WASHINGTON — Exporting natural gas will help keep the U.S. harvesting it, according to groups advocating more foreign sales of the fossil fuels.
In a letter to Energy Secretary Ernest Moniz, the American Council for Capital Formation and Act on LNG Exports said those foreign exports are critical to “stimulate continued development of gas.” Otherwise, there will be a domestic glut of natural gas that dissuades additional production, they said.
“Without the added demand from abroad for U.S. liquefied natural gas, supply will outstrip demand to such an extent that exploration and production will suffer,” the groups said.
The organizations point to projections that domestic natural gas production will increase by 12.4 billion cubic feet per day by 2018, with domestic demand climbing only 8.3 billion cubic feet per day in the meantime — leaving a critical gap that LNG exports can fill.
Their letter comes after the Energy Department’s decision to approve five applications to sell natural gas to countries that do not have free-trade agreements with the United States. In a two-step process, companies also need to win the Federal Energy Regulatory Commission’s approval before they can build massive plants for super chilling natural gas to transform it into a liquid capable of being loaded onto tankers and shipped around the world.
But another 21 applications to export LNG to non-free-trade countries are pending review at the Energy Department. The Department of Energy has been vetting applications on a case-by-case basis with 65 days (16 during the government shutdown) separating the last two approvals.
Export advocates say the Energy Department has been moving too slow, with the risk that further delays will squander the U.S. opportunity to compete with Australia, Canada and other countries to supply Asian markets hungry for natural gas.
But critics say the United States already is moving too hastily to authorize foreign sales of liquefied natural gas, without a clear understanding of how that might affect domestic prices. The recent Energy Department decisions have been predicated on a third-party study released in 2012 that concluded broader natural gas exports would have net economic benefits for the United States, but some large natural gas users have been skeptical.
America’s Energy Advantage and the Industrial Energy Consumers of America recently warned the Energy Department that unchecked LNG exports would cause domestic gas prices to spike, throttling “an American manufacturing renaissance.”
They asked the Energy Department to develop new standards for determining whether LNG export applications are in the public interest, after accepting comments from U.S. stakeholders on the issue. And they insisted that the current approach is vulnerable to legal challenges.
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Energy Department officials have pledged to keep using current data to guide their export decisions — fanning talk of a possible “pause” to reexamine the issue when the government’s Energy Information Administration soon releases a critical annual report forecasting oil and gas production.
Former Energy Department acting Chief of Staff Jeff Navin said he anticipates regulators will “take a look at the EIA data when it comes out in December, and if that data suggests that there are some significant changes to the assumptions, then maybe they’ll do some additional analysis.”
In an interview with E&ETV, Navin also stressed that there probably wouldn’t be a hard pause while the issue is examined.
“They’re going to look at all kinds of things as they go through this process,” Navin told E&ETV. “But I don’t anticipate that there’s going to be a hard and fast pause at a particular level.”
During a confirmation hearing, acting assistant secretary of energy for fossil energy Christopher Smith stressed that the administration would look at new data whenever it is warranted. And he signaled that any fresh look could include a new economic study, like the third-party analysis that has formed the foundation for the recent export approvals.