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Bills Seek to Ban U.S. LNG Exports

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Rep. Ed Markey (D-Mass) on Feb. 14 introduced two bills that would ban exports of liquefied natural gas (LNG) from the U.S.

The first bill, North America Natural Gas Security and Consumer Protection Act, would prevent the Federal Energy Regulatory Commission (FERC) from approving new LNG export terminals until 2025.

The second bill, the Keep American Natural Gas Here Act, would require that gas produced from taxpayer-owned federal lands would have to be resold to U.S. consumers. The bill also stipulates that any gas pipeline for which a right-of-way has been issued to cross federal lands must offer that gas for domestic sale only.

"Low natural gas prices are a competitive advantage for American businesses and a relief for American families, and exporting our natural gas would eliminate our economic edge and impose new costs on consumers," said Markey. "This is America's natural gas and it should stay here in America."

Markey has filed an amendment on the transportation bill schedule for debate on the U.S. House of Representatives floor later this week that would prevent gas extracted from drilling from being sold to overseas markets.

The U.S. shale gas boom, which has unleashed a surplus of natural gas on the U.S. market, and depressed U.S. gas prices has prompted a number of companies that had previously built LNG import terminals to add liquefaction capacity at these facilities to take advantage of strong gas demand and prices in overseas markets such as Asia.

Discussions over the possibility of U.S. LNG exports have been taking place in the past few years. However, concerns over the impact of LNG exports on U.S. gas prices – and the environmental concerns surrounding hydraulic fracturing – have caused controversy.

In January, the U.S. Department of Energy reported that increased gas exports would result in higher U.S. gas prices. A report released last December by Deloitte reported that U.S. LNG exports would have a "modest impact" on U.S. gas prices.

The Sierra Club on Feb. 7 filed a formal objection with the U.S. Department of Energy against the export of natural gas from hydraulic fracturing, challenging facilities at Cove Point, Md., Sabine Pass, La. and Coos Bay, Ore.,

"Liquefied natural gas is not only the dirtiest and most polluting form of gas, but it also requires an increase in fracking; a process we know to be unsafe and dangerous," said Deb Nardone, director of Sierra Club's Natural Gas Reform Campaign.

While they are not marching on Washington, some chemical manufacturers also are opposed to U.S. LNG exports, as the ample supply of U.S. gas provides low cost feedstock, Alan Herbst, principal of New York-based Utilis Advisory Group LLC, told Rigzone on Wednesday. A number of companies that had build plants overseas, thinking costs would be cheaper, have now found gas in the U.S. to be far cheaper than Europe or other markets.

"Cutting a little gas production won't solve the problem" of too much gas, said Herbst of recent announcement by some companies that they would shut in gas production due to depressed prices. "We need to create more demand for natural gas." He noted that utilities that can switch to natural gas from coal are doing so.



Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Daniel | Feb. 29, 2012
Exporting natural gas from our country only serves to create more demand for much higher cost crude oil imports. The more crude oil we import, the higher our deficit gets. We pay $100/bbl for imported oil, yet we want to export natural gas which costs about $15/bbl equivalent. Meaning a barrel of oil produces 6 million BTUs of energy, and it takes 6 thousand cubic feet of natural gas to produce 6 million BTUs of energy. Thus barrel of oil equivalent (BOE) natural gas cost $15/BOE vs oil which cost $100/BOE. In 2011 (as per EIA) the average cost per barrel of oil was higher than previous years including 2008 and 2009. When we import 11.6 million bbls of oil per day (11.6 mbopd), we spend and send $438 billion per year overseas to countries that do not have our best interest in mind. It doesnt matter who we import oil from since it is a world market, thus the price of oil goes up due to world demand. If we can avoid sending excessive amounts of money overseas for ever increasing costs of oil which increases our trade deficit, than we should use cheaper American produced natural gas to reduce our trade deficit as well as help with national security issues since a number of these overseas oil exporting countries have no interest in America. The high cost of world oil is directly related to the recession we experienced recently. American produced natural gas can be used to produce cheaper energy for our country, and help with national security. 70% of the oil we import is used for our American transportation system. We do not have enough natural gas to to replace all the high priced oil we import, but we can lower the amount of oil we import by using natural gas to power portions of our transportation system. This has been done in several countries around the world, such as Brazil, Iran, etc in order to help their economies and/or their national security interests. Brazil converted their cars over to natural gas after the 1970s oil embargoes. Iran converted their cars over to natural gas due to their need to export their crude oil, then re-import refined gasoline. Much cleaner and much cheaper natural gas produced in America should be used in America versus much more expensive and more polluting foreign oil. It is really no different than the move to use Made in America products, versus products made overseas. It results in more jobs staying in America, and more jobs being created in America to produce our own natural gas. Exporting American LNG will NOT result in a net increase in American jobs. Just the opposite is true. Keep in mind that America uses 25 trillion cubic feet of gas per year (TCFG), yet we only produce 21TCFG per year (2011 EIA). Thus we are still importing natural gas from Canada to make up the shortfall. If we would utilize natural gas to replace oil for transportation and electrical power generation, our economy would be much better off. Many middle class Americans cannot afford $4-$5/gal gasoline, thus it impacts our economy, and it will bring on another recession. We will get to $4/gallon gasoline, then $5/gallon. By using natural gas where we can in our own country we will create many more jobs than if we export the natural gas as LNG. This is a no brainer folks providing that you get reliable information regarding the subject. Increasing American jobs, having cheaper energy costs, and improving national security will help essentially all Americans. Please get accurate information regarding this very important decision. Regards.

Mr. H. | Feb. 21, 2012
Yet, we export 20% of ethanol produced in the U.S. Go figure.

Bert | Feb. 21, 2012
Another ignorant democrat trying to destroy the oil and gas industry. If his pathetic argument is correct, then stop exporting anything.

Pete Miesch | Feb. 20, 2012
I think we have to build a Natural Gas Pipeline with Refueling Stations along every Interstate Pipeline. That will enable all trucks to start using Natural Gas as well as cars that would be manufactured to use the Natural Gas. If this were done, we would reduce the amount of imported oil and would create a tremendous number of jobs building and running the pipelines and refueling stations and car and truck manufacturers would all add a lot of employees. If we are not going to do this, then we need to let the Companies with excess gas sell their gas in the free market.

Barbara Saunders | Feb. 19, 2012
When I was practically a kid in knee socks, covering energy issues in the US Congress as a cub reporter, a non-partisan then, as now, Mr Markey would always stand up and say the STRANGEST things imaginable ... which, then as now, literally hurt my ears. A person neednt even weigh them out ... BTW, doesnt he look quite a bit like a cadaver now, and so I think are all his very peculiar views on almost everything ...

Alan | Feb. 18, 2012
Rep. Markey apparently has no concept of the founding principles of America, in particular the individual right to property. That gas is NOT "Americas" gas, it belongs to the individuals or companies who bought the land and produced the gas. He also shows a shocking ignorance of the harmful effects of economic protectionism. He should be removed from office ASAP to spare us his further bumblings. Save us, citizens of Massachusetts! You were once a leader in the struggle for freedom. Turn away from the dark side of collectivism and government control of the economy!

Bill Gnaedinger | Feb. 17, 2012
I am an environmentalist and a democrat. I also beleive in free market capitalism. This is one of the stupidest ideas that I have ever heard. Petroleum products are part of a global economic market and global problem, vis-a-vis rising co2 levels. Restricting export will not stop rising CO2, but will artificially raise problems and hinder free markets.

David | Feb. 17, 2012
Wow. As a foreigner looking in I have always been amazed, (and jealous) at the protection of property rights that the U.S. people have. The fact private individuals own mineral rights, and are free to develop them is something the majority of us do not have. Citizens in every other country accept that the government owns all minerals, and that development of them occurs only with government permission. This is an astonishing infringement on liberty, and I am in shock that the U.S. people would even allow the entertainment of such an idea. Who owns your property? You, or the government? Please U.S. citizens maintain your place in the world as the country where private property cannot be infringed upon.

Jack Reeve | Feb. 17, 2012
The ignorance of these people is astounding. "Liquefied natural gas is not only the dirtiest and most polluting form of gas, but it also requires an increase in fracking; a process we know to be unsafe and dangerous," said Deb Nardone, director of Sierra Clubs Natural Gas Reform Campaign. We have developed only a small portion of these vast natural gas reserves, only to find ourselves with collapsed prices due to lack of sufficient domestic demand. We push for utilization of CNG as a transportation fuel only to be stymied by an utterly technologically ignorant governing body. So we continue to damage our environment unnecessarily with gasoline and diesel powered transportation, to say nothing of the idiocy of continuing to boost the wealth of antagonistic foreign entities. Jobs, revenue and environmental improvement are all made available by natural gas development, use and export. Yet we remain sorely impeded by utter fools such as these two clowns. Good luck America. Youre gonna need it.

Cathy Jacobson | Feb. 17, 2012
Do they not understand that to reduce production actually INCREASES the cost of production? You have to maintain the well fields even when they are not actively producing. The US economy is hurting big time and the democrats seem to want to kill anything that provides meaningful economic advances. Allowing export of production in excess of what can be consumed domestically helps by providing jobs to American people and revenues to American companies in the fields and at the terminals.

Hank Fuselier | Feb. 17, 2012
Talk about cutting off your nose to spite your face. Who votes for this guy? Develop the infrastructure to produce, transport, store AND export. THEN it will become economically feasible to use here and we wont have to export. Do something intelligent like introducing legislature to convert coal-fired power plants to NG-fired plants. You could kill 2 birds with one stone there. Reduce coal emmissions and further develop the US NG market. Maybe your comrades in W Va, Oh, Pa, Ky dont like to hear that.

Larry Bontekoe | Feb. 17, 2012
I am in favor of stopping the exportation of natural gas. Just think, we could ignore the middle east and no more wars for oil. We could have a stable economy. http://www.change.org/petitions/the-us-congress-house-of-representatives-and-the-department-of-energy-stop-the-exportation-of-our-natural-gas?share_id=ftqwXJgalA&

David Cole | Feb. 17, 2012
I count the posts on this board and 10 to 1 says Senator and The Sierra Club are self serving and anti American busines. I think both should go. Sierra Club main and only green concern is the green of their donations.

David Cole | Feb. 17, 2012
This Senator has a real problem. He was elected to serve the people and wants to remove the right to sell a product by companies in the US, effectively moving jobs to another country. The idiot betrays his own voters and his own countrymen. His removal from office is of upmost importance. He appears motivated to pretend lowering prices and barring competition is good for America.

chris | Feb. 16, 2012
We have a product in which many other countries can use at a cost and they want to ban it?!? Do you see Saudi Arabia banning oil exports because they want to keep the oil for their country? Gas exports means jobs for the blue collar worker. Keep washington out of our lives. We have a product in which we could tax heavily and they dont do it? Where is the logic?

Carl Ernst | Feb. 16, 2012
Talk about limiting free enterprise! If we can send our young men and women to fight oversees wars, we certainly shouSince when is NG the dield be able to export our cheap energy. Since when is NG considered a "dirty energy". Give me a break. Im sure glad Markey is not our PA rep!

Rob Turrentine | Feb. 16, 2012
This has got to be one of the worst ideas I've ever heard of. Prohibiting our own exports! This ought to be great for the balance of payments.

Mike Grimes | Feb. 16, 2012
More insane government involvement. We have an abundance of natural gas; so much that we are curtailing production. Why on earth would we not want to export. The Sierra club doesnt have to worry about making business thrive; they know not of what they speak. Gas is not dirty.

David Smith | Feb. 16, 2012
The dumbest idea yet on the subject. While were banning LNG exports, lets add agricultural product exports too! I've heard that the intention of having this ban is to insure that prices for natural gas wont rise for US consumers. If we cant bolster demand, you'll see low prices and diminished drilling activity as well.

PZ | Feb. 16, 2012
This is a pile of BS, why is this guy trying to keep America from creating jobs and improving our exports? The tax revenue alone from this would make our debt lvls go down significantly. Any person in congress that votes in favor for this needs their head examined. I will definitely vote out anyone that does!

brauman50 | Feb. 16, 2012
The president of the US gives lip service to Natural Gas and then does nothing to support a resource that would help this country toward energy independence. Now the lemmings, such as Markey, come up with an ammendment for one Bill that would not allow any of the oil products from the Keystone XL pipeline to be sold outside of the United States. Who gives a damn about balance of trade? Now Markey comes up with a Bill to stop a product (Natural Gas) from being exported and yet they wont do the things needed to support the use of an abundant natural resource. Some has been working very hard to destroy what this country is all about. Vote these people out of office. They are nothing more than political Whores for this president who is working very hard to destroy this country. Any oil or energy that we can obtain from our own resorces will keep money in North America is good for this country. Wake up America!

JonnyBGood | Feb. 16, 2012
Damn right, if we are going to wreck our drinking water, at least my light bill should be cheap.

Bob W | Feb. 16, 2012
Not sure I feel comfortable supporting either side of this bill. However, the silliness of the statements made in support of this bill astound me. I suppose the Sierra Club NGFC Director also believes that liquid oxygen is the "dirtiest and most polluting form", or that liquid water is the "dirtiest and most polluting form." But then silly statements rile up the supporter base, which in turn leads to more donations, and thats what its all about.

Jerry | Feb. 15, 2012
Representative Markey should also, strongly fight to allow construction of the Keystone XL pipeline to bring Canadian crude oil to the Gulf Coast. This would discourage Canada from building the pipeline to the Pacific coast with eventual exportation to Asia.

Mike Foster | Feb. 15, 2012
I have never set foot in the state of Mass. but as soon as I find out who Markeys congressional opponent is I am going to go to his website and give him lots of money Markey has declared war on the economy in western Colorado and I plan to fight back with everything that I can afford.

Dion | Feb. 15, 2012
If Natural Gas prices dont increase, it will stay in the ground! What's wrong with bringing the $$$ back to the US?

Ronald Magel | Feb. 15, 2012
What planet have these people (E Markey,Sierra Club) come from. The U.S. is bankrupt and has very little products to export mainly because of the high union labor costs to manufacture and compete with the rest of the world. It seems to me that if we can produce and sell NatGas to the rest of the world and get our balance of payments going back in the right direction,we better get with it. These freaks that are against this need to be bundled up and shipped to Cuba or Venezuela or some other socialist paradise where they wont be so miserable. From S. Texas, the land of the EagleFord

Laura Vincent | Feb. 15, 2012
I am sick and tired of our hands being tied. While china and other countries pollute the hell out of the planet. You guys don't even let us play on an even playing field. You have managed to run our country into the ground. But I bet you got your piece of the pie!

Jack Stripling | Feb. 15, 2012
Am I wrong?, but this cant be good for the O&G business that I am in. We as voters need to stop this assault on our jobs by the Democrats.



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