natural gas supplies to power their plants and as a feedstock they transform into other materials.
The lawmakers — 89 Republicans and 21 Democrats — said market forces will keep prices in check, even if American producers sell natural gas to European and Asian markets where gas fetches three and four times as much as it does in the U.S.
U.S. natural gas closed at $3.45 per million British thermal units in trading Thursday on the New York Mercantile Exchange .
Analysts generally agree that expanding the market for natural gas through exports could raise prices slightly. But the additional costs of liquefying natural gas, shipping it overseas in massive tankers and then converting it again at its destination could add $6.30 to $8.39 to the price per million British thermal units, according to a government-commissioned study of the issue.
“In other words, the difference between the price of gas in the U.S. and internationally would need to be at least that much higher in order to justify its export,” the lawmakers said. “That price differential is a significant cushion against domestic prices climbing to a ‘world price.’”
The Energy Department is weighing applications from more than a dozen companies to export at least 22.6 billion cubic feet of natural gas per day to countries that don’t have free trade agreements with the United States.
By a Thursday deadline, thousands of public comments had flooded the Energy Department in response to a study released in December that concluded the U.S. could claim up to $47 billion in new economic activity even if exports were unchecked, though there would be price increases in some sectors.
The lawmakers said that the U.S. has a limited window to take advantage of other countries’ hunger for natural gas. Japan, for instance, is eager to find power sources to replace nuclear power; Taiwan also is looking at the retirement of two major nuclear plants within a decade.
Two technologies — horizontal drilling and hydraulic fracturing — have allowed energy companies to unlock natural gas from dense rock formations across the country. Other countries with their own potential shale reserves are looking to follow the U.S. lead in exploiting the resource, the lawmakers warned.
“The United States is not the only nation with abundant shale gas reserves, however we do have significant advantages that will take competitors many years to overcome, such as best-in-class technology, gas processing and pipeline infrastructure developed over decades, a financial system that matches capital with promising investment opportunities, well-defined mineral ownership and a mature legal system,” the House members said. But, they warned, because “other nations are already at work trying to duplicate the success of America’s shale industry, these advantages won’t last forever.”
The letter was spearheaded by Republican Rep. Bill Johnson and Democratic Rep. Tim Ryan, both from Ohio, which has seen a surge of drilling in the Utica shale.
Signers from Texas included Democrats Gene Green, Al Green and Sheila Jackson Lee of Houston; Henry Cuellar of Laredo; and Rubén Hinojosa of Mercedes; and Republicans Kevin Brady of The Woodlands; Blake Farenthold of Corpus Christi; Pete Sessions of Dallas; Pete Olson of Sugar Land; Ted Poe of Humble; Joe Barton of Ennis; Mike Conaway of Midland; Lamar Smith of San Antonio; Bill Flores of Waco; Michael Burgess of Lewisville; Kenny Marchant of Coppell; Mac Thornberry of Clarendon; and Ralph Hall of Rockwall..
The issue is shaping up as politically regional, with lawmakers from drilling hotbeds broadly lining up in support of exports. Among the chemical and manufacturing sector, however, the divide is less clear.
Midland, Mich.-based Dow Chemical Co., Dallas-based Celanese Corp., and several other companies have aligned against unfettered exports and are making their arguments jointly as a new coalition: America’s Energy Advantage.
In its public comments filed Thursday, Dow said the economic study of natural gas exports was flawed, because it relied on 2-year-old data from the Energy Information Administration that doesn’t account for expanding demand in manufacturing, transportation and power sectors, as more fleet trucks move to LNG, more power plants switch from coal and more manufacturing plants are built in the U.S.
Dow also faulted the study for failing to pay close attention to how expanded exports would affect specific industries, instead of its broad economic overview.