USA: LNG EXPORT
Liquefied natural gas exports quickly took center stage at a June 19 US Senate Energy and Natural Resources Committee hearing to examine "how to harness a game-changing resource for export, domestic consumption, and transportation fuel."
Members and witnesses focused on the topic hours after the Federal Energy Regulatory Commission announced it had approved Cameron LNG LLC's plan to liquefy and export gas from its existing import terminal in Hackberry, La. (OGJ Online, June 19, 2014)
"We now have the opportunity to turn what would have been natural gas import terminals into export terminals, while ensuring US manufacturing will continue to be able to compete economically on global markets," Mary L. Landrieu (D-La.), the committee's chairwoman, said in her opening statement.
"I think it's time to move beyond the speculation and get to the nuts-and-bolts business of getting things done," Ranking Minority Member Lisa Murkowski (R-Alas.) said a few minutes later. "I have long advocated LNG exports. If I have one goal at this hearing, it is to establish there are reasons for optimism about DOE's procedural change, but there also are reasons for skepticism. The mechanics about licensing remain murky, especially for final timing."
Said Mark Udall (D-Colo.), "The ongoing crisis in Ukraine and Russia's announcement this week reinforced my belief that developing our gas resources is important not only to our domestic economy, but also in being able to help our friends overseas," who a day earlier introduced an updated version of his bill aimed at facilitating US LNG export application reviews (OGJ Online, June 19, 2014).
"I want to responsibly take advantage of our vast gas resource both for domestic consumption and for exports to global markets," he maintained.
But other committee members reiterated their concerns that aggressively allowing more US LNG exports might raise domestic gas prices so high that the recent US manufacturing renaissance would be halted. "Our policies on natural gas exports, transport, and use have a tremendous impact on consumers," said Tammy Baldwin (D-Wis.). "Discussions should fundamentally protect American consumers and give them a seat at the table."
"I appreciate there's a window of opportunity internationally, but we have 10 million people out of work in our country," added Debbie Stabenow (D-Mich.). "When we look at the incredible opportunity we have from this gas boom and compare it with what people in other countries have to pay, it's something we don't want to give up. From our standpoint, this is a huge competitive advantage."
Asserting that consumers are primarily concerned about prices, Martin Heinrich (D-NM) said, "There's a fair amount of consensus that the sweet spot will be where it's high enough to encourage production, but low enough to be good for consumers and encourage manufacturing growth."
Christopher A. Smith, the deputy assistant US energy secretary for oil and gas in DOE's fossil energy office who was among the 5 witnesses testifying at the hearing, responded, "This goes to the heart of the public interest decision we're dealing with. Price is an issue which gets a lot of our attention,"
"When we evaluated the first authorization we issued, we contracted the [National Economic Research Associates] study which looked at price and potential impacts on jobs and consumers," he said. "We also have to consider, in the public review process, comments from a broad range of stakeholders."
Another witness, Daniel J. Weiss, who directs the Center for American Progress's climate strategy, observed, "Right now, the Asian market's price is about 4 times ours, and the European market is about 60% higher than what we pay.
"Our price has helped gas become a substitute for dirtier coal and is helping protect children from respiratory diseases. We should consider what the domestic impact on jobs, wages, and health would be from more exports," Weiss said.
'Arsenal of energy'
Domestic energy abundance serves US foreign policy interests by turning the country into an "arsenal of energy" that is able to help friends and allies diversify from costly and dangerous dependence on suppliers like Russia and Iran, according to a third witness, Robert McNally, president and founder of the Rapidan Group LLC.
"In the case of gas, the striking swing of the US from future importer 10 years ago to future exporter now has weakened Moscow's ability to impose high, non-market based prices for gas in Europe," he told the committee. "In Asia, the prospect of LNG exports is already boosting Japan's bargaining position with LNG suppliers in its long-term contracts... I would want to aim right at Russia's pocketbook and deem every LNG export project in our national interest."
A fourth witness, Elizabeth Rosenberg, who directs the Center for a New American Security's Energy, Environment, and Security Program, said, "For all we can do, we won't change the fact that Russia will continue to be a very significant gas supplier to Europe
"We can encourage changes in pricing for gas and power in Europe, and export more LNG to diversify Europe's sources and let it negotiate for lower prices from Gazprom."
Exporting more LNG would deepen US trading ties with strategic states, including those in Europe and Northeast Asia, she testified. "It will bolster the US economy, improve the energy security of partners abroad, and allow the US to more effectively spur and support multilateral action to counter international security threats," Rosenberg said.
"With respect to LNG exports, time is of the essence," declared the fifth witness, America's Natural Gas Alliance Pres. Martin J. Durbin. Global demand is expected to increase 18-35 bcfd by 2035, while proposed new capacity outside the US is approximately 50 bcfd, he told the committee.
"Given the disparity between projected demand and the number of facilities being proposed worldwide, the window of opportunity for the US to get involved is narrow," Durbin said. "It's going to be the early movers who are going to have a competitive advantage in the global market."
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.