Study Says U.S. to Benefit from LNG Exports 'Under All Scenarios'
Under all scenarios, the U.S. is likely to get net economic benefits from allowing liquefied natural gas exports, according to a study by NERA Consulting commissioned by the Department of Energy. The study will assist in the decision making process on whether to allow LNG exports, DoE said, but additional factors need to be considered. The NERA study said net economic benefits increase as the level of LNG exports increase: "Scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports. In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices."
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U.S. domestic natural gas prices will increase if the U.S. exports LNG, the study acknowledged. But it said the global market limits how high U.S. natural gas prices can rise under pressure of LNG exports because importers will not purchase U.S. exports if U.S. wellhead price rises above the cost of competing supplies. Natural gas price increases at the time LNG exports could begin range from zero to $0.33 (2010$/Mcf), it said. The largest price increases that would be observed after 5 more years of potentially growing exports could range from $0.22 to $1.11 (2010$/Mcf), it said. Because this is not a DoE product,
DoE will do its own review of the study as well as consideration of relevant comments made throughout the process prior to making final determinations, DoE said. It said factors to be considered in granting the export licenses include economic, energy security, and environmental impacts. DoE will accept initial comments on the report for 45 days after the official notice of the study appears in the Federal Register. Reply comments will be accepted for a period of 30 days, beginning on the day after the conclusion of the initial comment period. After the reply comment period, DoE will begin to act on the 15 applications on a case-by-case basis, it said. DoE expects to act first upon applications for which the applicants have commenced the pre-filing process at the Federal Energy Regulatory Commission by Dec. 5, in the general order in which the Department received them, it said, and will handle later ones in the order received.
House Energy and Commerce Committee Chairman Fred Upton (R-MI) said the report should allow the agency to move forward in approving the licenses. “America’s natural gas boom has been a bright spot in our economy, fostering job creation and economic development across the country," he said. "As energy producers want to sell a fraction of U.S. supplies to other countries to continue economic growth, DOE’s findings confirm these exports are a good thing for the American economy, consumers, and businesses." Upton's press release is (here).
Senate Energy Committee Ranking Member Lisa Murkowski (R-Alaska) also lauded the report and said it may be time to revisit the approval process for exporting LNG to non-FTA countries. “The conclusions in this report on the benefits to the economy should inform the DOE approval process regarding exports,” she said. Murkowksi's press release is (here).