The debate over natural gas exports from the US has broken out of the energy sector and begun to raise temperatures across the political spectrum, with a high profile Congressional hearing this week underlining the stakes at play in a Department of Energy policy decision on the economic standing of natural gas export projects.
Despite being painted as absolutely opposed to exports of domestically produced natural gas and its position as a leader in the manufacturing sector’s opposition to unrestricted approval of export projects, Dow Chemical actually favors exports to free trade partners but is concerned about the impacts of unchecked exports to non free trade countries, the company’s Vice President for Government and Public Affairs Kevin Kolevar told Breaking Energy in a recent briefing.
Read an analysis of the FTA versus non-FTA natural gas export proposals here.
The company is part of a new DC-based group called America’s Energy Advantage, which includes other major manufacturing organizations that see the use of natural gas to produce manufactured goods as a multiplier of the economic benefits of the “fracking boom.” They argue that a recent report from consulting group NERA commissioned by the Department of Energy failed to take into account the full economic impact of that manufacturing multiplier when recommending broadly in favor of export projects.
The NERA report is complex and lays out multiple scenarios, but Kolevar says that its general conclusions were overly favorable to the oil and natural gas sector and understated the potential harmful impact of unchecked exports on the US agricultural and manufacturing sectors, in addition to American consumers.
“We can craft a thoughtful policy,” Kolevar says, arguing that a more deliberate approach to the DOE determination should be taken. “We might be looking at significant increases in price and volatility,” he said, adding that the capacity of the natural gas supply to meet all of the growing demand components – industrial, power sector demand, transportation and exports to foreign countries – should be balanced when considering the issues surrounding natural gas in the US.
He said that Dow expects prices to rise over the medium-to-long term, but the high stakes in the DOE’s ultimate decision call for additional time for analysis.
Project developers gathered at the North America Gas Summit in Washington, DC in late 2012 said that delay had the potential to scupper expensive projects, as other countries rushing to develop their own natural gas production potential could sign long-term supply agreements first and leave late-arriving projects to flood the short-term market and drive down the economic feasibility of exports. The lack of hard-and-fast dates on determining federal government policy for natural gas export projects is actually a good thing, Kolevar said; if there is truly 100 years of natural gas supply in reserve, then there is no rush – and no obligation under the law – to get the economic impact determination set by a specific date.