Due to a US domestic upsurge in Natural Gas which has helped lower US energy prices amid concerns about carbon emissions and other environmental concerns U.S. producers are now poised to ship vast quantities of gas overseas. Energy companies are seekng permits for proposed export projects that are set to cause a furious debate about who should benefit from this upsurge. And what long term damage will be caused by fracking.
Expanded drilling is unlocking enormous reserves of crude oil and natural gas which is offering the potential of moving the country closer to its ongoing quest for energy independence from other oil producing countries. Yet the industry is looking to profit from foreign markets, which will obviously result in higher prices at home and increased manufacturing costs for products from plastics to fertilisers.
Exxon Mobil and Sempra Energy are just two of the energy companies seeking federal permits for more than 20 export projects that could handle as much as 29 billion cubic feet of natural gas a day.If approved, the resulting export boom could lead to further increases in hydraulic fracturing, a drilling technique also known as fracking. It allows companies to gain access to huge stores of natural gas underneath states from Colorado to New York, but has raised widespread concerns about alleged groundwater contamination and even earthquakes.
This drilling upsurge has helped boost U.S. natural gas production by one-third since 2005, with production reaching an all-time high of 25.3 trillion cubic feet last year, according to the U.S. Energy Information Administration.
In recent months, however, production has begun to level off as the glut of natural gas keeps U.S. prices down. In response, producers have begun pushing to export the fuel to Europe and Asia, where prices are far higher.
If all the projects currently under review by the Energy Department were to be approved the result would be the export of more than 40 percent of current U.S. production of liquefied natural gas, or LNG, which is natural gas that has been converted to liquid form to make it easier to store or transport.
The prospect of a huge rise of U.S. gas exports has galvanised business groups and lawmakers from both political parties, and they’re urging the Obama administration to move faster to approve the projects as a way to create thousands of jobs and spur economic growth. Increased exports also would help offset the nation’s enormous trade deficit.
But many consumer groups and some manufacturers that use natural gas oppose the move to expand exports, saying they could drive up domestic prices and make manufacturing more expensive. Many environmental groups also oppose LNG exports because of fears that increased drilling could lead to environmental damage.
Michael Brune, executive director of the Sierra Club said, “Exporting natural gas will have serious implications for public health, the environment and climate change and building these terminals means lots of new fracking, and more fracking means more risks for Americans.”
Bill Cooper, president of the Center for Liquefied Natural Gas, an industry group, called natural gas a safe, clean-burning alternative to coal and oil and said, “LNG exports are a huge opportunity for the United States economy, our workers and our geopolitical relationships with countries such as Japan that are seeking to import natural gas. LNG exports will create jobs, increase government revenue and benefit consumers.”
The Obama administration has not said whether it will approve the projects. The issue is among the main challenges for Ernest Moniz, President Barack Obama’s nominee to be energy secretary. Federal law requires the Energy Department to determine that projects are in the public interest before granting export permits to countries that do not have free-trade agreements with the U.S.
Moniz, a physics professor and former top officials at the department in the Clinton administration, is widely seen as sympathetic to the natural gas industry. At a Senate hearing last month, he called this “stunning increase” in natural gas production a “revolution” that has led to reduced emissions of carbon dioxide and other gases that cause global warming.
A recent study commissioned by the energy department concluded that exporting natural gas would benefit the U.S. economy even if it leads to higher domestic prices for the fuel. The Michigan-based Dow Chemical Co. and other manufacturers have criticized that study, saying it relied on 2-year-old data that doesn’t account for increased demand for natural gas by manufacturers, trucking fleets and power plants.
Dow, which uses natural gas to power its plants and make products from plastics to pharmaceuticals, has argued against unfettered exports and said that could lead to price spikes that could harm the U.S. economy.
Regardless which road the Obama administration chooses to take, it will be a controversial one as either decision will be sure to upset someone. Obviously budget will be a huge concern, but with factors such as ecological concerns and economic strain will make any decision a difficult one.
By Michael Smith