Yes, we can export natural gas and revive manufacturing

As Senate and House committees hold hearings on the export of liquefied natural gas this week, it is notable that even in Washington’s hyper-partisan atmosphere, support for LNG exports is both bipartisan and bicameral. In addition, newspapers from across the country and across the political spectrum have written editorials encouraging Congress and the president to take the steps necessary to speed the approval process.

There is clear recognition that our domestic natural gas resource is sufficient not only to power our economy and fuel a manufacturing renaissance here at home, but also to help our friends and allies globally power their economies and improve the global environment.

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The U.S. is the world’s leading natural gas producer. Thanks to innovative technology that allows us to safely produce this vast domestic resource, we are cleaning our air, strengthening our economy and enhancing our energy security. Another benefit, one that is only heightened by recent events in Ukraine, is allowing the U.S. to influence global energy dynamics and to be a stabilizing geopolitical force by exporting LNG. This, however, will require a more certain and speedy process to approve the construction of export terminals.

These projects require a two-step authorization: The Department of Energy (DOE) must deem them in the public interest, and then the Federal Energy Regulatory Commission (FERC) must approve their siting. So far DOE – on a one-case-at-a-time basis – has approved one terminal and conditionally approved five others that now need FERC’s nod.  More than a dozen other projects await review. 

DOE approval does not mean a project will be built. In addition to FERC approval, the cost to build a facility is $5 billion to $10 billion or more, so the availability of capital will provide a natural constraint. And let’s not forget that the global market for LNG is not infinite and other nations are taking actions to compete for a share. That is why we believe it is appropriate for DOE to deem all pending applications as in the national interest since both capital markets and the global LNG market will more efficiently determine the number of export terminals that will ultimately be built.

DOE’s own studies, along with many independent studies, conclude that allowing exports of U.S. LNG will provide an overall benefit to the economy without significant impact on price.  Meanwhile, further technology innovations and simple experience have brought productivity gains in natural gas production. Our nation’s domestic shale gas abundance, therefore, will continue to play a central role in the ongoing U.S. manufacturing resurgence even as we take advantage of our export opportunities.

And the news of how natural gas is driving growth in manufacturing jobs continues to come in. According to an IHS report released last week by the U.S. Conference of Mayors, between 2010 and 2012, energy-intensive manufacturing added nearly 200,000 jobs and increased sales by $124 billion in U.S. metro areas thanks to abundant, affordable natural gas.  Looking ahead, the report predicts hiring will increase more than one percent annually through 2020.

Furthermore, by encouraging greater production of low-cost dry gas for export, we will see increased production of natural gas liquids, valuable co-products which are critical feedstocks for the chemical, fertilizer and plastics industries. According to ICF, production of these liquids would increase between 150,000 and 273,000 barrels per day due to LNG exports—helping preserve low prices that directly benefit the competitiveness of U.S. manufacturing. 

Domestic natural gas prices are driven primarily by supply. Simply put, the U.S. has ample supply—and the ability to access more quickly in response to market signals—to meet future demand for affordable natural gas. Indeed, the U.S. Energy Information Administration forecasts natural gas production will rise steadily in response to growing demand, climbing 56 percent from 2012 to 2040.

Of course, despite the growing support for LNG exports that spans traditional party and interest lines, those who want no fossil fuel use or development will attempt to step up their opposition. I believe White House adviser John Podesta got it right when he called blanket opposition to natural gas “a completely impractical way of moving toward a clean-energy future.”

It’s true that LNG exports won’t begin until late 2015 at the earliest. But it’s just as true that clear, decisive action from Washington today will send a strong signal to both the international community and to the markets that the U.S. is serious when it comes to global energy dynamics, helping our friends and minimizing the ability of others to use energy as a geopolitical weapon.

Enhancing global energy security; sharing environmental progress; and strengthening our own economy.  Sounds like a winner.

Durbin is president and CEO of America’s Natural Gas Alliance.