Senators warned of ‘narrowing’ opportunity to increase gas exports

The United States needs to move on natural-gas exports to take advantage of global demand as the number of international competitors grows by the day, experts told the Senate Energy and Natural Resources Committee on Tuesday.

Panelists warned during a forum convened by the Senate panel that the U.S. faces a "narrowing" window of opportunity to reap the economic benefit of exports.

“If we wait too long … we will lose the jobs,” said Octavio Simoes, senior vice president of Sempra International and president of Sempra LNG (liquefied natural gas), in a refrain heard often Tuesday.

The discussion on natural-gas exports comes after the Energy Department (DOE) last week green-lighted a second controversial project allowing exports to nations lacking a free-trade agreement with the U.S.

Those projects, of which 19 are pending, require more scrutiny from the DOE than deals to nations that have a free-trade pact with America.

ADVERTISEMENT
Under federal law, the DOE must determine such proposals are in the public interest. That means exports must not significantly raise domestic energy prices or lower U.S. stockpiles too drastically.

The applications are the subject of Capitol Hill debate regarding the future of the sudden glut in domestic natural gas supplies.

Republicans, industry and some Democrats contend the benefits of shipping natural gas abroad — adding jobs, reducing the trade deficit and helping allies in need of energy — outweigh domestic price jumps, which analysts expect to be modest.

“We simply cannot afford to needlessly drag our feet on exports, or we’re going to let real economic development opportunities, and the chance to provide our allies access to an abundant, affordable and clean source of energy, slip through our fingers,” committee ranking member Sen. Lisa Murkowski (R-Alaska) said Tuesday.

But several Democrats worry too rapid an outflow of natural gas would spike prices, undercutting advantages for U.S. manufacturing.

“Right now the future of America’s natural gas is uniquely intertwined with America’s overall economic future. To make things and grow things in America, our country needs affordable energy,” committee Chairman Ron Wyden (D-Ore.), who is skeptical on exports, said Tuesday.

Wyden said he thinks the process for evaluating natural-gas export applications might not be "right for the times."

Paul Cicio, president of the Industrial Energy Consumers of America, agreed that low natural gas prices spurred the revival of energy-intensive manufacturers of plastics, aluminum and cement that his trade group represents.

He urged caution on approving exports too fast, noting potential price bumps, and called on the DOE to establish metrics that export proposals should meet to satisfying the public interest. Cicio said the 20- and 30-year contracts buyers and sellers agree to on natural gas trade lock in investments in export terminals that cost billions of dollars.

“Placing this risk on domestic consumers is not acceptable public policy when indeed, it can be avoided. Once an export terminal is approved, there is no putting the genie back in the bottle,” Cicio said.

Federal officials said they were taking a measured approach.

DOE Acting Assistant Secretary for Fossil Energy Chris Smith maintained the agency would evaluate export proposals on a case-by-case basis, taking note of the cumulative impact of exports on domestic prices, the economy and the environment.

And U.S. Energy Information Administration chief Adam Sieminski said a report on the global shale oil and gas outlook is scheduled for release in the coming weeks.

The officials said they did not expect “unfettered” exports, noting other nations would satiate some of the global demand for natural gas.

Harry Vidas, vice president for ICF Resources, said there are 63 proposed export projects across the world — a fact other panelists used to push policymakers to act.

“You are competing for those clients,” said Patricia Outtrim, vice president of governmental and regulatory affairs with Cheniere Energy, one of two firms to get approval for exporting to non-free trade nations.

She added that the extensive filing process for non-free trade exports would weed out less serious proposals.

Outtrim said it takes up to three years and $100 million to get from submitting an application with the DOE to final approval for construction by the Federal Energy Regulatory Commission (FERC).

“As the Department of Energy considers a path forward on 19 pending project applications for a license to export LNG, it is important to remember that the FERC process can serve as a critical tool to evaluate which projects are viable in the market, and which may not stand up to public scrutiny,” she said.