Monday, November 21, 2011

Exporting our Energy Future: Could 20% of the Domestic Natural Gas We Use Be Sold Overseas?

Following up on our Series on Ocean Energy, we now turn to LNG – and the problem of LNG Exports…
In case you missed them, check out the first two parts of this series of posts:

Last week, while the President was announcing his plans on offshore oil drilling for the next 5 years, the Senate held a hearing on one of the ugliest turns in US energy history – the rapid, unchecked, and unfortunate export of domestically-produced natural gas to overseas markets via LNG tankers and terminals.  (watch the webcast replay here)

The way the export of natural gas works is that a company must apply to the Department of Energy for permission to export, and they must say where that LNG would go – to a nation we have a free-trade agreement (“FTA”) with or to one we don’t (we have “FTAs” with about 15 nations). 

Right from the outset of the application phase, the current laws on exporting gas are stacked against the average American consumer.  If a company applies to the DOE to export gas to a country with which we have a free-trade agreement, the federal government automatically must grant the request.  There can be no analysis into whether this might be bad for the public.

If a company applies to export to a nation the US does not have a free-trade agreement with, the DOE must presume that exports are in the best interests of the public, and it’s up to the DOE to “rebut” this presumption if they have a ton of evidence.  There does not seem to be a good mechanism to test whether the DOE is performing its due diligence in reviewing this presumption.

Under the harsh lights of a Senate Hearing Room, a Department of Energy representative testified that the federal government DOE is “presently” considering four applications to export domestically produced LNG to nations that the US does not have a free-trade agreement with.  A fifth application has already been approved.  Taken together, if approved, these export licenses would authorize the export of up to 6.6 Billion cubic feet of domestically-produced gas every day – which, according to the DOE export, “represents 10 percent of total current domestic natural gas daily consumption in the United States.” 

To make matters worse, the DOE has already authorized exports from 5 LNG facilities for trade with Free-Trade-Agreement nations, at the same bulk quantity of 6.6 Billion cubic feet per day.  (monitor the DOE export/import applications here)

Thus, within a few months (when these four pending applications are approved), the DOE will have allowed the export of up to 20% of our daily US consumption overseas – without having studied whether or not this will affect the price of gas for US consumers, businesses, and industries.  

That’s right, according to the testimony from the DOE, “In order to address the potential cumulative impact of a grant of the pending applications, DOE has [just recently!] commissioned two studies…to address the impacts of additional natural gas exports on domestic energy consumption, production, and prices, as well as the cumulative impact on the U.S. economy, including the effect on gross domestic product, jobs creation, and balance of trade, among other factors.  We anticipate that these studies will be completed in the first quarter of calendar year 2012.” (see the testimony here)

Put another way, two out of every ten units of gas used in the USA could be diverted to overseas markets soon, and the DOE is just now starting to look to see whether that’s a good thing or not. 

It is patently NOT good governance to blindly approve energy export applications without seeing whether it will be detrimental to the US economy.  In an era where the goal of becoming energy independent is at the fore of our national psyche, exports should be banned, or at the least questioned thoroughly (and only allowed if a substantial need is shown), not automatically approved. 

Instead of using plentiful and cheap gas produced in the US to wean us off of oil, or to help us transition to cleaner energy futures, gas is being sold to the highest bidder (usually European and Asian markets), to the detriment of the US. 

Finally, in another ugly tidbit of information, energy experts at the Senate Hearing testified that most of the companies that own our burgeoning “shale gas” reserves are foreign-based corporations.  Additionally, these are some of the same companies leading the charge to export our US-produced natural gas.  Thus, we have a system in place right now that has allowed foreign companies to come into American backyards, buy land and gas, and get authorizations to export it from the US.  And while these companies are pushing for LNG export applications, they admit that it will drive US gas prices higher (see here, toward end). 

Clean Ocean Action has been working on LNG issues for years – from imports and import facilities to this export issue.  Stay tuned for more information and COA action to stop energy companies from stealing our clean energy future.

Up Next: The US Is Exporting Vast Quantities of Oil Products? Yes we are - and it's driving up gas prices.

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