Tuesday, March 12, 2013

Major Differences Continue On Pros & Cons Of LNG Exports

Mar 12: The Center for International Environmental Law, Clean Water Action, Earthjustice, Earthworks, Environment America, Friends of the Earth, League of Conservation Voters, Sierra Club, and The Wilderness Society have sent a joint letter to the President strongly pushing for a "timeout on natural gas exports until critical national economic, environmental, and trade concerns are thoroughly analyzed and carefully addressed."

    The letter to the Obama Administration comes following the recent public comment period to the Department of Energy (DOE), who commissioned NERA Consulting to conduct a study of the impacts natural gas exports would have on the nation's economy [See WIMS 12/7/12]. DOE is currently reviewing proposals for 16 export facilities.  If all of these facilities were approved and developed, they would export a volume of gas equal to almost half of the natural gas currently produced in the US. Sierra Club and a number of allied groups also filed extensive technical comments on the NERA economic study, stating it is incomplete, extremely flawed, and favors the interests of dirty fuel investors over those of the majority of Americans.

    In the letter to the President, the groups highlighted shared concerns that natural gas exports will raise domestic energy prices, disproportionately harming the middle class and manufacturing, while further exacerbating the climate crisis and leading to more dirty and dangerous fracking and drilling on our nation's lands.  

    The groups indicated in a release that the expansion of drilling and fracking "will further pollute our air, water and put the health and safety of our communities at additional risk.  Expanded drilling will also substantially increase emissions of methane, which is a powerful climate disrupting pollutant that puts the public at risk of worsening climate change." They said in spite of the many environmental risks, however, DOE has failed to undertake a comprehensive analysis of the national environmental impacts that exports and increased natural gas production would create.
    In addition, they said the US is currently negotiating a new trade agreement, the Trans-Pacific Partnership (TPP), with ten nations across the Pacific Rim. Additional countries are considering joining the pact, including Japan--the world's largest natural gas importer. They said the agreement, in its current form, would leave the Administration unable to condition or deny export licenses to "hungry international gas markets" in TPP countries, even if those exports would harm public health and the US economy.
    In light of the risks and the deficiencies of the DOE's oversight and review process to date, the group letter urges the Obama Administration to thoroughly study and diligently address the economic, environmental, and trade aspects of gas exports before making any final decisions on  proposed export terminals.
    The concern about LNG exports is not limited to environmental groups. In December 2012, following DOE's release of the NERA report, Dow Chemical Company's chairman and chief executive officer Andrew Liveris issued a release saying, "The report issued by the DOE on liquefied natural gas (LNG) exports is flawed, misleading, and based on outdated, inaccurate and incomplete economic data. The report fails to give due consideration to the importance of manufacturing to the U.S. economy. Manufacturing is the largest user of natural gas in the U.S., and creates more jobs and more value to the U.S. economy from natural gas than any other sector. The value of every unit of energy used by the manufacturing sector is multiplied by as many as 20 times from the production of thousands of high value products though the value chain. Compare this to the 1-time value created by exporting energy as liquefied natural gas. Furthermore, for every manufacturing job created on the factory floor 5-8 more are created in the larger economy."

    Liveris continued, "The report also fails to consider the tremendous competitive advantage that affordable, abundant domestic natural gas offers to the nation. Instead, the report offers the baffling conclusion that the U.S. would be better off using its domestic natural gas advantage to fuel growth and jobs in other regions versus strengthening the U.S. economy through manufacturing and benefiting consumers with lower energy costs. Industry has announced over 100 capital investments representing over $90 billion in spending and millions of new jobs predicated on abundant and affordable natural gas, none of which were captured in this report. Unfortunately, policy makers have been given a flawed report that overlooks vital dynamics, including a manufacturing renaissance that is already underway and much needed by this country."

    Dow has joined a recently-formed group called America's Energy Advantage (AEA), whose members also include the American Public Gas Association, Alcoa Inc., Eastman Chemical, Nucor Corporation, and Celanese Corporation. Today (March 12, 2013), AEA released a report from Charles River Associates (CRA) which they said adds to the growing list of studies that warn against the dangers of unrestricted exports. AEA said DOE should use the to "overcome the rebuttable presumption for LNG exports created by the Natural Gas Act." DOE is required by the Natural Gas Act to determine if exports of LNG are in the public interest and these data from CRA are designed to help the Department make these decisions, and overcome the "rebuttable presumption" contained in the law.

    Peter Huntsman, President and CEO of Huntsman Corporation said, "The U.S. government must ensure that we can meet the present and rapidly growing future demand for natural gas in our country before we launch blindly into massive exports of LNG. The data in this report quite clearly indicates that our nation has much more to gain from using this abundant resource to manufacture value-added products, than from merely exporting this resource as LNG." AEA's position is counter to other major industry associations including the U.S. Chamber of Commerce and National Association of Manufacturers (NAM) who are actively supporting increased exports. On January 18, Dow Chemical Company withdrew its membership from NAM over the issue [See WIMS 1/22/13].
    The Chamber's President and CEO Thomas Donohue's said, "We are now in a position to export liquefied natural gas and coal, thus reducing our trade deficit and bringing billions of dollars into the United States. The abundance of affordable natural gas is attracting good manufacturing jobs back to America, particularly in the chemical and steel industries. All of this adds up to a lot of jobs, growth, improved national security, and more revenues for government." [See WIMS 1/16/13].    
    U.S. Representative Ed Markey (D-MA), Ranking Member of the Natural Resources Committee, has also questioned the NERA report and LNG exports in general. In December 2012, he released his own report and said in a letter to DOE, "I was disappointed to find fundamental flaws with the study that I fear may have led to conclusions that severely underestimate the negative impacts of large-scale natural gas exporting. Given the important role this study may play in determining U.S. natural gas export policy, I strongly urge that the study's methodology be reevaluated in some key areas, that the most recent projection data available be utilized in the model, and that the model be re-run and re-analyzed." He outlined what he called "major flaws." Rep. Markey introduced legislation in the 112th session, H.R4024, to put the brakes on these applications while a large-scale export policy is analyzed, as well as H.R.4025 to restrict the export of natural gas produced from America's public lands.
    On January 24, in an effort lead by Representatives Bill Johnson (R-Marietta, OH) and Tim Ryan (D-Youngstown, OH), 110 House Members (89 Republicans and 21 Democrats), sent a letter to DOE Secretary Steven Chu, urging him to allow America to be a major player on the world energy market by opening America's vast reserves of natural gas to the global energy marketplace. The Representatives said, ". . .we cannot rest until every person who needs a job has one. Exporting natural gas is a chance to provide that employment -- and is a promising development that we cannot afford to miss." [See WIMS 1/28/13].
    Access a release from the groups with links to the letter and technical comments (click here). Access more information on the Sierra Club's Beyond Natural Gas website (click here). Access a release from Dow Chemical (click here). Access a release from Rep. Markey (click here). Access the 7-page letter and analysis from Rep. Markey which contains links to referenced information (click here). Access legislative details for H.R.4024 (click here); and H.R.4025 (click here). Access an overview of the CRA report, a release and link to the complete report (click here). Access the AEA website (click here). Access a release from the U.S. Chamber (click here). Access a release from the Ohio Representatives and link to the letter with signatures (click here). Access a notice from DOE and link to the FR notice of availability; the EIA analysis; the NERA analysis; and a summary of LNG export applications (click here). [#Energy/LNG]
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