The People of America's Oil and Natural Gas Indusry

100 Days: Energy Exports Strengthen U.S., Boost Allies

Mark Green

Mark Green
Posted February 13, 2017

One benefit from the renaissance in U.S. energy production is the new capability to export American oil and natural gas – the mere discussion of which reflects the sea change in our country’s energy outlook.

Consider: Just a few years ago there was great concern about growing U.S. dependence on imported crude oil. And because of declining domestic natural gas production, it was thought the U.S. would have to build import terminals to accept liquefied natural gas (LNG) shipped in from other countries. Both signaled U.S. energy scarcity and weakened prospects for the future.

Today, thanks to surging domestic output, exporting oil and gas not only is possible, it’s plausible – with clear benefits for the economy, domestic production, allies abroad and America’s standing in the world.

A new era of U.S. energy exports is under way. The United States started freely trading crude oil in January 2016, following congressional legislation to end a 1970s-era ban on exports. The same month the first cargo of U.S. LNG produced from shale left Cheniere Energy’s Sabine Pass export terminal. Last month, export volumes from Sabine Pass reached a record 1.476 billion cubic feet of gas equivalent, according to Platts Analytics. Exports of LNG and crude oil both offer multiple economic benefits.

A study by ICF International projected that by exporting crude oil the U.S. economy could gain up to 300,000 jobs in 2020, with the economy increasing by $38.1 billion. The same study projected higher U.S. crude production under an exports scenario, stimulated by access to overseas demand for light sweet crude from the Bakken and other regions:

crude_output_exports

The early results are promising. The U.S. Energy Information Administration (EIA) reported that the number of countries buying American crude had increased sharply over 2015 and 2014 (when major restrictions on exports were in effect).

crude_exports_destination

Further, significant domestic fuel cost increases predicted by some opponents of lifting the export ban haven’t materialized – in line with the projections of most major studies.

The situation with LNG exports is a little different because they weren’t banned as crude exports were. Rather, declining domestic production was pushing the U.S. toward importing large volumes of natural gas to meet needs here at home. The shale energy revolution changed that. Modern hydraulic fracturing and horizontal drilling in American shale deposits allowed companies to increase natural gas production 50 percent over the past decade:

natgas_output   

Now, there’s an LNG export opportunity, one another ICF study projects could contribute up to 452,000 jobs nationwide up to 2035, while adding $73.6 billion annually to GDP.

Beyond the job and economic benefits, exporting U.S. LNG will help allies overseas – especially those seeking more options in terms of LNG supply – in particular, countries in Central and Eastern Europe, who’ve seen energy used as a weapon in a market dominated by the Soviet Union and now Russia. Maros Sefcovic, the European Union’s energy chief, told the Wall Street Journal earlier this year:

“Like shale gas was a game changer in the U.S., American gas exports could be a game changer for Europe.”

Vytautas Grubliauskas, mayor of Klaipeda, Lithuania:

“U.S. LNG is more than just about gas. It’s about freedom.”

Key for the United States is to implement policies that strengthen U.S. competitiveness in the global LNG market. The International Energy Agency projects the U.S. will become the world’s third-largest LNG supplier in five years, but other nations are vying for market share, too. Though the Cheniere terminal is up and running and others are expected to come online in the next couple of years, as of December 2016 more than 20 U.S. projects awaited approval and more than half of them were sent to the U.S. Energy Department in 2014 or earlier.

With new crude exports and growing capacity to export LNG, the United States is just now discovering its potential as a global energy supplier. It’s time to complete the equation by expediting federal approvals for LNG export facilities so that the U.S. can be fully competitive with other suppliers around the world.

ABOUT THE AUTHOR

Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.