Tuesday, May 21, 2013

New Report Validates LNG Export

A report released yesterday by the Bipartisan Policy Center (link to report; article about it) concluded the following:
"...The scenario analysis revealed that within the suite of natural gas supply and demand assumptions considered, there are ample domestic supplies of natural gas to meet future demand without significant price increases. 
"Similarly, the analysis shows that the United States is uniquely positioned to take advantage of the economic, environmental, and energy security benefits of the country’s large natural gas resource base. Natural gas resources have the potential to create new market opportunities for expanded natural gas use in ways that will grow the economy and improve the environmental performance of the U.S. energy system, if the environmental challenges associated with natural gas development using horizontal drilling and hydraulic fracturing are addressed by industry in collaboration with state and federal regulators."
In my cursory review of the document, the logic and process seem to be sound, but with the ever-expanding number of industry groups and think tanks cranking out reports these days, one can never be sure.  (Case in point:  the article linked above cites a new report, also released yesterday, from the American Chemical Council, an industry group representing foes of LNG export.)

While there is often much kvetching about the government picking winners, this is a case where the market will determine the ultimate winner if enough permits are approved.  Only a handful of these developments will be able to raise financing to build these multi-billion dollar projects (several applicants are LNG importers and have a natural advantage).  Additionally, while export quantities will help support the demand side of the supply/demand equation, there will be an implicit ceiling where exported North American gas won't be able to compete on the international market if domestic prices rise too high.  That's not to say there won't be colossal missteps along the path - but, hey, that's the American way.

1 comment:

wil said...

aqs long as a communist resides in the white house, we are doomed robert.