Posted July 25, 2013
Senate Energy and Natural Resources Committee Chairman Ron Wyden, with some on-target remarks to a forum on surging U.S. shale natural gas production hosted by the Bipartisan Policy Center on Thursday:
“We are in what I’ve come to describe as an economic Olympics, and winning is all about creating the most high-skill and high-wage jobs you can. … In this economic Olympics the American economy gets out of the blocks with a very strong lead because of natural gas. So what we want to do is put in place bipartisan policies that help us extend that lead in the natural gas field.”
We agree. The shale revolution in the U.S. – built on the confluence of vast resources, technology, innovation and entrepreneurial opportunity – has experts talking about ample natural gas to meet domestic needs for a century or more while also supplying friendly buyers overseas, adding wealth back into the U.S. economy.
Let’s talk about that last piece, exporting shale gas as liquefied natural gas (LNG). Here, Sen. Wyden treads gingerly, telling the BPC audience he wants to “make sure we get this right.” Certainly, industry wants that as well. Which is why it has developed specific standards for natural gas operations, is committed to transparency and is earning the trust of communities and individuals by listening and responding to local needs.
Yet, on LNG exports – to borrow the senator’s Olympics analogy – we shouldn’t blow the big lead we currently enjoy. If America is the Usain Bolt of shale natural gas, several body lengths ahead of everyone else, the last thing we need to do is to peel off onto the track’s infield and let others catch up while we debate policies and roles that are best left to the private market and the laws of supply and demand.
We know the stakes on LNG exports. Estimates of the U.S. natural gas resource base dwarf projections for U.S. LNG exports and total U.S. consumption over the next 20 years:
Meanwhile, studies depict broad economic benefits to the United States from LNG exports. An ICF study projects net job growth of 73,100 to 452,300 between 2016 and 2035, with GDP gains at about $15.6 billion to $73.6 billion, depending on the level of exports. ICF estimates cumulative economic growth of $720 billion over that same period. Another study, by NERA Economic Consulting for the Energy Department, found significant benefits to the U.S. economy over all export scenarios it examined. NERA Senior Vice President David Montgomery spoke at the BPC event:
“We found that under all of these conditions … there were net benefits to the U.S. economy in all the scenarios we looked at. That means two things. One of them is that the more exports DOE allows, the larger the benefits to the U.S. economy. And second, that under every particular set of conditions that we looked at, unlimited exports gave the U.S. the greatest benefit.”
Montgomery said the economics of the global marketplace suggest the U.S. shouldn’t overthink its shale natural gas abundance in terms of the LNG export issue:
“In some ways the pursuit of this notion of where is the ‘sweet spot’ is a will-o-the-wisp, and I’ve gone through many efforts to try to figure out why there is so much concern about our exporting too much. … The question is where the government is trying to make something happen that would not happen without the affirmative action of government. … But natural gas exports are not something which are being created by government action. They’re something that will happen. The market itself will determine quite well (the proper balancing point). … In this case all we really need to do is get out of the way.”
Bear with one more reference to an Olympic race: On LNG exports, it’s our race to lose. We have ample resources, the technologies, the skilled work force and the investment base to fully supply our domestic needs and be a leader in the global LNG market. The laws of supply and demand can and should be allowed to function on this valuable commodity. Experts like Montgomery are certain they will and that this will ensure broad benefits to the U.S. in jobs and economic growth.
But the LNG race is global. Others are in the race. While it’s good that the Energy Department granted its second export license to a U.S. project in May, many others are still waiting for government approval. The Energy Department should approve them without delay so that the U.S. can realize its full energy and economic potential. Or, as Sen. Wyden said, “win the gold.”
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.