API: USA IS A SUPERPOWER
Press Conference on LNG Exports
Erik Milito, API Director of Upstream and Industry Operations
Wednesday, March 12, 2014
Good morning and thank you for joining our call today.
There's been a tremendous amount of talk recently about how and whether U.S. energy resources – and particularly whether the export of some U.S. energy products, such as liquefied natural gas (LNG) – can play a role in calming international energy markets and even bring pressure to bear in regions where energy resources and market power are wrapped up in diplomatic trouble spots, like the Ukraine.
As you may know, over the last few years, American innovations in hydraulic fracturing and horizontal drilling have unlocked vast energy reserves here in the United States.
We surpassed Russia as the world's top producer of natural gas in 2009. And, last year, the U.S. exceeded Russia as the world largest producer of oil and natural gas combined.
For the first time in generations, the United States is an energy superpower. And the world – especially Europe and countries like Russia, China, and India – is watching closely to see if American policymakers are ready to harness that power on the international stage.
We may not have control over what happens in other parts of the world, but we can control our decisions about how to utilize U.S. energy, and those decisions will have a major impact on the world around us.
Now is the time to build our energy infrastructure, expand exports, and lock in the economic and geopolitical opportunities that our energy revolution has created.
To do that, we need continued support from policymakers in Washington to build LNG export terminals.
With these investments, the EIA expects that America will become a net exporter of LNG by 2016. .
But first, the Department of Energy (DOE) must approve long-delayed LNG export permits to non-Free Trade Agreement nations.
There are over 20 pending applications, and only six have been approved since 2011. Each application represents a multi-billion dollar investment in infrastructure, as well as long-term investments in U.S. labor and materials.
To those who say these terminals will take time to build and suggest that lead time will diminish our ability to have a global energy impact, there are two responses.
First, market signals are incredibly powerful -- provided the market believes that we will do what we say we will do.
And second, what geopolitical crisis ten or twenty years from now will draw the same comments, if we stand by today and watch others seize the opportunity?
Already, we face rapidly-moving competition around the world. Over 60 non-U.S. facilities are currently planned or under construction, and those nations that act quickly to attract these investments will reap the rewards.
Our allies know U.S. exports will undoubtedly have an impact long before the first tanker leaves our shores, and they are eager to diversify their energy supplies with reliable, steady supplies from the United States.
Last week, the ambassadors for Hungary, the Czech Republic, the Slovak Republic, and Poland petitioned Congressional leaders to help expedite U.S. LNG exports as a means of protecting the stability and independence of Eastern Europe – a region where many nations rely on a single supplier for 70 to 100 percent of their natural gas.
By accelerating exports, we can strengthen the global energy market against future disruptions and send a signal to the world that the United States is ready to lead. Our growth as a major exporter would bring competition into the market and help ease the ties that bind our allies to any single supplier.
The huge growth in U.S. production has already helped to improve the leverage of our allies during contract negotiations. And even a small rise in U.S. exports could make a huge impact on markets where supplies are limited.
Being an energy superpower also has strong benefits for American consumers and the United States right here at home.
The U.S. Department of Energy commissioned a study by NERA, which concluded that LNG exports would yield net economic benefits across all scenarios.
The study also showed that concerns about domestic natural gas prices were unfounded. As NERA noted, "the market for LNG exports is self-limiting, in that little or no natural gas will be exported if the price of natural gas in the US increases much above current expectations." In part, that is because the cost of liquefying and exporting gas creates a natural price buffer, while multiple studies confirm that production will increase as the market expands.
More recently, the same firm issued an updated study to reflect the latest data from the Energy Information Administration (EIA). It concluded that LNG exports would add jobs and reduce near-term unemployment.
Already, the oil and natural gas industry supports 9.8 million U.S. jobs. And our ability to export LNG could add an additional 665,000 jobs in 2035, according to ICF. Exports will also reduce our trade deficit, increase government revenues, and grow the economy.
The only thing standing between America and a steady flow of jobs and capital are self-imposed bureaucratic restrictions. And the sooner we act, the sooner those benefits will flow – another reason why what we do today matters.
In recognition of this important issue, a growing number of U.S. policymakers are ready to act. Influential Democrats, House Speaker John Boehner, and Senator Jim Inhofe have all spoken out for exports. Senators Mark Udall, John Barrasso, and Mark Begich, along with Reps. Cory Gardner, Michael Turner, and Ted Poe have all announced work on legislation that would reduce barriers for the export of natural gas.
Some have proposed fast-tracking approval for NATO or WTO trading partners, and a report by the House Energy and Commerce Committee recommends immediate approval for all pending applications.
API welcomes the work Congress is doing to make LNG exports a priority. However, what we do today matters, and there's no reason that the Department of Energy cannot act now to approve all the pending permits.
The interests of the United States are served best by free trade, a position that U.S. trade representatives have championed in negotiations around the world. And we urge the White House to take the initiative and allow America to fully realize the benefits of being global energy superpower.
Now, I'd be happy to take your questions.
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BLOOMBERG - While Europe as a whole gets more than a third of its gas from Russia, that share is lower in the U.K., which receives the bulk of its fuel from North Sea fields and Norway. Still, Moscow-based Gazprom PJSC was the second-biggest supplier to major industrial consumers in the U.K. last year, according to Britain’s energy regulator Ofgem.
FT - of the six LNG tankers that have made deliveries into the UK so far in 2018 three have carried cargoes originally from Russia, leading to questions about whether Moscow was gaining a foothold in the UK gas market after starting up the Yamal LNG facility in Siberia late last year.
REUTERS - So far this year, two Yamal cargoes unloaded at British terminals for domestic consumption, accounting for about a third of Britain’s 2018 LNG imports after typical supplier Qatar pre-sold the bulk of its winter output to Asia last year.
REUTERS - U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.77 a barrel at 0753 GMT, up 6 cents, or 0.1 percent, from their previous settlement. Brent crude futures LCOc1 were at $64.62 per barrel, down just 2 cents from their last close.