The People of America's Oil and Natural Gas Indusry

Please, Let Us Buy LNG From America

Mark Green

Mark Green
Posted March 25, 2014

Because Lithuania has a front-row seat to the current Ukraine-Russia crisis, the appearance of the country’s energy minister at a Senate hearing on U.S. liquefied natural gas (LNG) exports was especially timely. Jaroslav Neverovič had a pretty simple message to the United States: We need U.S. natural gas.

Neverovič probably was the most anticipated of the witnesses at the Energy and Natural Resources Committee’s hearing, the first led by Sen. Mary Landrieu, the panel’s new chairman. Neverovič:

“At present, we are completely – 100 percent – dependent upon single supplier of natural gas and, as a result, are forced to pay a political price for this vital energy resource. Lithuanian families and businesses pay 30 percent more for natural gas than citizens in other European countries. This is not just unfair. This is abuse of monopolist position.”

The minister said while Lithuania is taking steps to achieve energy independence, it needs help:

“… let me also be 100 percent transparent. I am also here to plead with you and your colleagues to do everything within your power to help us achieve that objective by expediting the release of some of your abundant natural gas resources into the world market, especially to those nations beholden to a monopolistic supplier. The United States, with your enormous natural gas resources and highly developed infrastructure, has the kind of liquid market that Europe is trying mightily to achieve.”

The plea was compelling and was supported by testimony from other speakers invited by the committee. David Montgomery of NERA Economic Consulting, which studied the potential impacts of LNG exports for the U.S. Energy Department in 2012, said U.S. LNG exports occur because there is enough natural gas to supply domestic needs and overseas buyers – and that U.S. exports would impact Russian natural gas domination in parts of the world:

“… we estimate that in the next 5 years, U.S. competition could drive Russia’s revenues from natural gas exports down by as much as 30%, and in the longer term could cut those revenues by as much as 60%. Since energy exports are the mainstay of the still inefficient and lagging Russian economy, this is a penalty with teeth.”

Former State Department energy official David Goldwyn argued for Energy Department approval of pending U.S. LNG export projects:

“The U.S. can be a strategic supplier to the global gas market. While our government does not dictate where that supply will go, it does control how fast we will connect to the global market. The Natural Gas Act has inadvertently put the friends and allies who need us most at the back of the line. The process for reviewing exports of LNG to countries we do not have free trade agreements with has proven to be cumbersome, and potentially out of sync with commercial realities.”

More Goldwyn:

“The crisis in Ukraine should cause us to think anew on this process and see if we can leverage our natural gas bounty to help our allies by accelerating the consideration of export applications so that they can plan for the day when they can reduce their reliance on Russian gas or on the oil-linked prices that are crippling their economies. The uncertainty that results from this process is a result of the opaqueness of the process and there is no clear timeline for the approval or denial of projects. … The U.S. could minimize this uncertainty by deeming exports of natural gas to be in the national interest, regardless of whether their destination is to FTA or non-FTA nations.”

While it’s good the Energy Department approved a seventh LNG export application, more than 20 remain in a holding pattern. Also on hold: domestic job creation and economic growth, impetus for new energy development here at home and a serious signal – to Lithuania and others around the world – that U.S. energy is on the way. API President and CEO Jack Gerard, writing for the National Journal’s Energy Insiders blog:

By accelerating the approval process for LNG export applications, the Department of Energy can send an immediate stabilizing signal to world markets and bolster our allies. Bringing more diversity and reliability to Europe’s energy supply would help alleviate future energy security risks for nations that rely on a single supplier for 70 to 100 percent of their natural gas. … The issue of LNG exports is a critical test that will determine whether the United States will embrace our role as an energy superpower or sit on the sidelines. We should not waste the opportunity to create jobs and grow our economy while exerting a positive influence on the geopolitical landscape.

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.