There’s a rift in Congress over whether the country should export its glut of natural gas. A new report released by the U.S. Department of Energy is bolstering the hopes of those who want to see more exports.
The report shows that controlled exports of liquefied natural gas would add revenue to the U.S. economy.
Fadel Gheit is a senior energy analyst with Oppenheimer. He says exports would increase profits of domestic gas producers.
“If it is managed well, I think it would be beneficial for the producer and it would encourage more supply. And it would have room for reasonably priced natural gas in the U.S. – competitive if I might add, compared to any other market in the world,” Gheit said.
Gheit said the report leaves some questions unanswered.
“How long it will take to get this program going. How much it’s going to cost. Will there be tax incentives? What the is the government role,” he asked.
The report did not examine Alaska’s export potential. The state already exports some Cook Inlet gas to Japan, and any increased North Slope production would ship to Asia, as well. Though, it would require a pipeline costing tens of billions of dollars to build.
There is some skepticism on Capitol Hill about how exports would affect domestic prices. And the report is unlikely to quell some fears. Oregon Democrat Ron Wyden, who will chair the Senate Energy Committee com January, has been vocally skittish of exports.
… Just the opposite of the top Republican on the Committee, Senator Lisa Murkowski.
“I think that works to incent additional production, which is good for other sectors, whether it’s the manufacturing sector. It’s good for jobs. It’s good for the balance of trade,” Murkowski said.
The report shows that large scale exports could force prices up as much as twenty-five percent – but the prices would still be cheaper than five years ago. Senator Wyden’s office issued a statement saying he’ll continue to question the Department of Energy over whether exports will increase costs to industries that rely on domestic gas – like chemical manufacturers.
The chemical industry is a major force in Louisiana … and so is the oil and gas industry. Democratic Senator Mary Landrieu says all industries would benefit from certainty.
“It might be helpful for Congress to make a statement that natural gas export is in the best, long-term interest of our country,” Landrieu said.
So far only one terminal in the Lower 48 has an export permit for LNG– in Louisiana. Analysts are now speculating the Department of Energy may now rule on the dozen or so pending applications for new ones.
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