IECA requests moratorium on US LNG exports to non-FTA countries

Aug. 17, 2017
The Industrial Energy Consumers of America called for a moratorium on US exports of liquefied natural gas to countries not having a free trade agreement with the US.  

The Industrial Energy Consumers of America called for a moratorium on US exports of liquefied natural gas to countries not having a free trade agreement with the US.

Obama administration public interest export studies used to justify US LNG shipments to countries having, as well as countries not having, FTAs with the US failed to consider cumulative export volumes and their impact on demand for domestically produced gas, it said in an Aug. 16 letter to US Energy Sec. Rick Perry.

“It is time for the US Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-FTA countries and put consumer safeguards in place,” IECA Pres. Paul N. Cicio said as the letter was released.

The letter said that the US Energy Information Administration reported that total LNG export approvals to both FTA and non-FTA countries now equals 71.2% of US 2016 natural gas demand. Approved volumes to non-FTA countries alone equals 170% of total residential demand, it added. “Of greatest concern is that the [Trump] administration has said publicly that it will approve more applications to export to non-FTA countries,” it said.

LNG exports are considered to be in the US national interest automatically if they are to customers in countries having an FTA with the US. Exports to customers in non-FTA countries require a national interest determination from DOE.

IECA’s letter presented two scenarios that it said justify a halt to DOE’s approval of US LNG shipments to non-FTA countries:

• Scenario I takes the EIA’s 2017 Annual Energy Outlook cumulative net demand for gas, which includes exports of LNG and shipments to Mexico, and compares it with the EIA technically recoverable US gas resources in the Lower 48. That forecast includes LNG exports rising to 12.1 bcfd by 2035. This scenario illustrates that with only 12.1 bcfd of LNG exports, 58% of all US technically recoverable gas resources would be consumed by 2050, just 33 years away, IECA said.

• Scenario 2 uses the same assumptions as Scenario I but includes the volume of LNG export applications equal to 54 bcfd that DOE has approved already. Using EIA’s annual average forecasted increases in LNG exports from 2016 to 2020 of 1.58 bcfd and using this same growth rate for the years beyond 2020 until LNG export volumes reach 54 bcfd, 71% of US technically recoverable resources would be consumed by 2050.

“The net effect is that LNG exports, specifically to [non-FTA] countries lowers our competitors’ costs and increases ours, directly and negatively impacting competitiveness and our ability to justify reshoring,” IECA’s letter said. Its opposition to allowing US LNG exports to non-FTA countries is consistent with President Donald J. Trump’s fair trade and “America First” policies, it added.

Contact Nick Snow at [email protected].

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.