In what is perceived as a victory for the oil and gas industry, the US Department of Energy has endorsed the idea of liquefied natural gas exports as good for the US economy. A just-released study commissioned by the DOE states that the net economic benefit of LNG exports outweighs the downside even though it may bring higher natural gas prices to American consumers and manufacturers, says the agency.
North American natural gas producers and midstream companies hoping to begin the lengthy process of building new LNG export facilities and retrofitting import terminals have welcomed the Energy Department report. They hope it will help sway the Obama administration’s decision on whether to approve more than a dozen proposed LNG export projects. The decision had been put on hold until the report was completed.
The study delivers a solid endorsement of natural-gas exports at a time when the issue is hotly debated.
The report, prepared by NERA Economic Consulting, stated that domestic gas prices probably would not rise sharply as a result of exports and that expanded export revenue would generally help most Americans.
Gas exports could produce up to $47 billion in new economic activity in 2020, when many new terminals would be up and running, according to the report, which concluded, “Welfare improvement is highest under the high-export volume scenarios because US consumers benefit from an increase in wealth transfer and export revenues.”
The Center for Liquefied Natural Gas, a trade group whose members include ExxonMobil, Sempra Energy, and Royal Dutch Shell, says that more gas exports will increase domestic gas production and expand demand for oilfield equipment, related services, and steel piping.