Congratulations to the Federal Energy Regulatory Commission (FERC), which regained its quorum last week with Senate confirmations of Rob Powelson and Neil Chatterjee. Meanwhile, the White House officially nominated Kevin McIntyre and Richard Glick for FERC positions last week. If confirmed, they’ll fill out the five-member panel – four new commissioners joining Cheryl LaFleur, who has been FERC’s lone member for a month.
All of this comes not a moment too soon. According to a POLITICO analysis, the agency has a backload of projects worth about $13 billion, including a number of pipelines to carry natural gas out of shale plays in Pennsylvania, Ohio and West Virginia. The projects could generate more than 23,000 construction jobs, POLITICO estimates. Welcome back, FERC – now, please get to work!
FERC’s restored quorum is a good time to remind everyone how critically important infrastructure is to America’s ongoing energy renaissance. This country’s abundance of natural gas and oil – unlocked by modern hydraulic fracturing and horizontal drilling – has made the U.S. the world’s leading gas and oil producer, grown the economy, benefited consumers and boosted American manufacturing while playing an important role in U.S. progress on air quality and climate. These benefits are brought by a natural gas and oil industry that is, itself, an economic dynamo: 10.3 million jobs supported, $1.3 trillion generated to the national economy and economic impacts provided in all 50 states.
Infrastructure – from natural gas and oil pipelines to gathering, processing and storage facilities to export terminals and more – is essential to fully write America’s energy story, to ensure energy gets where it’s needed.
This includes the export of natural gas, which helps friends and allies overseas while also helping stimulate domestic production. Exporting liquefied natural gas (LNG) requires multi-million dollar facilities that FERC helps oversee. LNG exports strengthen the U.S. standing in global markets while advancing security goals that include increasing natural gas supply diversity for our allies. From time to time, some sound alarms about potential export levels and possible domestic price impacts. Some have claimed that exporting more LNG could have negative climate impacts. These are false alarms.
First, analysis by the Energy Department, Brookings, ICF International and others all pointed to positive net economic impacts from exporting U.S. LNG – jobs, growth and stimulus to increase domestic supply. This conclusion is based on America’s abundant natural gas reserves and the fact that actual production has exceeded the government’s output projections. A major contributor is increasing natural gas production efficiency – lower rig counts yet rising output.
Another way to look at it: A 2016 IHS study found that the U.S. Lower 48 and Canada have about 1,400 trillion cubic feet (Tcf) of natural gas that’s recoverable at a current Henry Hub break-even price of $4 per million Btu (MMBtu) or less – a 66 percent increase over 2010 estimates.
Of that total supply, IHS estimated that 800 Tcf is recoverable at less than $3 MMBtu, represented by the green area. The little white box in the upper left-hand corner is actual U.S. natural gas consumption in 2015, 27 Tcf. The point is the U.S. has ample natural gas to supply both the domestic market and overseas demand. As we argued a few years ago– when some said the U.S. might export too much LNG – let the marketplace make that call, not the federal government.
As for climate, the increased use of natural gas is the primary reason U.S. emissions of carbon dioxide associated with electricity generation are at near 30-year lows. By exporting cleaner-burning natural gas, others around the world could see cleaner air, as the U.S. has experienced, and progress toward their climate goals.
The benefits of America’s energy renaissance are multiple, boosting the national economy, helping consumers and advancing environmental and climate progress. With construction of new or expanded infrastructure key to fully harnessing our domestic energy wealth, it’s good to see FERC again reaching full strength to play its role in the approval process.
By Mark Green
Originally posted August 7, 2017
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