The Senate Energy Committee held its first meeting of the new Congress. It wasted no time in discussing one of the most controversial issues the committee will tackle this session – exporting liquefied natural gas.
Some hope exports from the Lower 48 could lead to more exports from Alaska.
The new chairman of the Senate Energy Committee, Oregon Democrat Ron Wyden, has been skeptical of exports … fearing what may happen to domestic prices … and what that means for major consumers.
“Instead of a manufacturing renaissance, major gas consumers could find themselves hit hard with energy price hikes to enforced, to sideline job-creating efforts,” Wyden says.
Wyden wasn’t appeased by a Department of Energy study that found exporting LNG would lead to a net-benefit for the U.S. economy.
That’s a view echoed by Dow Chemical CEO Andrew Liveris, who testified before the committee.
“One study does not make a strategy. One study does make the decision. I think we have lots of import decisions, not the least of which is to make sure we have responsible supply,” Liveris says.
A costly supply matters to Liveris – he says his company buys more gas than many countries. And his chemicals end up in all sorts of products. He says they add value to every facet of the economy.
“Natural gas liquids should not be shipped overseas and burnt in Japanese cooking ovens. It should be kept home,” Liveris says.
The Department of Energy is weighing about a dozen export applications from the Lower 48. Nobody at the hearing would guess how many would win approval.
Senator Lisa Murkowski, the committee’s top Republican, asked the panel – and all demurred.
Senator Wyden says it’s time to reexamine the nation’s natural gas laws … they’ve been on the books for decades – since well before exports were being considered. But Senator Murkowski says any new process cannot impose too many burdens on industry.
She noted the long-standing regulatory process through the Department of Energy.
“The debate on this issue has been on the impacts of domestic prices and supply, but I think we also need to include within this discussion an understanding of the role the market forces will play, not only domestic prices, but on the number of projects that may be built,” Murkowski says.
Those projects could produce a glimmer of hope for Alaska’s producers, says Larry Persily. He’s the federal coordinator the Alaska natural gas pipeline.
“The approval of lower 48 export projects is going to give you reason to believe that if and when the time comes that an Alaskan project applies for export authority, it too would be granted approval by the Department of Energy,” Persily says.
Because, Persily says, it’s only fair if every state can export.
But he urges caution.
“The export approval is one piece of the package. You need U.S. Department of Energy approval. You need a Federal Energy Regulatory Commission certificate for the liquefaction plant. And if there’s a pipeline connected to it, you certainly need financing. You need buyers. This is just one piece of it,” Persily says.
And the largest hurdle to more exports from Alaska is the sixty-five billion dollars it could take to build a pipeline from the North Slope to the non-existent liquefaction plants at tidewater.