Energy Department warns House of limits on natural gas testimony

He’s among the witnesses at a Tuesday hearing on controversial liquefied natural gas (LNG) export plans, among other topics. From Smith’s prepared testimony:

Due to the adjudicatory nature of this process, I am unable to comment today on issues that are presently being addressed in our pending proceedings. Those issues include but are not limited to the merits of pending applications, the validity of the two-part LNG export study, the study’s adequacy as a basis for decision, and the appropriate scope of environmental review. 

Still, that leaves plenty to talk about tomorrow, Smith notes in his statement to the Energy and Power subcommittee, including the DOE's review process, the LNG study itself (as opposed to its alleged merits or shortcomings), and other topics.

The Energy Department is reviewing 20 industry applications to export gas to nations that don’t have a formal free-trade deal with the U.S. Those proposals, under current law, are more heavily vetted than gas exports to free-trade partners.

A DOE-commissioned study completed last year concluded that expanded exports are an economic win for the country, a boost to the petroleum industry and business groups back expanded exports.

But export critics — who fear price spikes that would hurt consumers and energy-thirsty manufacturers — have criticized the report.

Smith’s testimony acknowledges the controversy surrounding studies that are informing the DOE’s review of export proposals, notably the study completed late last year by National Economic Research Associates (NERA).

“Proponents of LNG exports generally endorsed the results of the two-part study, particularly the conclusion of the NERA study that increasing levels of exports will generate net economic benefits for the United States. On the other hand, comments filed by opponents of LNG exports raised a number of issues, including challenges to the assumptions and economic modeling underlying the two-part study and assertions that the two-part macroeconomic study should have further examined regional, sectoral, or environmental issues,” he notes in summarizing the large volume of comments received.

Energy Secretary Ernest Moniz, who took office on May 22, quickly conducted a review of data underpinning the DOE’s review of gas exports proposals. He said last week he’s ready to move onto case-by-case reviews of applications.

Moniz said more decision on individual applications will come before year’s end. The department approved an export application to non-free trade nations right before he took office.