Abundant shale gas resources in the US that have turned the natural gas supply outlook from a shortage to a surplus also are stimulating proposals to export—instead of import—LNG. Policies to encourage such projects should be carefully considered, witnesses told the US Senate Energy and Natural Resources Committee on Nov. 8.
Higher prices resulting from possibly tighter supplies are the most obvious risk, they suggested. Five LNG export applications have been filed with the US Department of Energy, said Jim Collins, underground utilities director for the city government in Hamilton, Ohio, who testified on the American Public Gas Association's behalf.
"Just the volumes enumerated in these few applications would make the United States the second-largest exporter of LNG in the world," he noted. "These five applications, if granted by DOE, would permit the export of just under 3 tcf of natural gas, which represents over 10% of our consumption on an annual basis. This level of export would have serious adverse implications not only for domestic consumers…but also for US national security."
One committee member, Christopher A. Coons (D-Del.), asked if it would be a better long-term strategy to export goods manufactured from plants fueled with US gas instead of LNG. Another, John Hoeven (R-ND), said producers in his state would prefer selling gas associated with oil recovered from the Bakken fomation to flaring it, as many do now.
Abundant US supplies not only could provide a reliable source of less-polluting fuel to generate electricity, but also might help revive the country's chemical manufacturing, observed Andrew Slaughter, upstream Americas business environment advisor, for Shell Exploration & Production Co. in Houston. Shell recently announced that it is considering building a gas-to-chemicals plant in the Marcellus shale region, and seven other companies also have reported plans for similar facilities, he said.
Shale-associated jobs
"A recent study by the American Chemistry Council noted the potential for 17,000 new knowledge-intensive, high-paying jobs in the US chemical industry, another 400,000 jobs outside the chemical industry, and more than $132 billion in US economic output—all associated with the shale gas revolution," Slaughter said.
Global markets likely will determine how many US LNG export projects actually go ahead, one federal official indicated. "As we're now considering applications with about 6.6 bcfd of total exporting capacity, the department decided that more detailed examination of a broad range of impacts was warranted," said Christopher A. Smith, deputy assistant US energy secretary for oil and gas in DOE's fossil energy office.
Criteria include US gas needs; adequacy of supplies; US energy security; impacts on the US economy, consumers, and industries; job creation, the US balance of trade; international considerations; environmental considerations; and consistency with DOE's long-standing policy of promoting market competition through free negotiation of trade arrangements, he said in his written testimony.
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