Should the U.S. export its abundant supply of shale gas? Oregon Sen. Ron Wyden raised that question in a hearing Tuesday — his first since taking over chairmanship of the Senate Committee on Energy and Natural Resources.
It sparked a lively debate over the potential impact of proposals under review by the Department of Energy to build liquefied natural gas export terminals and pipelines. Two such terminals are proposed in Oregon.
Andrew Liveris, chairman of the Dow Chemical Company, argued for limits on natural gas exports. Liveris said shale gas is a particularly rich source of the chemicals U.S. manufacturers need to make everything from fertilizer to paint to laptops.
“America’s natural gas bounty is more than a simple commodity. It’s a once-in-a-generation opportunity for America to export advanced products, not just BTUs,” he said.
Liveris didn’t specify what level of exports he thought would be acceptable, but he argued that approving too many export proposals could drive up the domestic price of natural gas in the U.S. by linking it to oil prices.
“European and Asian natural gas prices are indexed directly to oil prices, which makes them up to five times more expensive than in the United States. So it’s very easy to see why other nations want our gas. They want to lower their prices. What’s harder to see is why would we be willing to do that, at such a potentially severe cost to the American consumer,” he said.
Several witnesses sharply disagreed with Liveris, testifying in favor of unrestricted natural gas exports. Ken Medlock with the Center for Energy Strategies at Rice University said exporting shale gas could create a more liquid international market for the commodity. Medlock said exports from the U.S. could also give European countries more leverage to negotiate with the Russia’s state-owned energy giant, Gazprom.
“No longer do they have a captive customer. Now they have to think actively about price and negotiate on their pricing terms, which basically changes their negotiating tactics, not only at the bargaining table for natural gas but also around other geopolicial interests, vis a vis Belarus, vis a vis Georgia,” he testified.
Ross Eisenberg with the National Association of Manufacturers said his group opposes limits on exports. He testified that gas production itself supports manufacturing by creating a demand for steel, cement, and machinery.
“We’ve got plenty of natural gas and we believe the free market can generally resolve any disputes over how the gas should be used. But if the federal government takes an overly prescriptive or reactive approach to permiting, regulation, or exports, then our natural gas-fueled renaissance will be over before it began,” he said.
The Department of Energy is reviewing 16 proposals for terminals and pipelines that would export natural gas, including two in Oregon: Jordan Cove LNG in Coos Bay and Oregon LNG in Warrenton.
Wyden said he does not think the Department of Energy had conducted a thorough economic study of the issue, and indicated that he favors exports with some limits.
“Let’s see if there’s an economic and environmental sweet spot where U.S. gas producers can make enough money to continue producing, and U.S. manufacturers have an affordable, stable supply of natural gas, and where the environment is not only protected, but actually benefits from greater use of natural gas and lower CO2 emissions,” Wyden said.
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