The oil and gas industry on Thursday stepped up its fight for natural gas exports and criticized a new coalition of manufacturers that wants to restrict foreign sales of the fossil fuel.
The American Petroleum Institute’s chief economist, John Felmy, held a conference call with reporters to tout the benefits of increased exports of liquefied natural gas, while an ExxonMobil executive used the company’s policy blog to take aim at the critics. Mayors from Tulsa, Oklahoma City and Houston also urged the Energy Department to swiftly approve natural gas export licenses.
“Restricting exports of energy makes no more sense than unnecessarily restricting the export of chemicals, agriculture products or cars, and such a backward move could violate international trade rules,” Felmy said. “We cannot and should not build a wall around the United States.”
The Energy Department is weighing applications from more than a dozen companies to sell up to 22.6 billion cubic feet of natural gas per day to countries that don’t have free trade agreements with the United States.
A government-commissioned study issued in December concluded that even unlimited exports would broadly benefit the U.S. with up to $47 billion in new economic activity. But that net positive benefit would cause price increases for companies that are big users of energy produced by burning natural gas or are heavily reliant on the fossil fuel as a building block for producing chemicals, fertilizers and other products.
The chairman of the Senate Energy and Natural Resources Committee, Sen. Ron Wyden, D-Ore., and top congressional Democrat Ed Markey of Massachusetts have said the government-backed study relied on old data about natural gas demand and papers over the potential cost increase and harm to the chemical industry.
But ExxonMobil Vice President Ken Cohen insists in a blog post that the report is in line with other predictions.
“Expert after expert has shown that the economic benefits to the country from LNG exports are significant and outweigh any potential domestic natural gas price increases,” Cohen said.
The new manufacturing group, called America’s Energy Advantage, is spearheaded by Dow Chemical Co., but also includes Alcoa Inc., Eastman Chemical and Dallas-based Celanese Corp.
The group itself is opposed to unfettered exports, but divided on what level might be sufficient to sustain domestic natural gas production without causing prices to climb too high.
And the manufacturing sector isn’t aligned behind the effort. The National Association of Manufacturers warned on Tuesday that limiting natural gas exports would have “far-reaching negative effects on the United States.”
Group members say there’s a big difference between exporting natural gas — a raw material — and exporting a finished product built in the United States with that fossil fuel, where the U.S. can claim a bigger economic impact as it moves through the value chain.
“Natural gas is of singular strategic importance, so much so that the United States has by law tasked the Department of Energy with making sure LNG exports are in the public interest,” said George Biltz, Dow’s vice president for energy and climate change. “We believe the evaluation should include consumer prices, manufacturing jobs and energy security.”
While Biltz stressed that Dow supports “rules-based free trade” and he noted that “LNG exports have a benefit,” he insisted that the Energy Department should move prudently in considering the issue.
It’s unclear how fast the Energy Department could move on the pending applications, having already granted one export license to Houston-based Cheniere Energy. The department is accepting public comments on the export study through next week, and after its own internal review, it may start considering permit applications on a case-by-case basis.
But the timeline could slow down in response to any review Wyden initiates — or if Energy Secretary Steven Chu leaves his Cabinet post.
Some analysts have suggested a Chu resignation — and the process of confirming his replacement — could stall the whole licensing process for months.
Felmy acknowledged that possibility on Thursday. “Anytime you have a change at the top of one of these agencies that has to adjudicate on these things, and you don’t have the seat filled for that person who has to sign off on it, that is a concern,” he said.