Latest EIA report lists mixed impacts from higher US LNG exports

Increased US LNG exports would raise natural gas prices and increase production, reduce end-users’ demand, push higher total primary energy use and related carbon dioxide emissions, and modestly increase consumer expenditures for gas and the electricity it generates, according to a recent report from the US Energy Information Administration.

Increased US LNG exports would raise natural gas prices and increase production, reduce end-users’ demand, push higher total primary energy use and related carbon dioxide emissions, and modestly increase consumer expenditures for gas and the electricity it generates, according to a recent report from the US Energy Information Administration.

Higher LNG export levels also would raise real gross domestic product as increased energy production spurs investment, more than offsetting impacts from higher energy prices, the report said. US spending for goods and services also would climb in most cases, EIA analysts said.

“A slower, more realistic ramp-up in LNG export capability results in slightly lower price impacts of the projection and delays increases in gas production that support higher LNG exports,” it said. EIA’s 2014 Annual Energy Outlook, which includes cases the study used as baselines, best reflects EIA’s view on LNG exports and US gas markets more generally, the report said.

EIA conducted the analysis, which updated a report from January 2012, in response to a May 29 request from the US Department of Energy’s Fossil Energy Office (FEO). Like that early 2012 analysis, it extensively discussed caveats and issues involving the representation of global gas markets and their interaction with the North American market.

Much of that discussion also applied to the analysis contained in this updated report, FEO said. Additional observations regarding issues surrounding the estimation of economic impacts of the export scenarios were provided in the new report’s economic results section.

Earlier findings confirmed

Two oil and gas industry groups said that EIA’s Oct. 29 report confirmed previous findings that more LNG exports would produce greater US economic gains.

“The updated study confirms what past research has found, which is that higher levels of exports prompt more US growth and increase investment in American energy security,” said Kyle Isakower, American Petroleum Institute’s vice-president, regulatory and economic policy.

“Across the board, demand for exports was met with higher domestic production, showing that America has the resources to supply affordable energy here at home, while lowering the trade deficit, creating new jobs, and supporting our allies overseas,” Isakower said.

Erica Bowman, vice-president for research and policy development at America’s Natural Gas Alliance, noted that while EIA’s report did not represent EIA’s projection of the most likely export scenarios, it does show that US gas production could grow substantially to meet new demand, and that the economy would benefit from this growth.

“Even under the most aggressive export scenarios the overwhelming majority of gas used to fill LNG export demand originates from additional production, not from existing domestic applications,” she said, adding, “In fact, domestic manufacturing consumption is projected to grow from current levels under all LNG export scenarios.”

Contact Nick Snow at nicks@pennwell.com.

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