Exporting Natural Gas from the U.S.

Today’s post contributed by Brittany Thomas – Coordinator, External Affairs

It’s a question that we are hearing more and more frequently, from community members and from members of the media:

Do you think the United States will move towards exporting natural gas?

And let’s be honest, it’s a very fair question. Natural gas prices are relatively low while production rates have increased and the estimates of recoverable natural gas in the country are astounding.

Last week I attended the 2012 Marcellus Summit at Penn State University (We are!) and one of the first speakers tackled this very idea. Kevin Massy, Assistant Director for the Energy Security Initiative at the Brookings Institution, presented a recent study to an audience of about 75 individuals.

Released in May 2012,  “Liquid Markets: Assessing the Case for U.S. Exports of Liquefied Natural Gas” is the result of a year-long study by a Task Force of independent natural gas experts. The Task Force used a two-pronged approach to look at the situation. First, would increased LNG exports even be feasible? And if they were, what would the implications be for the United States and the world?

The 47-page paper (it sounds more intimidating than it is, trust me) lays out the entire review and analysis process used before making final conclusions. The study addresses areas ranging from resource availability to human capacity to domestic implications for the price of natural gas. They also looked at environmental concerns associated with natural gas production. Some notable findings:

  • “A number of studies by national laboratories, academics, and other analysts…[conclude] that the life-cycle emissions of shale gas used for power generation are still roughly 50 percent of those from coal” (p. 7)
  • “The USGS has found that any seismic activity resulting from fracking is “almost always too small to be a safety concern” (p. 7)
  • “While several studies are ongoing into the effects of shale gas production on the environment, there has been no conclusive evidence found to date that links the practice of fracking to ground water contamination or increased seismic activity” (p 10 – emphasis added)

After analyzing the feasibility for exporting LNG, the Task Force turned its attention to implications both domestic and global before giving their final recommendations.

What did they conclude?

  • Exports are feasible.
  • Domestic natural gas prices will increase modestly.
  • A limited impact on macroeconomics or jobs.
    • However, increasing domestic natural gas production will increase employment for oil and gas producers as well as the demand for manufacturers of production equipment, and gathering and transportation sectors.
  • Limited environmental impact.
  • Potential for positive foreign policy impacts from U.S. entry in the global gas market.

And what did they recommend?

  • The government should neither prohibit nor promote LNG exports.
  • The capping of LNG exports would distort markets and possibly have unintended consequences.
  • The U.S. has an interest in continuing to promote free trade.

So back to the original question:

Do you think the United States will move towards exporting natural gas?

The answer seems to be, for now at least, to wait and see. There are several companies applying to export LNG and the Brookings Institute has confirmed that with the current situations, it can be done.

One thing’s for sure – if Marcellus Shale is starting an energy revolution in the United States, exports will only continue to change the dynamics of energy policy across the world.

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