Industry blasts US DOE analysis on expanded US LNG exports
Expanded US LNG exports would harm both the public and the environment, a long-awaited analysis by the US Energy Department (DOE) found Dec. 17.
"Today's publication reinforces that a business-as-usual approach (to LNG exports) is neither sustainable nor advisable," Energy Secretary Jennifer Granholm said in a statement.
Wholesale consumer prices could jump by more than 30% if the US continues with "unfettered exports" of LNG, Secretary Granholm said.
She noted that DOE's analysis found a "triple-cost increase to US consumers from increasing LNG exports." That includes higher domestic price of the natural gas itself, increases in electricity prices, and the increased costs for consumers from the pass-through of higher costs to US manufacturers, particularly energy-intensive industries.
The report follows a pause on US government approval of new LNG export projects announced by President Joe Biden in January (OGJ Online, Jan. 26, 2024).
Increasing US LNG exports
US LNG exports have surged in recent years in Europe and Asia following Russia’s invasion of Ukraine in 2022. The Biden administration ordered to study to determine if greater LNG exports were in the nation's interest.
The US's total LNG operating capacity currently stands at 14 bcfd, but DOE has already authorized a three-fold increase to 48 bcfd. The pause, which President-elect Donald Trump said he would reverse on his first day in office, only affected projects that had not already been approved.
In addition to boosting prices, an expansion of LNG exports would increase greenhouse gas emissions even with the use of carbon-capture technology, the study found.
"Special scrutiny needs to be applied toward very large LNG projects," Granholm said. An LNG project exporting 4 bcfd – considering its direct life cycle emissions – would yield more annual greenhouse gas emissions by itself than 141 of the world's countries each did in 2023."
Increased LNG exports could also threaten US security, the report said. “While Europe has been the primary destination for US LNG from 2016 to present, global demand and the destination of US LNG in the future is less certain."
Because most of Europe is moving to reduce fossil fuels, including natural gas, to tackle climate change, additional future LNG exports would likely flow to Asia, where demand is expected to surge in the coming decades.
Demand in China – already the world’s largest LNG importer – is slated to nearly double between now and 2030. Chinese entities have already signed several contracts with operating or proposed US LNG projects, indicating that imports would grow even more through 2050.
As a result, "any sound and durable approach for considering additional authorizations should consider where those LNG exports are headed, and whether targeted guardrails may be utilized to protect the public interest," Granholm said.
Oil, gas industry response
Some lawmakers, as well as the LNG, offshore, and natural gas industry blasted the report.
Sen. Joe Manchin (D-WVa), chairman of the Senate Energy and Natural Resources Committee, vowed to hold hearings in the coming weeks.
"Let me be crystal clear: America’s LNG policy should be based on facts, not politics. The indisputable facts are that, to date, America's LNG production has strengthened our economy, created good-paying jobs, supported the energy needs of our allies around the world, and helped reduce global emissions," he said in a statement.
Mike Somers, president of the American Petroleum Institute, added that export LNG to allies drives significant US economic growth and a reduction in the US trade deficit.
"Outdated arguments against LNG no longer align with today's energy reality," added Erik Milito, president of the National Offshore Industries Association. "The [Biden] administration is recycling the same old, tired political talking points from a decade ago, which have been shown to be completely inaccurate."
He noted that despite US LNG exports hitting record levels in 2023, US natural gas prices saw a 62% reduction.
Charlie Riedl, executive director of the Center for LNG, said LNG remained a "vital tool for countries looking to displace dirtier fuels" such as coal to reduce greenhouse gas emissions.
The study has a 60-day comment period.
Cathy Landry | Washington Correspondent
Cathy Landry has worked over 20 years as a journalist, including 17 years as an energy reporter with Platts News Service (now S&P Global) in Washington and London.
She has served as a wire-service reporter, general news and sports reporter for local newspapers and a feature writer for association and company publications.
Cathy has deep public policy experience, having worked 15 years in Washington energy circles.
She earned a master’s degree in government from The Johns Hopkins University and studied newspaper journalism and psychology at Syracuse University.
