American Gas - February 2013 - (Page 30)

A recent report on LNG exports is being carefully scrutinized and hotly debated. Making your b u r ner tips opinion known is critical. By Mark Kalpin law The Impact of Exports O n December 5, 2012, the U.S. Department of Energy released a report on the potential macroeconomic impact of liquefied natural gas exports on the U.S. economy. The report, prepared by NERA Economic Consulting, gives particular emphasis to the energy and manufacturing sectors, and complements an earlier study that was conducted by the U.S. Energy Information Administration for the DOE in January 2012. Under Section 3 of the Natural Gas Act, an entity proposing to export natural gas (including LNG) must obtain authorization from the DOE. The DOE is required to review proposed exports to countries that do not have a free trade agreement with the U.S. and must authorize the export unless it finds that the proposed export “will not be consistent with the public interest.” In making this determination, DOE considers economic, energy security, and environmental impacts. The DOE is reviewing 15 applications that propose to export a total of almost 12 billion cubic feet per day of natural gas from the lower 48 states to non-FTA nations. In a conditional authorization issued in May 2011 for the proposed Sabine Pass Liquefaction Project, the DOE 30 American Gas february 2013 stated that it would review the potential cumulative impact of the Sabine Pass authorization and any future LNG export authorizations on the U.S. economy when considering subsequent LNG export applications. In the report, NERA concluded that the U.S. would gain net economic benefits from allowing LNG exports, and that the net economic benefits increased as the level of LNG exports increased. However, NERA also found that increased levels of LNG exports could lead to negative economic impacts, including slightly higher natural gas prices, reduced wage income for certain consumers, negative competitive impacts on energy intensive manufacturers, and higher prices for electricity. The report’s conclusions will be hotly contested. A trade association of LNG producers, shippers, terminal operators, and developers has released a statement in support of the report and its conclusions. In contrast, energy-intensive manufac=turers and other trade associations have objected to additional LNG exports on the fear that increased domestic natural gas prices will hurt economic growth in the U.S. and the international competitiveness of energyintensive manufacturers. The report has been scrutinized by a number of elected officials. Some, including Sen. Lisa Murkowski (R-Ark.), have expressed support for increased LNG exports. Others, such as Rep. Ed Markey (D-Mass.), have criticized the report on the grounds that increased LNG exports will benefit oil and gas companies at the expense of consumers. The issue of LNG exports will also raise the level of debate over hydraulic fracturing, a practice that is credited with helping to create a surplus of natural gas supplies in the U.S. Neither the NERA report nor the preceding EIA report consider environmental impacts, let alone the issue of hydraulic fracturing. The Sierra Club already has protested a pending LNG export application on the grounds that the environmental harm resulting from the increased use of hydraulic fracturing has not been evaluated by the DOE. More recently, a group of health professionals petitioned the administration to delay authorization of LNG exports until studies on the health effects of hydraulic fracturing can be completed. The question of whether the DOE should authorize increased exports of LNG raises a number of key issues for natural gas utility companies. Many believe that allow-

Table of Contents for the Digital Edition of American Gas - February 2013

American Gas - February 2013
Table of Contents
President’s Message
Subject Index
Supplanting Coal, Creating Jobs
Digest
Issues
Updates
Need to Know
By the Numbers
People and Places
Fill ‘er Up—in the Driveway
Europe
State House
City Hall
Wall Street
Elm Street
On the Docket
Profile: Philip B. Jones
Law
Jobs
Buyer’s Guide: Meters
Marketplace
Headway

American Gas - February 2013