Moniz plans hands-on approach to natural gas exports

President Barack Obama’s energy secretary nominee on Tuesday vowed to conduct case-by-case reviews of proposals to export natural gas but also signaled that he would be evaluating the “cumulative” price effects of selling more of the fossil fuel overseas.

The candidate, MIT physicist Ernest Moniz, also told a Senate panel that he was open to revisiting a controversial government-commissioned study that concluded that the United States would glean net economic benefits from more natural gas exports. Some export critics insist that analysis was built on outdated data and papered over widely varying regional effects from expanded exports.

“We need to have strong analysis, grounded in the best data,” Moniz told the Senate Energy and Natural Resources Committee.

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More than a dozen companies have asked the Energy Department for licenses to export natural gas to Japan and other countries that do not have free-trade agreements with the United States. Although Houston-based Cheniere Energy won export approval last year, the Energy Department has put other applications on hold while it considers the economic effects of the decisions.

Some manufacturers, led by Dow Chemical Co., warn that unfettered exports could boost the price of natural gas, blunting a competitive advantage for U.S. companies that use the fossil fuel to power plants or as a building block for making other materials. These critics suggest that while some exports could be approved without causing major economic pain to U.S. businesses and consumers, there eventually is a tipping point.

Energy producers generally contend that the nation’s current drilling boom — and the abundant natural gas it is yielding — is threatened if prices stay too low. By that rationale, foreign exports could prop up U.S. natural gas prices just enough to keep the fossil fuel flowing.

Moniz said the economic effects of exports — including the effects on domestic natural gas supplies — will be factors in weighing license applications. For instance, Moniz said he is interested in knowing whether boosting exports could spur more domestic production not just of natural gas but also natural gas liquids that can be used by U.S. manufacturers.

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“All of these issues have to come together (to) make a transparent, analytically based evaluation, application-by-application,” Moniz said. “In the overarching public interest criterion, the status of the domestic natural gas market is clearly right up in that list of criteria. I think we have an obligation to make judgments, license (application) by license application, but using all those criteria, including the one of cumulative impacts.”

Moniz also signaled he supports the way federal law treats natural gas exports by tilting toward the approval of licenses “unless there is a clear public interest issue” standing in the way.

As the founding director of the Massachusetts Institute of Technology Energy Initiative, Moniz has weighed in on natural gas issues before, including endorsing its use as a bridge fuel while the nation transitions to cleaner renewable power sources. Previously, Moniz was an energy undersecretary during the Clinton administration.

If confirmed, Moniz would take over a sprawling Energy Department with some major challenges, including dealing with questions surrounding the disposal of radioactive waste from nuclear power plants and government loan guarantees for nascent energy technology.

Given spending constraints, Moniz said he would seek to leverage Energy Department research funding so that it advances technologies to points where industry can finish the job.

He repeatedly stressed the importance of policies and technology geared to a low-carbon economy and asserted that the federal government can play a role in bringing down the costs of new energy technologies.

On other issues, Moniz:

  • said he would consider master limited partnerships and other financial tools that could spur private investment in clean energy, just as they have been used by pipeline firms.
  • Moniz also gave a full-throated endorsement of carbon capture and sequestration research aimed at trapping greenhouse gas emissions at power plants and other facilities. But Moniz said costs have to come down and the public has to have confidence in long-term carbon dioxide storage. Noting the long-term storage challenge, Moniz said the ideal alternative would be developing a use for the captured CO2.
  • stressed that while the Energy Department would not be involved in regulating the hydraulic fracturing technology that is unlocking natural gas and oil from dense rock formations, it does have a role contributing innovations that could shrink the environmental footprint. While geology differs widely across the United States, Moniz said, there is a nationwide interest in ensuring companies follow “best practices” when using hydraulic fracturing.

Sen. Ron Wyden of Oregon, the Democratic chairman of the Senate energy panel, said he expected a swift committee vote on Moniz. Moniz would still have to be confirmed by the full Senate.

Read FuelFix coverage of the debate over exporting U.S. fuel: