Senator Ron Wyden would appear to have ample reason to support the expansion of LNG exports from the US.
The Democrat and incoming chairman of the Senate Energy and Natural Resources Committee has a proposed LNG export terminal in his home state of Oregon.
The developers and backers of the Jordan Cove Energy Project, which have asked the US Department of Energy for a permit to export LNG to countries that do not have free-trade agreements with the US, say the terminal would create more than 120 much-needed, high-paying jobs and turn Oregon into a lucrative gateway for LNG exports to Asia.
But Wyden has held firm to his opposition of expanded LNG exports, saying the Jordan Cove project and others like it could cause natural gas to trade as a global commodity, similar to oil. That would mean US consumers could expect to encounter volatile swings and price shocks for future natural gas supplies, he has said.
In a letter to Secretary of Energy Steven Chu on January 10, Wyden urged him to shelve a DOE-commissioned study on LNG exports, conducted by NERA Economic Consulting, which he said vastly underestimates potential growth in domestic gas demand.
“Export applications, which are typically for 20 years or more, and the associated LNG export terminals, will reshape the North American natural gas market for years to come,” Wyden wrote. “The shortcomings of the NERA study are numerous and render this study insufficient for the department to use in any export determination.”
The study, released in December, found such exports would be a boon to the US economy and would not cause any major adverse effects on US household wealth, employment or industrial competitiveness. DOE has said it may use it as the basis for ruling on 20 export permit applications to non-FTA countries beginning in February.
Proponents of expanded LNG exports say allowing them would be a major boost to the US gas industry and create jobs. Domestic gas production has soared in recent years with the shale boom, and experts say US LNG could be sold to gas-hungry Asian buyers for three to four times the price it fetches domestically.
The Jordan Cove project itself began in 2003 as a proposed LNG import terminal at Coos Bay, Oregon, with a 234-mile pipeline to a gas hub on Oregon’s border with California, as projections at the time expected gas shortages in the US.
But with the current glut of domestic natural gas, the project’s developers, Calgary-based Veresen, are now seeking to use the pipeline to instead send gas to Coos Bay and cool it to LNG for storage in tanks and eventual loading onto about 80 tankers a year for shipment to Asia.
Jordan Cove developers in March applied for a DOE permit to export LNG to non-FTA countries, joining 19 other companies that have asked for permission to export a combined 22.6 Bcf/d.
In his letter to Chu, Wyden said the NERA study is “seriously flawed” for using outdated data that contradicts more recent projections by the Energy Information Administration on future US gas consumption. He said DOE needs to establish clear criteria for approving LNG export applications.
“Proper, transparent mechanisms must be in place to effectively evaluate all LNG export applications–prior to their approval –to gauge whether each application is in the public interest,” he wrote. “The inadequacies of the NERA study only underscore the need for the department to establish those criteria and procedures in a transparent and accurate manner informed by data that most accurately reflects the world today.”
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