The People of America's Oil and Natural Gas Indusry

New Study, Familiar Result: LNG Exports Benefit U.S.

Mark Green

Mark Green
Posted June 13, 2018

The U.S. Energy Department’s latest study on the economic impacts of exporting liquefied natural gas (LNG) reaches a by-now familiar top-line conclusion: Exporting U.S. LNG is good for the economy, and those benefits will outweigh domestic cost impacts.

We say familiar, because this is the fifth DOE study on LNG exports – and the fifth to describe broad, positive economic impacts for the United States from shipping natural gas to friends and allies overseas – which should end claims that LNG exports could harm American consumers.

Certainly, no one can say the issue hasn’t been thoroughly analyzed – not after five government studies and two commissioned by our industry (see here and here).

DOE’s latest study, covering 54 scenarios involving different combinations of U.S. natural gas output and global demand levels, came to a number of large conclusions including:

  • U.S. consumer well-being increases with rising LNG exports.
  • Total U.S. economic activity (gross domestic product) increases with rising LNG exports.
  • U.S. LNG exports are backed by increased natural gas production here at home.

From the study:

Throughout the entire range of scenarios, we find that overall U.S. economic output is higher whenever global markets call for higher levels of LNG exports, assuming that exports are allowed to be determined by market demand.   

For consumers, the study found that any domestic price impacts would be mitigated by increasing domestic natural gas production and general economic growth. Todd Snitchler, API market development group director:

“This report further confirms that increasing exports of American natural gas will benefit the U.S. economy and benefit consumers. U.S. LNG cargoes have already been delivered to more than 25 countries spanning every region of the world. Increasing the use of American energy throughout the world enhances our national security here at home and abroad by giving our allies a reliable source of natural gas. Further, the increased use of clean natural gas has lowered U.S. emissions to levels not seen in 25 years. With global emissions on the rise, increased use of U.S. natural gas around the world could help make the world’s air cleaner.”

Again, LNG exports potentially offer huge economic benefits for the U.S. A 2017 study by ICF International, commissioned by API, found that increased LNG exports would support hundreds of thousands of jobs and add tens of billions of dollars to the economy. Specifically, increased LNG exports volumes of up to 16 billion cubic feet per day (Bcf/d) could:

  • Support between 220,000 to 452,000 additional jobs
  • Add $50 billion to $73 billion to the U.S. economy

The study estimated that current U.S. natural gas resources are approximately 3,700 trillion cubic feet (Tcf) – higher than 2013 estimates of 3,500 Tcf. The study estimated the potential global market could be 32 Tcf by 2040.

Indeed, just this week the U.S. Energy Information Administration reported that the global LNG trade reached 38.2 Bcf/d in 2017, a 10 percent increase over 2016, with volumes from the United States among the fastest growing due to rapidly increasing liquefaction capacity:

liquefaction_capacity_added

EIA said the U.S. is expected to add another 6.05 Bcf/d in new liquefaction capacity by 2021 – in addition to 3.5 Bcf/d already in operation at Sabine Pass on the Louisiana/Texas border and Cove Point, Md.

U.S. policy should continue to support additional LNG export capacity as global demand grows for natural gas and the benefits it brings to economies and the environment. At the same time, the U.S. should engage with global partners to establish additional facilities to receive LNG. As the new DOE makes clear, abundant and affordable natural gas is empowering for our economy. Snitchler:

“This report, along with five others commissioned by DOE since 2012 confirming the benefits of LNG exports, should finally put to rest any doubt that increased U.S. LNG exports will benefit American consumers with affordable energy and American workers with increased production and help make our air cleaner. As the U.S. leads the world in the production and refining of oil and natural gas, increased engagement with our global partners to promote the benefits of U.S. energy resources should remain a top priority moving forward.”


ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.