|Obama Administration Says No to Full Environmental Study of LNG Exports
The Obama Administration is blocking a comprehensive environmental study on the impact of exporting massive quantities of liquefied natural gas, or LNG, on the grounds that new gas drilling induced by the exports is not “reasonably foreseeable.”
Meanwhile, the U.S. Department of Energy is resisting calls by Dow Chemical and other manufacturers for a more clearly defined and transparent DOE process for determining whether proposed LNG export projects serve the “public interest.”
Both the DOE and the Federal Energy Regulatory Commission face mounting pressure to evaluate the economic and environmental consequences of licensing LNG export facilities. Since the agencies licensed an LNG export terminal in Sabine Pass, La., in 2011, 19 other applicants have lined up with licensing requests.
Sensitive to the potentially huge cumulative impact those projects could have on the U.S. economy, the two agencies suspended approvals pending a two-part economic study by the Energy Information Agency and a private contractor, NERA Economic Consulting.
Both analyses are now finished, and Christopher Smith, a deputy assistant secretary of DOE for oil and gas, testified March 19 that LNG export applications would be considered on a “case-by-case basis” in light of their economic conclusions, which have been sharply criticized.
Consideration of the toll LNG exports have on the environment is still up in the air. “I will be unable to comment today on … the appropriate scope of environmental review,” Smith added.
Independent studies predict that unfettered LNG exports will drive up the domestic price of natural gas, spur a boom in fracking shale formations and cause a major transfer or wealth from consumers and energy-dependent industries to the natural gas industry and its investors.
While NERA, the DOE’s private contractor, has not disputed those points, its December 2012 report asserts that aggressive LNG exporting would be a net positive for the U.S. economy. “Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased,” NERA wrote in its policy-driving report.
Response to NERA’s conclusions have been broad and intense. Potential LNG exporters applaud it, but many of the 188,000 comments it triggered were negative.
For example, John Detwiler, an engineer from Pittsburgh, wrote that none of NERA’s scenarios “take a realistic view of the swings in gas supply, demand and pricing in the real world.” Detwiler also charged that NERA has a “consistent public record of advocacy against environmental protections and promoting denial of climate change” and that its lead author, W. David Montgomery, has publicly opposed carbon emission controls and DOE investments in green energy.
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