The United States stands to get a big political and economic boost by allowing exports of liquefied natural gas to Japan and other countries, top senators said Wednesday.
The chance to sell more natural gas to foreign customers “is an opportunity to really help tilt the balance of trade in our favor for the first time in decades,” said Sen. Lisa Murkowski, R-Alaska, at an energy briefing organized by The Hill newspaper. “The economic gain that could be offered for the American worker (and) the geopolitical benefits that could come … are positives.”
The Energy Department has postponed decisions on companies’ applications to export about 16 billion cubic feet of liquefied natural gas daily until it receives a study of the economic effect of that move later this year.
Obama administration officials have stressed they want to sustain domestic natural gas production while ensuring that any decisions on exports don’t bump up costs for American consumers and harm a manufacturing resurgence spurred by low prices.
Expanded LNG exports would give U.S. producers an opening to Asian and European markets, where natural gas can fetch prices three to five times what the fossil fuel commands in the United States.
“Trade offers us an opportunity to take advantage of some pretty enormous price differences that we see around the world,” Murkowski said. Japan, in particular, is “clearly looking for North American energy sources” and a stable, long-term natural gas supply.
Exporting to the country is “an opportunity to fill a need with a friend and an ally,” Murkowski added.
As the top Republican on the Senate Energy and Natural Resources Committee, Murkowski is well positioned to make the case on Capitol Hill. And she can draw on support from House lawmakers from states with robust natural gas production, who have implored Energy Secretary Steven Chu to swiftly approve export licenses.
But the incoming chairman of that panel, Sen. Ron Wyden, D-Ore., has been vocal in raising concerns that exporting more natural gas would hike prices inside the United States. Wyden has also been critical of the long-standing federal law that already allows companies to export U.S. natural gas to the nation’s free trade partners. The United States already exports some natural gas — mostly by pipelines — to Mexico, Canada, Brazil and other countries.
“This policy needs reconsideration,” Wyden said earlier this month. “It could harm the nation’s ability to achieve energy independence, combat pollution and preserve the environment and improve the economic competitiveness of American manufacturers.”
Sen. Mary Landrieu, D-La., stressed that natural gas costs could rise domestically anyway — even without exports — if companies curtail production while prices are low.
“If the price drops too low, production will cease,” she said, at The Hill event.
“All the indicators and facts on the ground would indicate this is a market we have and we want to open it up to some degree, and we can still have a long-term supply,” Landrieu said.
Most of the companies pursuing export licenses want to convert existing terminals for receiving natural gas imports that were built before today’s drilling boom.
The liquefaction process involves cooling natural gas to 256 degrees below zero, transforming it into a liquid that can be transported by tanker ships. The liquefied natural gas can be converted into a gas form at its destination.