Industry pushes to boost exports of type of fuel

More sales of liquefied natural gas would balance price, producers say

Growth in production would moderate any natural gas price increases resulting from more liquefied natural gas exports from the United States, industry advocates for exports said Monday.

Kathleen Sgamma of the Western Energy Alliance and Erik Milito of the American Petroleum Institute spoke in a teleconference to urge the Department of Energy to allow for more natural gas exports.

The two responded to concerns from some domestic manufacturers that more exports could excessively drive up the cost of the natural gas used as a source of power for their plants.

Sgamma pointed to how low natural gas prices have led to a drop-off in drilling in western Colorado’s Piceance Basin and other areas in the West where production involves predominantly gas rather than gas liquids and oil.

“We believe that we have the capacity to increase production in response to any increased demand and keep those prices moderated,” she said.

According to the Department of Energy, federal law generally requires approval of gas exports to nations with free trade agreements with the United States. In other cases the DOE must approve the exports unless it finds them inconsistent with the public interest. It currently is considering 15 export applications.

A DOE contractor recently did a study finding such exports would benefit the nation economically. Some manufacturers say the estimate of future natural gas demand cited by the study is too low. But the Western Energy Alliance says the study also relied on an underestimate of projected production.

One company that voiced concern to the DOE about future gas demand and how exports could affect gas prices is steel maker Nucor Corp. Last year, Nucor entered into a joint venture with Encana USA to drill more than 4,000 wells in the Piceance Basin over 20 years. The deal is designed to help Nucor offset the impacts of potential future gas price increases by being invested in gas production.

Others have raised concerns about exports driving up costs for residential natural gas consumers as well, while also resulting in increased environmental impacts from more drilling and hydraulic fracturing.

“The failure of the study to evaluate any costs associated with hydraulic fracturing

… renders it a woefully incomplete analysis of the potential economic effects of increased LNG exports,” the Environmental Working Group told the DOE in a written comment.

Colorado Mesa University official Derek Wagner, writing on behalf of CMU’s Unconventional Energy Center, told the DOE, “For the Western Slope of Colorado, access to export markets is exactly what we need to reinvigorate industry and boost our local economies.”

But Jason Bane of the conservation group Western Resource Advocates said Monday, “To suggest that this discussion is only about economic profit ignores the very real (health and environmental) concerns of families in Colorado and around the country.”


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