HOUSTON — Energy Secretary Ernest Moniz went further than ever before Wednesday in suggesting the Obama administration could redo the economic analysis that is underpinning its decisions on exporting American natural gas.
Moniz also floated the idea of giving greater consideration to the proposed destination of natural gas exports as part of the government’s review of those projects — suggesting a new dynamic is possible to help steer the fossil fuel to foreign allies.
Right now, “we don’t determine where the cargoes go,” Moniz said at the IHS CERAWeek energy summit in Houston, which is taking place as Russia’s invasion of Ukraine stokes calls to use U.S. oil and gas as a strategic weapon. But he suggested talking through with Congress and others “how we want to address those issues.”
The Energy Department has the ultimate responsibility for those licenses, Moniz stressed, adding: “I would certainly welcome consultation.”
The Energy Department has already authorized one proposal to broadly export natural gas to countries that do not have free-trade agreements with the United States and issued five other conditional approvals.
Cumulatively, the licenses now mean as much as 8.5 billion cubic feet of American natural gas could be sent per day to non-free-trade partners, about 13 percent of current daily production. That’s close to the upper bounds of potential natural gas export levels analyzed in a 2012 study conducted for the Energy Department that forms the basis for deciding whether each pending application is “consistent with the public interest.”
That — as well as other market changes — could prompt a new economic assessment, Moniz signaled Wednesday.
“It may be at some point we will need to refresh studies of economic benefit,” he said. “It may be that at some point, it may look as though a bunch of factors would suggest a new review, tuning up the review, updating the review, updating the data, et cetera.”
Factors that could prompt a reassessment include shifts in natural gas demand, industrialize utilization of the fossil fuel and the market absorption of natural gas liquids, Moniz said.
“We are continuously evaluating, and if we have to update data, we will,” Moniz added. But he stressed that even when new data comes online, it doesn’t always require a hard stop to consider it. As example, he cited new projections from the government’s Energy Information Administration that projected a greater increase in natural gas supply than in demand.
“Did it require us to do a whole new study? No,” Moniz said. “We will just be doing our job and continuously evaluating the national interest determination.”
Some heavy industrial users of natural gas worried that unfettered exports could spike domestic prices insist a new analysis is needed in light of new projections about climbing demand for the fossil fuel from manufacturers and utilities.
Moniz dismissed speculation that the Obama administration has in mind a hard cap on possible natural gas exports.
“It’s no secret that we have something like 35 billion cubic feet per day in the queue,” Moniz said. “And it’s also no secret that – right or wrong – I have never seen any economic analysis that expects the market would support that level of exports.”