Would the economy benefit if the U.S. was an exporter of liquid natural gas? A new Department of Energy study suggests that would be the case.
The report examined the impact of allowing liquid natural gas (LNG) exports under a variety of market conditions.
Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.
Some in the oil and gas industry contend the idea is a no-brainer.
"It should be immediately obvious to anyone that when we export from the United States, we’re increasing wealth within the United States," says Kathleen Sgamma with the Denver-based Western Energy Alliance. "The fact that the DOE felt compelled to conduct an economic study of that seems obvious; but (it) seems to be a well-done study."
Sgamma adds that allowing LNG exports would be great news for energy producers in Western states, including Colorado, where 137,000 people work in the industry.
"We’ve got an oversupply of natural gas in the West and across the country," she notes. "So we believe western producers could easily fill that gap and increase production to meet new demand for exports."
Prices are low right now thanks to that generous supply. That hasn’t stopped some from worrying that exporting natural gas would cause a spike in prices here in the U.S. But Sgamma thinks the report indicates there’s enough supply to meet demand domestically and abroad without increase cost.
Energy producers currently can’t export liquid natural gas until the Department of Energy begins approving export licenses. Sgamma says this economic analysis is a step in that direction.
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Interview Highlights
On whether exporting liquid LNG would cause prices to rise for utilities or other customers:
"I believe we have enough supply in the West to meet any increased demand. So we would still operate in an environment of very abundant natural gas, and that means very affordable prices for U.S. consumers. Because of that huge oversupply, we have more than enough where we can export overseas while still maintaining affordable, reliable and clean natural gas for U.S. consumers."
On what’s standing in the way of exporting LNG:
"The Department of Energy has to license new terminals, and they’re receiving political pressure not to do so. So the [Obama] administration decided to do an economic analysis so they could reassure those with concerns that the economics of exporting makes sense. So this report is very good news for the United States to go forward and start exporting natural gas."
On the report’s suggestion that not many jobs would actually be created by a change in export policy:
"That was a puzzling aspect of the report because, obviously, when you produce more, you create more jobs. And you create significant jobs. There is a comment period on the study, and we will certainly be commenting on that because we believe they underestimated the amount of jobs that would be created. But in general they did find there was a benefit, that there’s increased employment, and that the U.S. GDP increases substantially."
Read the full report [.pdf] here.
You can find more on the issues around LNG exports from Forbes magazine here. Or you can read a very different perspective from Australia here.
