UTNIF LNG Exports CP
1NC Shell
1NC Generic
Text: The United States federal government should substantially increase its liquefied
natural gas exports.
Counterplan solves the aff – exports lead to increased drilling because of increased
demand – solve the current decrease in development activity and maintain our
manufacturing advantage
Kathleen Sgamma, Vice President of Government & Public Affairs of the Western Energy Alliance,
1/15/13, “The Time is Now for LNG Exports” http://energy.nationaljournal.com/2013/01/shouldamerica-exploit-energy.php#2280921
One criticism of exporting natural gas is that it will raise prices for U.S. consumers, although the NERA study finds that prices will rise only
moderately with exports. However, I believe the analysis
failed to take into account the significant capacity of the
industry to increase production in response to the greater demand arising from exports. Because of
the glut in natural gas supplies, development activity is down in many areas, particularly in dry gas
basins. With increased demand, producers in the West and across the country will likewise respond
with increased production, further moderating prices. Given the large disparity between U.S. and
world natural gas prices, American manufacturing would still retain the competitive advantage.
Exports reduce emissions and don’t link to renewables tradeoff
Levi. Senior fellow for energy and environment at the Council on Foreign Relations. 2012 (Michael.“A
Strategy for U.S. Natural Gas
Exports,”http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf
Natural gas, though, has the same climate consequences whether it is burned in the United States,
Europe, or Asia. Exported natural gas is also likely to displace coal. Indeed, since allowing natural gas
exports appears to primarily increase the volume of gas produced, rather than displace gas previously
destined for domestic consumption, allowing natural gas exports could ultimately reduce global
emissions. I estimate this impact as, at most, approximately 15 million tons of reduced global
emissions for each billion cubic feet of daily natural gas exports. For six billion cubic feet a day of exports and a value
for damages from emissions of a modest $21 per ton of carbon dioxide—the figure used in U.S. regulatory impact assessments (Greenstone,
Kopits, and Wolverton 2011)—the
avoided climate damages would be $2 billion annually. Global greenhouse-gas
emissions from energy use would be reduced by 0.3 percent relative to 2008 levels. On the other hand, if exported natural gas
displaced as much renewable energy and energy conservation as it did coal, the impact on non-U.S.
emissions would be neutral. Climate policy also has an important international political dimension. Global climate diplomacy tends
to focus on what happens within individual countries’ borders. If a U.S. decision to allow natural gas exports reduced global emissions but
raised U.S. emissions—indeed the most likely outcome— the United States could, in principle, suffer diplomatically. But this is highly unlikely in
practice. The
export volumes examined here would raise U.S. emissions by at most approximately 0.3
percent, a trivial difference in the context of climate diplomacy, which tends to focus on changes on the order of 10 percent or more
of national emissions.
2NC- Top Shelf
2NC Generic Solvency
Exports are Key to Stable Prices
Helman, Forbes Staff, 12
[Christopher Helman covers the energy industry for Forbes, “The U.S. Has A Natural Gas Glut; Why
Exporting It As LNG Is A Good Idea,” http://www.forbes.com/sites/energysource/2012/06/13/the-u-shas-a-natural-gas-glut-why-exporting-it-as-lng-is-a-good-idea/]
The emergence of shale gas has caused natural gas prices in North America to drop to the lowest levels
seen in decades. Shale gas resources elsewhere in the world, however, have not yet been developed
to the same extent—creating a sustainable arbitrage opportunity. Given the potential profitability of liquefying
surplus North American gas production and exporting it as Liquefied Natural Gas (LNG), a number of companies are now willing to develop
capital-intensive natural gas export projects. LNG
exports will help to provide better balance between supply and
demand in the market, dampening price volatility in North America, and providing circumstances in
which industrial gas investments and feedstock natural gas purchases can be made with greater
confidence in long-term natural gas pricing. As recently as 2007, North America was looking at a significant gas shortage and
more than sixty LNG import projects were proposed. Just five years later, the implementation of horizontal drilling and hydraulic fracturing has
led North America to a sizable excess of gas supply. The latest figures from the U.S. Energy Information Agency (EIA) indicate that natural
gas supply could exceed demand by 2016, enabling North America to become a net exporter of LNG.
The rapid increase in natural gas production has had a substantial impact on gas pricing in North America. While gas prices in North America are
not directly correlated to oil prices, up until late 2008, natural gas prices generally matched oil price trends. Since the increase in shale gas
production was first identified in Navigant’s groundbreaking North American Natural Gas Supply Assessment in 2008, natural gas prices have
headed downwards from $5.00 per million British thermal units (mmBtu) to approximately $2.50 per mmBtu in May 2012. However, although
natural gas prices decreased, crude oil prices increased during the same period. While the EIA indicates that long term North American natural
gas prices will rise to $4.00 to $6.00 per mmBtu, natural gas will continue to trade at a sizable discount to oil on an energy equivalent basis.
Unlike crude oil, there is not yet a large tradable global market for natural gas and consequently, prices vary across the world. In Asia, prices for
major LNG importers closely correlate to oil prices, and LNG is currently priced over $17.00 per mmBtu. In Europe, prices are lower at $12.00 to
$14.00 per mmBtu. For North American producers to benefit from higher global prices they must successfully construct costly and
complex LNG facilities and related infrastructure costing billions of dollars. Assuming a long-term North American natural gas price of $4.00 to
$6.00 per mmBtu, liquefaction and shipping costs will add approximately $4.00 per mmBtu. This offers an
attractive $3.00 to $5.00
per mmBtu arbitrage opportunity to the $13.00 per mmBtu price currently achievable at Europe’s LNG
terminals. The real prize, however, would be realizing LNG exports to Asia. While shipping costs would be higher (due to the much
greater distance to Asia than to Europe), the current Asian LNG price of $17 per mmBtu provides the prospect of a much
greater arbitrage opportunity. What are the risks to the current export strategy? Shale gas production has increased rapidly,
offsetting a steady decline in conventional gas production across North America. While more natural gas can be produced from what is largely
agreed upon as an “abundant gas resource,” the pace of future development is subject to factors such as changing environmental legislation.
Competition for the Asian markets, notably from the large number of Australian-based LNG projects in development, is expected to be fierce.
LNG project costs are on the increase, due in part to the considerable number of projects seeking to be developed in a short period of time.
Finally, shale gas resources are not exclusive to North America. Europe and Asia both have significant shale gas potential; however, the pace at
which shale gas resources will be developed in these regions has yet to become clear. Overall, North
American natural gas
exports are a very positive development for both North American and global natural gas markets . In a
market of surplus supply, access to large export markets will serve to balance supply and demand, thereby
dampening price volatility, increasing natural gas prices moderately, and, over the long-term, providing a
sustainable natural gas market in North America—the stability of supply and price needed by North American industrial
markets.
Exports won’t hurt gas prices
Samuelson, economic columnist, 2012
[Robert Jacob Samuelson is a Harvard graduate and Pulitzer nominee. He’s a columnist for The
Washington Post, where he has written about business and economic issues since 1977, “Don't Kill the
Shale-Gas Boom,” 12.24.12,
http://www.realclearpolitics.com/articles/2012/12/24/dont_kill_the_shale_gas_boom_116502.html]
The complaint that LNG exports might unwisely drive up natural gas prices comes from politicians and gas consumers. Sen. Ron Wyden, D-Ore.,
argues the Obama administration should ensure that "unfettered
natural gas exports don't harm U.S. consumers and
manufacturers." Dow Chemical says a "rush to export liquefied natural gas" could jeopardize the "tremendous competitive advantage for
American industry" from low-price shale gas. In theory, LNG might divert large volumes of natural gas because the
wellhead price of U.S. gas is, on an energy-equivalent basis, much cheaper than oil. But in practice, this isn't likely: LNG isn't
easily substituted for oil and is costly. The expense of liquefying it to minus-260 degrees Fahrenheit
and transporting it long distances in refrigerator tankers raises the price sharply. LNG projects are fabulously
expensive. Sabine Pass in Louisiana, a project approved by the Department of Energy, will cost $11 billion and could provide customers in
Britain, South Korea, India and Spain with gas equal to about 3 percent of present U.S. supply. Exporting natural gas simply isn't as easy as
exporting wheat. Unsurprisingly, LNG satisfied less than 10 percent of global gas demand in 2010. Nor are American producers guaranteed
contracts. Other large suppliers (Qatar, Australia) might undercut U.S. prices. But the
global LNG market could absorb some
American shale-gas production. Why discourage this? A study commissioned by the Department of Energy
suggests that the price impact would be modest. The truth is that the United States needs domestic and
foreign buyers for its natural gas. Supply is outpacing demand, leading to a collapse in prices and
drilling activity. Gas rigs are down half from a year ago, reports the energy firm Baker Hughes. Prices can't be held at
artificially low levels. Companies won't drill unless they can profitably sell what they find. A policy that
discriminates against producers in favor of consumers by restricting foreign sales will hurt both. The gas boom will recede as an engine of
growth. For
years, Americans have complained about trade deficits. Now that we have something more
to sell, we shouldn't turn away customers.
Increasing Demand would sustain Shale
Hoium, Staff writer at the Motley Fool, 12
[Travis Hoium, “What's the Best Natural Gas Policy for the United States?” 3.16.12,
http://www.fool.com/investing/general/2013/03/16/analysts-debate-whats-the-best-natural-gaspolicy.aspx]
There are currently two main uses for natural gas: electricity production and heating. Natural gas vehicles are a nice side
business that I believe will grow, but they're far from demanding a significant portion of our natural gas resources. Electricity production is
a great use for natural gas, but at this point we're displacing domestic coal instead of imports, so it's a wash
from a policy standpoint. Electricity consumption is also stagnant to declining slightly, so this isn't
exactly a growth avenue for natural gas outside of the replacement of coal. US Natural Gas Consumption Chart
US Natural Gas Consumption data by YCharts. Even with the growth of natural gas in electricity generation, we're simply not
consuming enough natural gas domestically to make a dent in the potential production windfall. Production would
be even higher in 2012, but prices have been so low that drillers all but stopped drilling for natural gas, choosing to
drill for oil instead. If we're going to make a significant impact on the economy, we need to begin exporting natural gas to countries that could
use the low-cost fuel. The Federal Energy Regulatory Commission recently published its estimates for March 2013 landed prices of liquefied
natural gas. Here are a few of the notable prices. Location Price ($/MMBtu) Lake Charles, La., USA $3.01 Cove Point, Md., USA $3.34 United
Kingdom $9.94 South Korea $17.75 Japan $19.75 China $19.35 Rio de Janeiro, Brazil $16.84 Source: Waterborne Energy, Inc., via Federal Energy
Regulatory Commission Since energy is all about supply and demand, you can see we
have a world of demand at our
fingertips. From a supply side, prices in the U.S. are as low as they are because we have too much
production, which I mentioned has been cut back dramatically over the past year. We should open up export markets,
which would increase production, raise prices to sustainable levels, and increase exports, which are all
good for the U.S. economy.
Shale Exports Stabilizes Prices
Hulbert, Forbes Energy Contributor, 12
[Matthew Hulbert, “Why America Can Make or Break A New Global Gas World,”
http://www.forbes.com/sites/matthewhulbert/2012/08/05/why-america-can-make-or-break-a-newglobal-gas-world/]
The same debate is raging in the US. Despite the phenomenal breakthroughs in American shale developments, the front runner of the
revolution now risks becoming a victim of its own success in terms of Henry Hub prices dropping so low, that full cycle economics for US shale
gas plays have become negative. Unless
prices organically firm, or US producers learn the dark art of supply restraint, current
will fold; fields will be mothballed,
with Chesapeake providing the best ‘poster boy’ example of how precarious shale gas economics have
become. The quick fix option to get Henry Hub back at a sustainable $4-7/MMbtu level (and by far the most lucrative for some of the
mid-cap players involved), is to sign up international LNG contracts. That’s exactly what’s being done, with some of the larger
output levels will be difficult to maintain or enhance for American consumers. Companies
IOCs (Royal Dutch Shell, BP and ExxonMobil) also aggressively pushing for LNG exports to capitalise on huge spreads, not to mention preventing
further write-downs on shale assets. It’s
not like Chinese champions working on US plays would have any
ideological opposition to such a prospect. In total, FERC has around 125bcm/y of LNG applications
currently awaiting approval – even on a ‘bad day’ 40-50bcm exports should be very feasible by 2020.
That would make the US the third largest LNG player in the world. It’s also going to be the crucial factor over the
next five years to decide where gas markets are heading. America will be decisive for future pricing models, whether they shift to gas (rather
than oil) fundamentals. US LNG could be the straw that breaks oil indexation back.
Exports provide market-based incentives to continue driling
American Council for Capital Formation, 1/10/13, “Dubious Campaign Against LNG Exports
Ignores Net Benefits of Free Trade”
It’s important to note that the drop in U.S. natural gas prices in the past three years has caused the
number of rigs drilling for gas to fall sharply, for example there were 811 rigs drilling for gas in 2011
but only 439 at the beginning of 2013. At current natural gas price levels, employment and output of
the U.S natural gas industry will continue to decline.
Increasing natural gas exports will provide domestic producers with market-based incentives to
increase their production and expand trade to support our economic recovery. :
Exports provide investor confidence to continue drilling
Don Santa, President of the Interstate Natural Gas Association of America, 1/14/13, “Keeping Shale
Gas Boom Alive with Exports” http://energy.nationaljournal.com/2013/01/should-america-exploitenergy.php#2280694
Limiting or restricting LNG exports might initially trim domestic natural gas prices, but in the long-term this policy could backfire.
If prices drop further – they already are at near historic lows – producers might be compelled to slow
or stop their U.S. drilling activities.
U.S. natural gas and oil development has been one of the very few economic high points – and job creators – during this tepid economic
recovery. Having
a dynamic and diverse market, which includes LNG exports, gives producers the
confidence they need to invest in domestic exploration and production. U.S. natural gas development provides
enormous benefits by creating American jobs, generating federal, state and local tax revenues, and helping provide the fuel we need to heat
our homes, run our business and the feedstock to many of our everyday goods, such as plastics. The
incentives to maintain robust
investment in exploration and production will be diminished if the market for U.S. gas production is
artificially constrained.
Multiple studies back us up
Jack Gerard, President and CEO of the American Petroleum Institute, 1/16/13, “The Case for Free
Trade in Natural Gas”
http://energy.nationaljournal.com/2013/01/should-america-exploit-energy.php#2282276
Multiple studies have shown that exporting natural gas could increase gas development activities in
the U.S. which will have a positive overall impact on the U.S. economy. The economic benefits also include, for example, net
value-added contributions to GDP, jobs and tax revenues. Increased natural gas production could also
result in an increase in natural gas liquids – ethane, propane and butane, for example -- that are
important feedstocks to U.S. industrial businesses.
2NC Demand High
Companies will buy LNG from the US, Australia proves
Robins.Writer for the Sydney Morning Herald.2014 (Robins. “Woodside signs deal for US gas”
7/2/14 Online: http://www.smh.com.au/business/woodside-signs-us-deal-to-trade-gas-into-asia20140701-3b6il.html)
Only weeks after turning its back on a gas-export project in Israel, Woodside Petroleum is moving to
ramp up its trading operations by opting to buy gas from one of the first of the planned gas-export
projects in the US. Woodside is to buy about 850,000 tonnes annually of liquefied gas from the
Cheniere Energy project planned for Corpus Christi, Texas, in the southern US . Woodside is to pay 115 per cent
of the domestic US spot gas price for the gas, the Henry Hub price, plus $US3.50 per million British thermal units (mmBtu), along with provision
for some price escalation. There is also provision for a flat payment of $US3.50 per mmBtu if Woodside opts not to take delivery of the gas.
Cheniere said the price was in line with other sales agreements it had finalised for output from this project. Cheniere is yet to receive
government approvals for the project, although it is anticipated the contract with Woodside will take effect from late 2019. The contract is for
20 years, with provision for a 10-year extension. The deal marks Woodside's entry into the US gas market, and it comes as it is seeking to
establish its own gas-export project based on Canada's west coast. Woodside began trading export gas in 2011, and by 2014 had handled more
than 40 cargoes, selling into the north Asian market, which is also the outlet for gas from its North West Shelf project. As part of the expansion
of its trading arm, Woodside recently established an office in Singapore and bought its own vessel to ship gas, Woodside Goode. Much of the
gas sold into the north Asian market is priced off the "Japan Crude Cocktail", a price based on the average price for crude oil imports into Japan.
Gas utilities have traditionally willingly paid a premium for uninterrupted supplies, but the emergence of a spot gas-export market coupled with
the prospect of lower-priced gas from
North America has begun to change the dynamics. Sourcing some gas
priced off the Henry Hub could give Woodside pricing flexibility when selling output from other
projects such as Browse Basin, analysts said. Other gas majors such as BG and BP are sourcing gas
from the US on similar deals to Woodside. Historically it had been an aggregated supply chain into Asia with 100 per cent takeor-pay contracts, which reflected the buyers' need for supply certainty, Credit Suisse analyst David Hewitt said. "For Asian utilities LNG
was always an inflexible fuel," Mr Hewitt said. So, sourcing some from the US would provide a
degree of supply flexibility.
So the [Woodside] sales representative can now go to the utility and put price and supply flexibility on
the table," he said. Cheniere is planning three trains at its Corpus Christi export project, and has to date sold 6 million tonnes of LNG.
Construction is due to start early next year.
Overseas demand is high
Levi, senior fellow for energy and environment at the Council on Foreign Relations (CFR), 2012
Michael A. Levi is the David M. Rubenstein senior fellow for energy and environment at the Council on
Foreign Relations (CFR), a nonpartisan foreign-policy council. June 2012, “A Strategy for U.S. Natural Gas
Exports,” http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf]
U.S. natural gas production is booming. Five years ago, most experts assumed that U.S. natural gas output was in terminal decline; today, most
believe the opposite. As recently as 2009, the U.S. Department of Energy was projecting indefinite dependence on imported natural gas along
with rising prices for decades to come (EIA 2009a). By 2010, after breakthroughs in extracting natural gas from shale, conventional wisdom had
flipped. Large-scale gas imports now seem unlikely, and abundant domestic supplies look like they will hold prices in check (EIA 2010a). The
market has signaled its endorsement of this development by hammering natural gas prices. U.S. benchmark
natural gas dipped
below $2 for a thousand cubic feet in early 2012, and as of mid-April 2012, delivery of the same amount in March 2015
could be assured for $4.43. Wellhead prices, meanwhile, fell to levels unseen since 1995.1 But the world looks different
from overseas. In Europe, a thousand cubic feet of gas sold on the spot market for about $11 as of March 2012, and in
East Asia, the price was north of $15 (Platts 2012). These prices are all the more striking since it costs roughly $4 to
liquefy and ship a thousand cubic feet of natural gas from the United States to Europe, and only about
$2 more to send it to Asia (Morse et al. 2012). Yet the United States does not export natural gas to those
markets. Many have thus argued that it is leaving money on the table. The potential profits from exports have prompted
several companies to apply for permits to export liquefied natural gas (LNG) without restriction. In March 2011, the U.S. Department of Energy
(DOE) approved the first such permit, for Cheniere Energy, and in April 2012, the Federal Energy Regulatory Committee (FERC) approved
Cheniere’s Sabine Pass, Louisiana facility. As of May 2012, another eight projects had applied to the DOE for similar permits, and four more had
applied for permits to export LNG to countries with which the United States has free trade agreements (DOE 2012). The DOE has signaled that it
will begin making decisions on these applications after receiving the results of a contractor study on the possible impacts of LNG exports in late
summer 2012. The DOE can be expected to solicit input from several agencies, including the Departments of State and Commerce, the
Environmental Protection Agency, and the Office of the U.S. Trade Representative, as well as from the National Economic Council, the National
Security Council, and the Council on Environmental Quality in making its ultimate decisions. Indeed, if currently anticipated price differences
hold up, and fully free
trade in natural gas is allowed, several developers will likely attempt to build LNG export
terminals. A wide range of analysts have claimed that as many as six billion cubic feet of daily exports
by the end of the decade is plausible . That trade could expand U.S. gas production substantially and,
in principle, net U.S. producers, exporters, and their suppliers north of $10 billion a year. 2 Gas exports
could help narrow the U.S. current account deficit, shake up geopolitics, and give the United States
new leverage in trade negotiations. This has led many people to advocate for a U.S. policy that
allows—or even encourages—natural gas exports.
Global LNG demand will grow for the next 20 years
Aemo 13
[Australian Energy Markey Operator, June 2013, “Projections of Gas Demand for LNG Export from
Eastern and South Eastern Australia”
http://aemo.com.au/Gas/Planning/~/media/Files/Other/planning/gsoo/2013/2013.09.04%20LNG%20R
eport.pdf.ashx]
Growth in global LNG demand is projected to be concentrated in the Asia Pacific region as shown in Figure
6.1. This is attributable primarily to continuing growth in LNG demand in China and India and new
demand in Malaysia, Singapore, Asia Pacific Europe Middle East North America South America Historic Source: History - BP
Statistical Review of World Energy; Projections - Core Energy Group. 6.2. LNG Demand Drivers Growth in global LNG demand is a
largely a function of the following factors: § Population growth. § Growth in economic activity. §
Growth in primary energy demand. § Gas share of primary energy demand. § Competitiveness of LNG
relative to alternative gas sources. Although this report makes generic references to LNG demand, the demand and supply drivers
vary significantly between regions. For this reason, Core has completed analyses on each of these factors on a region-by-region basis to develop
a Reference LNG Demand Scenario. 6.3. LNG Demand Scenario The Global LNG Reference Scenario presented in Figure 6.1 represents Core’s
view of most likely outlook for global LNG demand. This scenario has been developed following consideration and modelling of the factors
listed in Section 6.2. This Section contains specific comments on the Asia Pacific and Atlantic Region elements of the Global LNG 6.3.1. Asia
Pacific Region Japan: § Japan is currently the largest importer of LNG, sourcing approximately 87 Mt in 2012 .
§ Although Japan is the largest importer, historic growth in LNG demand was relatively slow until the 2011 Fukushima disaster resulted in the
shutdown of nuclear reactors, placing increased pressure on gas-fired power stations and an increase in LNG demand of 18 Mt (2012 year
compared to 2010 year). § Projected LNG demand in Japan is primarily dependent on the country’s stance on nuclear power. Core’s Global LNG
Reference Scenario assumes that over
the 2013 to 2033 period, LNG demand grows at a rate of 0.5% p.a. South
Korea, also known as “Green Korea” focuses on an increase in renewable and nuclear fuelled power. As
such, gas/LNG is not expected to increase its market share materially. § Core’s Global LNG Reference Scenario reflects these plans,
with LNG consumption growing at 0.8% p.a. over the period to 2033 . Taiwan: § The Taiwanese Bureau of Energy has
stated that it intends to increase Taiwan’s energy security and ensure environmental protection. § The Taiwanese Bureau of
Energy has also stated that the country has an LNG supply target of 20 Mt by 2025. Core’s Global LNG
Reference Scenario is consistent with this trajectory, growing at a rate of 2.6% p.a. China: § Gas consumption in China is
expected to increase significantly over the period to 2033 as a result of increasing primary energy
demand and as the country targets lower energy emissions consistent with their twelfth five-year plan
spanning the 2011-2015 period. § There is a high level of uncertainty regarding the source of this gas
supply as China has access to locally-sourced (indigenous) gas, pipeline gas from adjacent countries
and imported LNG. § Core’s Global LNG Reference Scenario models growth from 2013 levels at a rate of 5.9% p.a. India: § Gas is
Korea: § The National Energy Plan in
expected to increase its share of primary energy in India over the period to 2033. § Similar to China, India has access to indigenous gas,
resulting in high levels of uncertainty over the source(s) of future supply. § India’s indigenous gas supply is currently priced well below
international LNG pricing, and Core expects that India will seek to minimise reliance on higher-cost LNG imports by accessing pipeline supply
and new indigenous gas sources. As a result, Core’s Global LNG Reference Scenario models growth from 2012 levels at a rate of 4.9% p.a. Other
Asia: § LNG
import terminals have been, or are being, constructed in Singapore, Malaysia, Indonesia and
Thailand. The Global LNG Reference Scenario assumes LNG consumption grows to increase market
share. § Analysis of plans for new LNG import terminals and LNG demand projections published by relevant authorities combined with
consideration of Gross Domestic Product (“GDP”) growth projections were used to derive demand projections. 6.3.2. Atlantic Region Europe: §
LNG forms an important component of Europe’s gas supply with a 14% market share in 2012. The remainder
is supplied by indigenous production and pipeline gas. Core has assumed that LNG will maintain this market share.AEMO 2013 GSOO | Eastern
& South Eastern Australia: Projections of Gas Demand for LNG Export 6. Global LNG Demand Outlook § Total LNG consumption in the Americas
in 2012 was 20 Mt, with 5 Mt in the USA and Canada. LNG Demand in the USA and Canada is expected to decline as those countries become
LNG exporters. § Other countries consuming LNG include Brazil, Argentina, Chile and Mexico (east coast). These
countries have significant domestic gas resources and LNG is used to meet short term imbalances or to supply areas not connected to
indigenous supply. It is therefore not projected to increase significantly.
2NC-AT:Economic Decline
The benefits of LNG exports outweigh the risks
Levi, CFR Energy Fellow, June 2012 (Micheal Levi,”A Stategy for US Natural Gas Exports” Online:
http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf)
A surge in low-cost U.S. natural gas production has prompted a flurry of proposals to export liquefied natural gas (LNG). A string of
permit applications are now pending at the Department of Energy (DOE), and more can be expected;
lawmakers are also debating the wisdom of allowing LNG exports. This paper proposes a framework for assessing
the merits of allowing LNG exports along six dimensions: macroeconomic (including output, jobs, and
balance of trade), distributional, oil security, climate change, foreign and trade policy, and local
environment. Evaluating the possibility of exports along all six dimensions , it finds that the likely
CQF
benefits of allowing exports outweigh the costs of explicitly constraining them , provided that appropriate
environmental protections are in place. It thus proposes that the DOE and the Federal Energy Regulatory Commission (FERC) approve
applications to export natural gas. It also proposes steps that the United States should take to leverage potential exports in order to promote its
broader trade and foreign policy agendas
Concerns about natural gas don’t outweigh the huge economic benefit
Loris , the Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation, 2/11/13 (Nicolas Loris, “U.S. Natural Gas Exports: Lift Restrictions and
Empower the States” Online: http://www.heritage.org/research/reports/2013/02/us-natural-gasexports-lift-restrictions-and-empower-the-states)
Technological advancements in directional drilling and hydraulic fracturing have led to an abundance
of natural gas production in the United States that is fundamentally changing the energy landscape.
The result has been more jobs, economic growth, and consistently low domestic natural gas prices in
what has been known to be a historically volatile market. In fact, the current price of natural gas may
be too low to sustain the current rate of development, as producers are flaring gas and in some cases
not even drilling for new dry gas wells. Many producers are seeking to expand to foreign markets
where prices are also much higher. Unfortunately, the current regulatory regime surrounding natural
gas has not adjusted to this huge influx of supply, particularly in the area of export regulations. The
Department of Energy (DOE) is delaying decisions to approve applications due to concerns raised by
some policymakers and energy-intensive companies that domestic prices will increase and adversely
affect American energy consumers. In reality, the concerns regarding American natural gas exports
are unsubstantiated and exaggerated and do not outweigh the broad economic benefits for America.
Congress should remove the DOE's authority for authorizing natural gas export permits, and introduce
reform that allows the states to control the environmental review and permitting process for natural
gas export facilitie
CQF
2NC-AT:Perm plan then cp
LNG exports must happen now if companies will want to pursue LNG exports in the future
Loris , the Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation, 2/11/13 (Nicolas Loris, “U.S. Natural Gas Exports: Lift Restrictions and
Empower the States” Online: http://www.heritage.org/research/reports/2013/02/us-natural-gasexports-lift-restrictions-and-empower-the-states)
CQF
Thus far, the DOE has only granted one permit out of the 17 applications the EPA received to export domestic LNG. All applications have FTAapproval but are under DOE review for approval to export to non-FTA countries.[26]
A number of countries around the world
already have LNG export terminals, and are expanding their export capacity. In fact, 46 LNG export
terminals exist worldwide, with Qatar being the world's largest exporter, and Algeria, Australia, Indonesia, and Malaysia all
substantial exporters as well.[27] Of the 13 LNG export projects currently under construction, eight of
them are in Australia.[28] Excluding the terminals proposed in the United States, there are more than 20 planned in other countries.[29] As
the Department of Energy wavers on approving LNG terminals, other countries are pursuing this
valuable opportunity. Of course, natural gas exports are not a zero-sum game. Companies in other countries
expanding their LNG exporting capacity do not necessarily negate opportunities for companies in the U.S. to do the same. If, however, a slow
permitting process needlessly delays export terminals, the economics could change as exports from other countries lower prices in regions the
U.S. wishes to engage. If exporting
LNG from U.S. ports is no longer economically viable as a result of
international competition, companies will not seek to build more terminals. But they should not be forced out of
opportunities by an unnecessarily slow DOE.
2NC-AT:Shale Mines Exhaust
Shale gas in in abundance, and production is expected to increase
U.S Energy Information Administration 12’ (U.S Energy Information Administration, Does the
U.S. Have Abundant Shale Gas Resources,
http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm)
Of the natural gas consumed in the United States in 2011, about 95% was produced
domestically; thus, the supply of natural gas is not as dependent on foreign producers as is the
supply of crude oil, and the delivery system is less subject to interruption. The availability of large
quantities of shale gas should enable the United States to consume a predominantly domestic supply
of gas for many years and produce more natural gas than it consumes. The U.S. Energy Information
Administration's Annual Energy Outlook 2013 Early Release projects U.S. natural gas production to
increase from 23.0 trillion cubic feet in 2011 to 33.1 trillion cubic feet in 2040, a 44% increase . Almost
all of this increase in domestic natural gas production is due to projected growth in shale gas
production, which grows from 7.8 trillion cubic feet in 2011 to 16.7 trillion cubic feet in 2040.
Shale gas production continuing to grow, developing millions of jobs, and saving
.
billions of dollars
Americas Natural Gas Alliance 12’ (Americas Natural Gas Alliance, U.S. Shale Gas Benefits,
http://anga.us/media/content/F7D1750E-9C1E-E786-674372E5D5E98A40/files/ihs%20shale%20gas%20jobs%20brochure.pdf)
Energy demand in the United States is expected to grow significantly. Shale gas will be
instrumental in meeting these challenges and will become more important in the American energy portfolio in
the future. Shale gas will support over a million additional jobs, nearly 20 percent of which will be direct
industry jobs. Over $200 billion in economic value will be added to the GDP by 2035. A 10 percent
reduction in electricity costs and a 50 percent or more decrease in natural gas prices will continue to
benefit American consumers, amounting to an average $926 of savings per household between
2012 and 2015. The federal, state and local governments will see great increases in annual revenue from tax receipts as shale
production increases over the next few years. The impact of shale development cannot be overstated.
If this shale
revolution had not begun in 2007, the United States would be relying heavily on expensive
LNG imports from other nations. However, recent years have seen natural gas prices plummet, jobs created at an
incredible speed, and an energy revolution that could reaffirm America’s position as an energy leader in the world.
Abundance of shale gas, studies predict a quadruple production increase within the next
30 years
Pikens (Pickens chairs the hedge fund BP Capital Management) 14’ (Boone Pickens, Boone Pickens, Jr., known as T. Boone
Pickens, is an American business magnate and financier.. Abundance, http://www.pickensplan.com/natural_gas/
Natural gas is one of America’s greatest resources. While reserves other resources are diminishing, new drilling
technologies and techniques are allowing us to recover natural gas in the huge shale deposits found all
across America. A recent Rice University study projects that U.S. shale gas production will more than
quadruple by 2040 from 2010 levels of more than 10 billion cubic feet per day, reaching more than 50
percent of total U.S. natural gas production by the 2030s. The study incorporates independent
scientific and economic literature on shale costs and resources, including assessments by
organizations such as the U.S. Geological Survey, the Potential Gas Committee and scholarly peer-reviewed
papers of the American Association of Petroleum Geologists. As President Obama has pointed out, the energy
available from natural gas contained in these shale deposits can provide ample supplies for the next
100 years
Cheap shale gas will dominate future U.S energy independent infrastructure
Chemical & Energy News 05/14/14 (Chemical & Energy News ,Cheap, Abundant Shale Gas Won’t Significantly
Cut U.S. Greenhouse Gas Emissions, http://cen.acs.org/articles/92/web/2014/05/Cheap-Abundant-Shale-Gas-Wont.html)\
The rapid expansion of shale gas production in the U.S. has triggered a polarizing debate: Environmentalists charge that methane leaks could
make shale gas a higher carbon emitter than coal, while some industry experts and the Obama Administration claim that cheap shale gas will
help cut emissions, even in the absence of policies that constrain carbon release. A new study aiming to settle that debate finds that abundant
shale gas by itself will neither slow nor accelerate the current rate of U.S. greenhouse gas emissions .
Hydraulic fracturing—a
technology that uses pressurized water to release natural gas out of tight shale rock formations—has boosted shale gas from less
than 1% of U.S. natural gas production in 2000 to 34% in 2012. Earlier studies on the effects of this
production jump have either done so by comparing emissions from shale gas to those from other fuels
or predicting the impacts of a flood of shale gas on energy markets. Last year, Richard G. Newell and
Daniel Raimi, energy economists at Duke University, decided to do both. The researchers had to consider a range
of intertwining issues that ultimately determine how shale gas will affect U.S. greenhouse gas emissions. For example, at power plants, burning
natural gas emits half the amount of greenhouse gases as coal does. But, during production and distribution, methane leaks could negate these
benefits. To complicate things further, there is some uncertainty about the magnitude of these leaks. Besides the emissions directly associated
with shale gas, the energy source’s net impact on emissions depends on the kinds of fuel it displaces. Switching to natural gas from high-carbon
coal could slow emissions, but displacing more expensive zero-carbon renewables could increase them. Meanwhile, if more shale gas leads to
lower energy prices overall, consumers might ramp up consumption, negating any potential cuts in emissions. In the researcher’s analysis, they
examined whether fuel switching is more important than increased consumption by turning to the U.S. Energy Information Administration’s
national energy model. The model projects how changes in the supply and prices of each fuel affect decisions about which energy sources
companies invest in and how much energy the U.S. consumes. They
ran the model from 2010 to 2040, comparing a
baseline scenario using current policies and production levels with a hypothetical scenario in which
shale gas dominates natural gas production. Next, they coupled the model’s results to Environmental Protection Agency data
on lifecycle greenhouse emissions from gas, coal, oil, nuclear power, and renewables. Newell and Raimi accounted for uncertainty about
methane leakage by employing a range of low- to high-leakage estimates.
The analysis suggests that by 2040, cheap,
abundant shale gas will displace more coal than renewables and nuclear power for electricity, cutting
emissions from electricity-generation by 5.1%. However, energy use in general will rise, causing total
U.S. greenhouse gas emissions to drop by only 0.3% from the baseline scenario. High methane emissions could
inflate total emissions by a modest several tenths of a percent. “Natural gas abundance alone has no impact on greenhouse gases,” Newell
says. But he points out that models from other researchers have shown that natural gas could be used as a bridge fuel as the U.S. moves away
from coal to low-carbon energy sources when paired with polices that put a price on carbon release. “If we had a carbon policy in place,
economic forces would be operating in concert to back out of carbon-intensive sources of energy and to reduce the total amount of energy
used, thereby reducing greenhouse gas emissions,” says Hillard Huntington, an energy economist at Stanford University. He cautions that
although the Duke study is important, there are large uncertainties in energy markets and that expansion of hydraulic fracturing to Asia or
increased coal exports from the U.S. could change the supplies and prices included in the team’s model.
2NC-AT: No Investment
Companies are ready to buy LNG, Texas exports prove
Kelly, Reporter, The Wall Street Journal Ross Kelly covers Australian companies for The Wall Street
Journal from its Sydney bureau, specializing in the energy, transport, media and property sectors. Ross
also covered the banking beat for the Australian Associated Press and was the agency's deputy finance
editor. , 7/1/14, (Ross Kelly, “Woodside Petroleum Agrees to Buy LNG from Cheniere” Online:
http://online.wsj.com/articles/woodside-agrees-to-buy-lng-from-cheniere-energy-1404174072)
CQF
SYDNEY— Woodside Petroleum Ltd. WPL.AU +0.50% 's deal for liquefied natural gas from a proposed U.S. export facility represents a deeper
push into energy trading, as the Australian company retools its strategy in the wake of a series of abandoned investments in oil and gas
production. Woodside
said Tuesday it will buy 850,000 metric tons of LNG a year from Cheniere Energy
Inc. LNG +0.36% 's proposed Corpus Christi terminal in Texas. Sales of LNG—gas cooled to a liquid form so
it can be transported by ship—are due to begin in 2019 and continue for at least 20 years. For Cheniere, the
deal locks in a customer at a time when it is seeking financial backing for the multibillion-dollar project ahead of a targeted start for
construction next year. Sharp increases in production of shale gas in North America have depressed domestic prices, prompting many
companies to envision terminals to ship cargoes of LNG to Asia, where demand is rising quickly. A wave of North American supplies would
threaten the profits of companies such as Woodside that operate or are building terminals on Australia's northern and eastern coast. Pressure
on Woodside is also mounting after management recently walked away from a deal to invest in a large natural gas discovery offshore Israel,
and last year delayed the multibillion-dollar development of the Browse gas field offshore Australia due to high costs. Woodside has operated
Australia's giant North West Shelf LNG project since 1989, and started up a second export facility known as Pluto in 2012. But the Perth-based
company remains a small player in LNG trading, an industry that is dominated by international energy companies such as Royal Dutch Shell
RDSB.LN -0.57% PLC and Total SA, FP.FR -1.70% and specialist trading houses such as Mercuria. Woodside said it would buy LNG from the
Corpus Christi plant with a view to selling it to customers at a higher price. "This agreement is a demonstration of how we are extending and
enhancing our marketing and trading capabilities and adding value to the portfolio," Peter Coleman, Woodside's chief executive, said in a
statement. Woodside shares closed up 0.5% Tuesday, outperforming a 0.4% fall in the wider market. Woodside
has agreed to pay
Cheniere a 15% premium to the monthly Henry Hub natural gas price—the U.S. domestic benchmark—plus a fixed
price of US$3.50 per million British thermal units. That implies a price of US$8.61 per million BTUs, based on the current Henry Hub price of
US$4.44 per million BTUs. Asian utilities are currently paying in the mid-to-high teens per million BTUs, giving Woodside room for profit after
shipping costs, provided regional demand remains strong. U.S. gas exports remain a contentious issue in Washington because of the potential
impact on domestic users. Canadian exports, however, are due to start in 2017, while Russia recently agreed to pipe natural gas to China.
People will invest in LNG even if it is risky, hedge funds prove
Hemming, Has been writing for the Sydney morning herald for 8 years and often writes about
international relations and natural gas and energy issues, 6/26/14 (Richard Hemming, “ US hedge funds
pump up LNG” Online: http://www.smh.com.au/money/investing/us-hedge-funds-pump-up-lng20140630-zsn79.html)
When this column covered the hype surrounding Liquefied Natural Gas last February, () its share price
had already climbed 65 per cent in the previous six months. We think it’s worth covering again, considering the stock
CQF
has exploded, increasing seven fold since then! Back in February LNG (ASX code LNG) was trading at 32 cents giving it a market cap of $A111
million and was trying to get develop a project called Magnolia in Louisiana, US. The project is slated to cost $US2.26 billion ($A2.4 billion) and
is designed to construct two 2mtpa “trains” (production lines), meaning four million tonnes of liquefied natural gas will go to “take or pay”
customers. The investment decision for the project is slated as 2015 and it could kick off as early as 2017 according to the company. Fast
forward to today and LNG’s shares are $2.33 delivering it a market cap close to $1.1 billion and it’s still
trying to develop that same project, and is still yet to get the crucial environmental approvals through the US Federal Energy Regulatory
Commission (FERC). So why the big move? For one thing,
a load of US hedge funds have entered the register via the
company’s $49.5 million capital raising in early May at 55 cents. That price is a massive discount to the company’s
current share price. Any investors at the current share price have to pray that they don’t get cold feet and start selling. The reason why these
because of the high demand for the
stuff as an exportable commodity on the one hand; and the difficulties in getting the gas liquefied because of the increasing costs.
institutions were interested is that the industry thematic for liquefied natural gas is exciting,
In the US it also relates to the difficulty in exporting, because of energy security fears. Only one licence has been granted in the US to export
liquefied natural gas, which is held by Cheniere Energy. The company’s Sabine Pass project in Louisiana is a long way in front of the LNG
company’s Magnolia project, with confirmed sales agreements and two processing trains, each of 4.5mtpa, scheduled to commence at the end
of next year.
Companies want to invest in exports – recent evidence proves
Wingfield, Washington Bureau for Forbes and a correspondent for Bloomberg news in Washington,
6/19/14 ( Brian Wingfield, “ Sempra Wins Final US FERC Approval for LNG Export Plant” Online :
http://www.bloomberg.com/news/2014-06-19/sempra-wins-final-u-s-approval-for-cameron-lngexports.html)
Sempra Energy (SRE) won final U.S. approval to build an export terminal for liquefied natural gas,
becoming the second such facility to win government approval. The Federal Energy Regulatory Commission voted
CQF
unanimously today to let Sempra’s Cameron LNG project in Louisiana move forward. The company said it plans to start building the estimated
$9 billion to $10 billion terminal later this year. “This is a landmark project that will bring economic prosperity and create thousands of jobs in
Louisiana,” Sempra Chairman and Chief Executive Officer Debra Reed said in a statement. “Today’s approval is another important step in
delivering natural gas to America’s trading partners abroad.” Democrats and Republicans in Congress have pushed to expedite approval of the
export terminals to send the fuel to Europe and reduce Russia’s energy dominance after it annexed Ukraine’s Crimea region. The
Republican-led House Energy and Commerce Committee in April approved and sent the full House a
bill that would speed Energy Department approval of LNG export applications. Cameron “will position America
as an energy superpower,” Senate Energy and Natural Resources Committee Chairman Mary Landrieu, a Louisiana Democrat, said today in a
statement.
LNG exports happening now Exxon contract proves
The Economist, reputable and professional journal of economics published monthly, 5/31/14 ( The
Econmist, “LNG Bubbling Up”, Online: http://www.economist.com/news/business/21603030international-gas-market-developing-buyers-will-gain-more-sellers-bubbling-up)
CQF
SQUEEZING and cooling gas until it becomes a liquid, and then shipping it by tanker, is inherently costlier than sending it down a pipeline. But
50 years since the first shipment left Algeria, liquefied natural gas (LNG) is no longer exotic, complicated or marginal. For the past two years the
global LNG trade has been in a flat spot, with little new supply. But on
May 25th Exxon Mobil said it had shipped its first
cargo from a $19 billion project in Papua New Guinea (pictured on the next page), the first in a wave of new
LNG supplies that are about to come to market. Projects under way mean that by 2018 over a third more LNG capacity will
come onstream—the equivalent of China’s current consumption of LNG and piped gas combined. By 2025 capacity could double, reckons EY, a
consulting firm. Australia has seven projects under construction, which will together supply 80 billion cubic metres (bcm) a year, which is more
than Germany’s entire current consumption of gas. Australia should become the largest LNG exporter after Qatar by 2016. Although piped gas
is set to grow too, LNG’s
share of the world’s gas supply is likely to rise from around 15-20% now to as
much as 30% if all the projects being planned come to fruition, says Dirk van Slooten of the International Gas Union (IGU), an industry
body.
2NC-AT:Methane Leaks
Even if Natural Gas does cause warming we can’t evaluate it yet, twenty years is too small
of a timeframe
Schrag, Daniel P. Schrag is the Sturgis Hooper Professor of Geology at Harvard University, Professor of
Environmental Science and Engineering, and Director of the Harvard University Center for the
Environment, Spring 2012 (Daniel Schrag “Is Shale Gas Good for Climate Change” Online:
http://schraglab.unix.fas.harvard.edu/publications/128_Schrag.pdf)
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One thing is clear: twenty
years is far too short a timescale over which to evaluate climate change policies.
This simple fact poses enormous problems for the formulation of climate change policy, as making
projections for even the next decade is difficult enough, to say nothing of projecting out over a
century. And yet it is the century timescale (at least) that matters. An insightful study by climate scientist Myles Allen and his colleagues13
showed that the peak warming in response to greenhouse gas emissions depends on cumulative greenhouse gas emissions over a period of
roughly one hundred years; moreover, the climate response to any speci½c emissions scenario is surprisingly insensitive to the emissions
pathway.14 They concluded that climate policy should focus on limiting cumulative emissions rather than setting emissions-rate targets. This
result has been replicated by several studies; all ½nd that it is the cumulative emissions over a century, not the rate of emissions, that is most
important for the climate response to greenhouse gas emissions. 15 This ½nding contradicts the argument that the rate of warming warrants
attention to shorter timescales. Such assertions are often made without mention of any speci½c rates or scenarios. In reality, different
emissions scenarios with different mixes of methane and carbon dioxide emissions, for example, result in very similar rates of warming over the
century. Focusing
on reducing methane emissions over the next two decades merely delays warming by
a few years by the end of the century–a small bene½t relative to efforts to reduce the cumulative emissions of 76 Is Shale Gas
Good for Climate Change? Dædalus, the Journal of the American Academy of Arts & Sciences greenhouse gases, which are dominated by carbon
dioxide.
Most comprehensive studies indicate fracking has minimal methane emissions
Allen et al, Cockrell School of engineering, 13
[Dr. David T. Allen earned his Ph.D. in chemical engineering from the California Institute of Technology in
1983, served 12 years on the engineering faculty at the University of California, Los Angeles, and then
joined the College of Engineering faculty in 1995. “Methane Emissions in the Natural Gas Supply Chain:
Production,” http://dept.ceer.utexas.edu/methane/study/]
During the yearlong study, the UT-led study team selected times and general locations for sampling activities,
and companies provided access to completions that occurred during those periods. Production sites near the
completions were selected by the study team for sampling based on lists of available sites in the region provided by the participating
companies. The
sampling was designed to be representative of company operations in the Gulf Coast,
Mid-Continent, Rocky Mountain and Appalachian regions. Measurements of active equipment at 150
production sites with 489 wells, 27 well completion flowbacks, nine well unloadings and four well workovers were included
in the study. The types of sources measured account for two-thirds of methane emissions that occur
during natural gas production, as estimated in the most recent national greenhouse gas inventory. Measured emissions
from completion flowbacks were much lower than previously estimated. During hydraulic fracturing,
liquids that typically consist of water, sand and additives are injected at high pressure into lowpermeability formations. After a well is fractured, it is cleared of sand and liquids that were injected into the well in a process called
completion flowback. Two-thirds of the well completion flowbacks measured in the study either captured or
combusted emissions, resulting in emissions measurements that were 99 percent lower than would
have occurred in the absence of capture and combustion. The remaining one-third of completion
flowbacks vented methane, but these were low-emitting wells, so in total, the emissions from
completion flowbacks were 97 percent lower than current EPA estimates. "The net emissions for
completion flowbacks is significantly lower than previous estimates, indicating the type of emission
control activities observed during these events are very effective," Allen said.
Even assuming high methane leaks, fracking is better than coal
Magill, Senior Science Writer for Climate Central, 2/17
[Bobby Magill, “Natural Gas May Benefit Climate Despite Methane Leaks,” February 13th, 2014,
http://www.climatecentral.org/news/burning-natural-gas-benefits-climate-despite-methane-leaks17061]
Methane leaks are common in the U.S. natural gas production and distribution system, but they do
not fully negate the climate benefits of using natural gas to produce electricity over burning coal for electric power,
according to a new Stanford University analysis. The paper, to be published Friday in the journal Science, concludes
that U.S. Environmental Protection Agency inventories underestimate methane emissions from
natural gas production, but hydraulic fracturing — a process of fracturing underground rock to release
natural gas into wells — is not likely the largest source of methane leaks. The study says better
science needs to be done to determine where the methane emissions are coming from and how to
stop them. Myriad studies have been done showing that natural gas production is a source of excess methane emissions, sparking concern
among scientists that natural gas may not be a “bridge fuel” between coal and renewables because the affect natural gas has on climate change
may have been underestimated. Methane is about 100 times as potent as carbon dioxide as a greenhouse gas soon after being released into
the atmosphere, and about 34 times as potent as CO2 after about 100 years in the atmosphere. The
Stanford-led paper, which
reviewed more than 200 studies examining emissions from natural gas production, paints a complicated picture of what we know
about methane emissions, and whether it makes sense to replace coal-fired power plants with those running on natural gas. Atmospheric
testing shows that methane emissions are roughly 50 percent higher than EPA estimates, said study lead author Adam Brandt, assistant
professor of energy resources engineering at Stanford University. Brandt and his team reviewed studies that measured methane emissions
both on the ground near natural gas production facilities and in the atmosphere, where the studies found
methane emissions to be
between 25 and 75 percent higher than EPA estimates. But EPA estimates, which the agency reduced by 30 percent last year,
exclude natural sources of methane and emissions suspected to be from abandoned oil and gas wells because the amount of methane those
sources emit are unknown. The EPA calculates methane emissions by counting the number of cows, oil and gas wells and oil refineries in a
region, then estimates total emissions based on how much methane each of those soruces is expected to emit. The Stanford-led study was
unable to calculate total methane leakage from the energy industry, making it difficult to determine the exact climate benefit of using natural
gas over coal for electric power generation, Brandt said. Over
a 100-year period, the emission estimates from Brandt’s
team suggest that the climate impact of burning natural gas is less than that of coal. The team examined
previously published “lifecycle assessments” of coal and natural gas, which analyze the overall climate impacts associated with each fossil fuel.
Most lifecycle assessments use EPA greenhouse gas inventories to conclude that natural gas has less of an aggravating effect on climate change
than coal. But the paper concludes that even
though official EPA natural gas emissions inventories underestimate
methane in the atmosphere, producing and burning natural gas is still better for the climate than coal
over a 100-year period.
If we emit Methane, then so do they
Vaidyanathan, Staff writer at eenews, 2012
[Gayathri Vaidyanathan, E&E reporter, “The entire natural gas system' is driving methane emissions -MIT study,” November 28, 2012, http://www.eenews.net/stories/1059973005]
When energy companies extract shale gas, they emit only a fraction more methane into the
atmosphere than companies doing conventional gas drilling, according to a new study. That fraction -- about
216 gigagrams of methane in 2010 -- was due to hydraulic fracturing, a technique in which drillers inject pressurized water, sand and chemicals
to fracture shale rock and release trapped gas. Fracking
accounted for 3.6 percent of the 6,002 gigagrams of methane
emitted overall by natural gas operations in 2010. The implication is that shale gas drilling operations leak
most of their methane from much of the same points as conventional gas drilling operations:
pipelines, compressor stations, valves and other point sources. These account for about 96.4 percent
of the emissions from a gas production site, the study finds. The study, by researchers at the Massachusetts Institute of
Technology, was published this week in Environmental Research Letters. The work did not receive any industry funding,
although the research institute, MIT Energy Initiative, collaborates extensively with industry. "The majority of GHG [greenhouse
gas] emissions are not related to the 'unconventional' nature of shale gas; rather it is the entire
natural gas system, including compressor stations, gathering pipelines, transportation and distribution systems that should be better
assessed for potential emissions reductions," wrote Sergey Paltsev, co-author of the study and assistant director for economic research at the
MIT Joint Program on the Science and Policy of Global Change, in an email. The
researchers studied methane emissions
from the time a well is first fracked to the ninth day of its life -- a process industry refers to as "completion." During
this time, some injected water and brine returns to the surface, together with methane. Operators choose to either capture this gas and
route it to a pipeline, burn it by flaring or vent it into the atmosphere where it can wreak climate havoc.
Claims of methane leaks are over-hyped
Wiener-Bronner, Staff writer at the wire, 2014
Danielle Wiener-Bronner, 4/23/14, “Don't Worry About All Those Gas Well Methane Emissions the EPA
Missed,” http://www.thewire.com/national/2014/04/dont-worry-about-all-those-methane-emissionsthe-epa-missed/361134/]
Last week, a study found that drilling activities at a number of natural gas wells in Pennsylvania emit 100 to 1,000 times
more methane into the the atmosphere than the Environmental Protection Agency (EPA) had predicted. Which actually might not
be as big of a deal as it would appear, according to the New York Times's Andrew Revkin. "Toward a Better Understanding and Quantification of
Methane Emissions from Shale Gas Development," ran in the Proceedings of the National Academy of Sciences of the United States last week
and concluded that the EPA had significantly underestimated the amount of methane emitted during the natural gas drilling process. According
to the authors: We identified a significant regional flux of methane over a large area of shale gas wells in southwestern Pennsylvania in the
Marcellus formation and further identified several pads with high methane emissions. These shale gas pads were identified as in the drilling
process, a preproduction stage not previously associated with high methane emissions. To reach their conclusion, researchers used data from a
plane that flew over an area with oil well pads in southwestern Pennsylvania over two days in June of 2012 and measured levels of greenhouse
gas emissions in the area. The Los Angeles Times explains: Researchers flew their plane about a kilometer above a 2,800 square kilometer area
in southwestern Pennsylvania that included several active natural gas wells.
Over a two-day period in June 2012, they
detected 2 grams to 14 grams of methane per second per square kilometer over the entire area. The EPA’s estimate for the
area is 2.3 grams to 4.6 grams of methane per second per square kilometer... The researchers determined that the wells
leaking the most methane were in the drilling phase, a period that has not been known for high
emissions. But, according to Revkin, we should still take the study with a grain of salt. He argues that
it's dangerous to generalize based on just two days of data, and that that it's more likely that the
numbers reflect problems with specific gas wells, rather than drilling in general. He writes: Much of the
news coverage and commentary [on the study] was greatly oversimplified, implying that airplane
measurements taken on two days in 2012 and showing high methane levels over a handful of wells
(and nothing unusual over almost all the other wells in the region) pointed to an extraordinary new
pollution and climate change risk. In fact, he continues, the data could be taken as a sign that drilling
for natural gas could be an effective way to move away from coal: "The study is consistent with other
recent work covered here that shows there are specific and tractable issues that can be addressed,
making gas production far less leaky and thus a legitimate successor to coal mining." Revkin adds that
according to Cornell University geologist Louis Derry, the methane measured may have predated the
well drilling. Derry says: Unfortunately, we have no equivalent data on gas concentrations in this area (or just about any other place) from
prior to the start of drilling with which to compare. This would have been particularly valuable in an area with so much coal, where we might
expect high fluxes prior to any shale gas drilling
Fracking and natural gas are not responsible for methane emissions
Magill, Senior science writer for Climate central, 2014
Bobby Magill is the senior science and energy writer at climate central, February 13, 2014, “Natural Gas
May Benefit Climate Despite Methane Leaks,” http://www.climatecentral.org/news/burning-naturalgas-benefits-climate-despite-methane-leaks-17061]
Studies that have shown high methane leakage rates are not likely representative of the entire natural gas
industry, the study says. “We don’t know what’s causing excess natural gas leakage,” Brandt said. “We don’t know how much (of the)
emissions are from hydraulic fracturing. Hydraulic
fracturing is likely to produce only a fraction of the emissions.”
Hydraulic fracturing, or “fracking,” is a controversial method of injecting millions of gallons of water, sand and chemicals underground at
high pressure, cracking open crude oil- and natural gas-bearing rock formations and releasing the hydrocarbons to a well at the surface.
Advances in fracking technology, along with horizontal and directional drilling techniques, are responsible
for current shale oil
and gas boom across the U.S., but the technique is widely feared to contaminate surface and groundwater and emit unquantified
amounts of greenhouse gases. Brandt said fracking is unlikely to be the largest source of methane emissions
because high methane leakage rates were recorded before the current fracking boom began within
the past decade. Paper co-author and Massachusetts Institute of Technology lecturer Francis O’Sullivan said that methane
emissions from fracking are still significant — about 1 teragram per year in the U.S. — but those emissions account for only
a small portion of overall natural gas methane emissions.
2NC-AT: Links to Politics
Exports are passing with bipartisan support and little controversy
Harder, Energy Reporter for WSJ, 6/25
[Amy Harder, “House Passes Bill Speeding Up Liquefied Natural-Gas Exports,” 6.25.14,
http://online.wsj.com/articles/house-passes-bill-speeding-up-liquefied-natural-gas-exports1403736928]
The U.S. House of Representatives passed legislation Wednesday that puts a deadline on when the Obama administration must
decide whether to approve projects to export liquefied natural gas. The bill, which passed 266-150, with 46
Democrats joining nearly all Republicans in voting yes, requires the Energy Department to make a final decision on
projects to export liquefied natural gas 30 days after they complete environmental reviews at the Federal Energy Regulatory Commission. The
bill's prospects in the Senate are unclear, though this
measure has a better chance at passing the Senate than most
bills the GOP-controlled House passes. The policy has support from many senators within President
Barack Obama's own party, including several Democrats up for re-election this year, and the White
House didn't issue a veto threat like it did for another energy bill the House passed Tuesday. Of the
three votes the House has cast on oil and natural gas exports in recent years, this bill received the
most support from Democrats. Among the Democrats who voted yes were Rep. Steve Israel of New York, who chairs the
Democratic Congressional Campaign Committee, and Rep. Eliot Engel of New York, who voted against the bill in committee. The bill's chief
sponsor, Rep. Cory Gardner (R., Colo.), said he is talking "with a number of senators" about moving the measure in the upper chamber, though
he isn't talking with the one person who is pushing a near identical bill: Sen. Mark Udall (D. Colo.), who is facing a challenge from Mr. Gardner
to take over his Senate seat in a race that polling shows is close. The only difference in the two pieces of legislation is Mr. Udall's version
requires the administration to make a decision within 45 days instead of 30 days. "I have not directly spoken to Sen. Udall," Mr. Gardner said in
an interview this week before his bill passed. "He's familiar with the work I've been doing." The two politicians have been sparring over naturalgas exports policy ever since Mr. Gardner entered the race and the Ukraine-Russian conflict escalated and accentuated Eastern Europe's
dependence on Russian gas. As in many states, oil and natural gas production in Colorado has risen significantly in recent years thanks to
advances in drilling technology. In response to this energy boom, companies are scrambling to export both oil and natural gas, which each face
varying levels of restrictions. On Tuesday, The Wall Street Journal reported that the Commerce Department will allow at least two energy
companies to export a minimally processed ultralight kind of oil called condensate. The Obama administration has given final approval to two
companies to export natural gas, out of some two dozen projects pending review. Congress is unlikely to push legislation any time soon
changing the nation's decades-old laws restricting oil exports, but support is growing to do something on natural-gas exports. The Senate
Energy and Natural Resources Committee is planning to vote on Mr. Udall's legislation, which is co-sponsored by Sen. Mary Landrieu (D., La.),
chairman of the energy panel who is in a tight re-election race against Rep. Bill Cassidy (R., La.). The committee hasn't set a date for the vote,
though a spokesman for Mr. Udall said he expects it to be within the next month. The original versions of the bills introduced by Messrs.
Gardner and Udall expanded the category of countries that can receive natural-gas exports more quickly. The current versions, including the
one the House passed on Wednesday, are a mere two pages long and includes only a deadline to make final decisions and a requirement that
the Energy Department disclose what countries the natural gas will be exported to. The most substantive component that expanded the type of
countries that can receive gas exports more quickly was ultimately dropped from both versions. "We had tried of course to make it more
expansive," Mr. Gardner said. "But to get the broadest base support and strong bipartisan support, we had to negotiate the language." Mr.
Udall, in a statement, also touted his work to be bipartisan, despite the fact the two aren't working together. "I have been proud to lead the
bipartisan effort in Congress to ensure Colorado's natural gas resources help create jobs and strengthen global security," said Mr. Udall, who
didn't mention Mr. Gardner's bill. The lower chamber's consideration of Mr. Gardner's measure was one of three energy-related bills the House
is considering this week. The
House on Tuesday passed legislation streamlining federal reviews of crossborder pipelines, which Republicans say would avoid a repeat of the long regulatory delays facing the
Keystone XL pipeline. The House is also considering legislation that expands oil and natural gas
drilling. Both of these measures have very little chance at gaining any traction in the Senate.
The Obama Administration supports LNG exports
Sreekumar, Arjun is a value-oriented investor focusing primarily on the oil and gas sector, with an
emphasis on E&Ps and integrated majors. He also occasionally writes about the US housing market and
China’s economy, 5/18/2013 ( Arjun Sreekumar, “President Obama Supports Natural Gas Exports”
Online :http://www.fool.com/investing/general/2013/05/18/president-obama-supports-natural-gasexports.aspx)
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Earlier this month, President Obama said the U.S. will probably become a net exporter of natural gas
by the close of this decade, hinting that his administration will support additional liquefied natural gas
export projects from the United States. That prospect now looks more likely, as the administration on
Friday cleared the way for the Freeport LNG project -- a $10 billion facility on Quintana Island, Texas and partly owned by
ConocoPhillips (NYSE: COP ) , Dow Chemical (NYSE: DOW ) , and Osaka Gas -- to export gas to countries that don't have a free-trade agreement
with the United States. That makes it only the second such project to receive the Department of Energy's stamp of approval. The first was
Cheniere Energy's (NYSEMKT: LNG ) Sabine Pass terminal in Louisiana, which was given the green light back in 2011. In total, the DOE has
received more than two dozen applications for permits to export LNG to non-free-trade nations -- a group that includes China, India, Japan, and
members of the European Union. In deciding whether to approve additional projects, the DOE conceded that it would take into account
"market developments" at the end of the year, most likely referring to a potential rise in U.S. gas prices as a result of more ventures being
approved. The department said it will assess the remaining applications in the order they were received.
Support of Exports is growing in Congress
Dlouhy, Reporter on Energy for fuelfix, 13
[Jennifer A Dlouhy covers energy policy, politics and other issues for The Houston Chronicle,
“Congressional opposition to natural gas exports seen easing,” 11.21.13,
http://fuelfix.com/blog/2013/11/21/congressional-opposition-to-natural-gas-exports-seen-easing/]
WASHINGTON — The controversy surrounding exports of U.S. natural gas hasn’t disappeared, but recent
congressional votes suggest the tide may be turning on the issue, as the Energy Department
authorizes more companies to sell the fossil fuel overseas. On Thursday, the House of Representatives voted
142-276 to reject a plan from Rep. Peter DeFazio, D-Ore., that would block exports of natural gas produced on
public lands. That was a greater margin of support for the foreign energy sales than during three similar
votes last year. DeFazio said the foreign sales threaten a resurgence in domestic manufacturing, as companies move operations back to
the United States to take advantage of cheap power supplies and feedstocks from surging U.S. natural gas production. Most experts believe
that by expanding the marketplace for natural gas harvested inside the U.S., exports could cause the domestic price to rise — but opinions vary
widely on just how much. “We have manufacturing companies bringing production back to the U.S. because of our plentiful natural gas and
saying it is to our advantage, our energy is cheaper here, our feed stocks are cheaper here,” DeFazio said on the House floor. “If we begin to
export in great volume the raw material, the feed stock, the natural gas through a liquefied process, then suddenly it will be we are in the
international market. It means a dramatic run-up in natural gas prices. We will lose our competitive advantage for domestic manufacturing.”
But Rep. Michael Turner, R-Ohio, said the idea of hoarding U.S. natural gas is “ill-conceived.” “Increasing
natural gas exports
would provide our allies with an alternative and reliable source of energy, helping to strengthen our
economic and geo-political partnerships,” Turner said. “Restraining U.S. natural gas exports would
only hurt our abilities to bolster strategic partnerships and create jobs right here at home.” Ultimately, 56
Democrats joined 220 Republicans in voting against DeFazio’s plan, while 140 Democrats and 2 Republicans — Jeff
Fortenberry of Nebraska and Walter Jones of North Carolina — voted for it. (See the full vote tally here). The vote revealed a slight
uptick in the number of lawmakers who either support energy exports — or at least don’t want to ban
them outright. Bill Cooper, the president of the Center for Liquefied Natural Gas, said the wider
margin “demonstrates growing momentum in Congress for liquefied natural gas exports.” “With the
defeat of this amendment, the House of Representatives (reaffirmed) its commitment to free trade,”
Cooper said.
There is bipartisan voter support for LNG exports
Cicanek, Media Relations Associate at API, 14
Zachary Cicanek is a media relations associate at American Petroleum Institute, the only national trade
association that represents all aspects of America's oil and natural gas industry. 4.24.14, “What America
is Thinking on Energy Issues – Poll: Maryland voters support LNG exports, investments in oil and natural
gas,” http://www.api.org/news-and-media/news/newsitems/2014/apr-2014/poll-maryland-voterssupport-lng-exports-investments-in-oil-and-natural-gas]
Annapolis, Md., April 24, 2014 ─ Strong bipartisan majorities of registered Maryland voters support increased
investment in energy infrastructure, including the proposed liquefied natural gas (LNG) export
terminal at Cove Point, according to a new poll the Maryland Petroleum Council (MPC) is releasing as part of the American
Petroleum Institute’s (API) campaign highlighting the voices of Americans. “This poll shows strong majorities of Maryland voters support more
domestic oil and natural gas development, regardless of party affiliation,” said Drew Cobbs, executive director of MPC, “Marylanders get it;
voters also
voiced their strong support for exports of natural gas from the Cove Point LNG terminal. 74 percent
agreed that exporting natural gas helps create U.S. jobs, and 77 agreed that exporting natural gas
from facilities such as Cove Point in Maryland is good for the state's economy. “The Cove Point terminal
America’s economic future, the availability of affordable and reliable energy, depends on the policies created today.” Maryland
represents one of Maryland’s best opportunities to participate in the energy revolution, create thousands of jobs, and generate millions in state
revenue,” said Cobbs. “America is now the world’s leading producer of natural gas, and Maryland voters want to be a part of this opportunity to
strengthen America’s position on the international stage.” API
and MPC will use social media, advertising and API’s
grassroots resources of more than 24 million Americans to communicate the importance of America’s
energy future to members of Congress, the administration and elected officials at every level of
government. The state-wide telephone poll, conducted for API by Harris Poll among 602 registered Maryland voters also found
that: 91 percent of registered Maryland voters agree that increased development of the country’s
energy infrastructure would help create jobs in the U.S. 88 percent say increased production of
domestic oil and natural gas resources could help stimulate the economy. MPC is a division of API,
which represents all segments of America’s oil and natural gas industry. Its more than 600 members
produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million
U.S. jobs and 8 percent of the U.S. economy.
A2: China REM scenario
No REM regulations now, and it’s clean
Taquintic-Misa, Staff Writer for IB times 6.20
Esther Tanquintic-Misa, 6.20.14, “China Rare Earths: Increases 2014 Mining Quotas on Light Rare
Earths,” http://au.ibtimes.com/articles/556462/20140620/china-rare-earths-miningquotas.htm#.U712L_ldXCs]
China's Ministry of Land and Resources (MLR) has announced the country has increased its 2014
mining quotes on light rare earths at 105,000 tonnes, a jump of 12 per cent from last year. Mining quotas for heavy
rare earths and tungsten, in the meantime, were retained at 2013 levels. View Full Image Reuters The Australian High Court has rejected the
challenge of the mining tax’s validity led by Andrew Forrest’s Fortescue Metals. Aside from raising negligible revenue, the imposition of the
minerals resource rent tax has upset miners who argued that they are already paying royalties to state governments including income tax to the
federal government. In a statement, MLR said the mining
quotas for rock-type light rare earths grew by 11,200 tonnes
(REO) or 15 per cent higher than a year ago at 93,800 tonnes (REO). Mining for heavy rare earths and tungsten for this year have
been set at 17,900 metric tonnes and 89,000 tonnes, respectively. "The ministry will keep exercising total control over the exploitation placing a
limit on the total volume of rare earth and tungsten to be mined. The output quotas of tungsten will remain unchanged from last year's levels
and there will be a cap of 89,000 tons for tri-oxide in 2014. While the ministry shall no longer maintain total control over the exploitation quota
for antimony as of this year," the ministry said in the statement. Rare earths are 17 elements, including lanthanum, tungsten, neodymium and
molybdenum, that are highly essential for the manufacture of high tech gadgets and armaments. The MLR likewise announced no new licenses
for tungsten and rare earths prospecting and mining will be given before June 30, 2015, except for those state-sanctioned projects involving
mergers and reorganizations as well as optimal distribution. On Monday, the Ministry
of Industry and Information
Technology (MIIT) said the country has 67 rare-earth recycling projects. "In the name of resource
recovery and comprehensive utilization, some rare earth recycling enterprises purchased and
processed illegal rare earth mineral products used with its smelting and separation production line,
while trading in the black market, which has seriously disrupted the rare earth market order, the
government will resolutely crack down on various illegal activities," the ministry said on its Web site.
2NC: Specific Solvency
Jobs
LNG increases jobs
Levi, CFR Energy Fellow, June 2012 (Micheal Levi,”A Stategy for US Natural Gas Exports” Online:
http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf)
Building new LNG export facilities would create a substantial number of temporary construction jobs. Cheniere estimates that its
2.2 billion cubic feet per day facility will take roughly two years to build and support roughly 3,000
jobs at its peak (Oil & Gas Monitor). Scaling this up suggests that allowing LNG exports could lead to
as many as 8,000 temporary construction jobs if enough capacity for six billion cubic feet of daily exports
was developed in the next several years.
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Natural Gas creates more jobs than the coal industry
Schrag, Daniel P. Schrag is the Sturgis Hooper Professor of Geology at Harvard University, Professor of
Environmental Science and Engineering, and Director of the Harvard University Center for the Environment, Spring
2012 (Daniel Schrag “Is Shale Gas Good for Climate Change” Online:
http://schraglab.unix.fas.harvard.edu/publications/128_Schrag.pdf)
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Historically, the coal industry has been better organized than the natural gas industry, but natural gas has one important advantage: shale
gas has resulted in substantial job growth in the United States, creating far more jobs than would
come from an increase in coal production. Consider the case of Pennsylvania, where coal production
exceeds gas production on an energy-equivalent basis, but employment by the gas industry now
exceeds employment by the coal industry. A price on carbon would be in the best interests of the natural gas industry;
whatever market losses would come with the incentives for renewable and lowcarbon technologies would be more than compensated by the
decline in coal consumption and the rise in natural gas demand. With a price on carbon, we could see a slight drop in demand for natural gas in
the residential, commercial, and industrial sectors, but the elimination of even half the coal from the electricity sector would increase natural
gas demand by roughly 25 percent, thus driving up the price (and the pro½tability) of natural gas. Building a coalition between the natural gas
industry and the environmental community to support a comprehensive climate policy will not be easy. The oil and gas industries have long had
a combative and distrustful relationship with the environmental movement. They understand that climate mitigation will ultimately mean an
attack on all fossil fuels, not just coal, and so supporting climate legislation may prove folly over the long run, even if there are substantial
economic bene½ts over the next two decades. But if the oil and gas industries will not use their ½nancial and political power to support climate
legislation directly, dual attacks on the coal industry by environmental groups and the natural gas industry will still provide substantial bene½ts
in terms of progress toward a low-carbon world. The key is not just to displace some portion of current coal use in the United States, but rather
to weaken severely the coal industry’s political power by virtually eliminating conventional coal use in the United States. A ½rst step could be
for the oil and gas industries to support the new epa regulations on sulfur and mercury, which would likely force the closure of many older coal
plants that were effectively grandfathered under the Clean Air Act and its later amendments. In the one hundred–year war to build a lowcarbon world, it is not necessarily prudent to open up multiple fronts in early battles. By
focusing current political efforts on
attacking the coal industry and leaving the oil and gas industries out of the initial ½ght, a path toward a lowcarbon economy in the United States can be constructed in a politically pragmatic manner. This does not
mean giving the gas industry a free pass on irresponsible practices on drilling or waste disposal. By leveraging the ½nancial self-interest of the
natural gas industry to broaden political support for anti-coal policies, environmental groups can simultaneously use a grassroots campaign to
pressure existing coal-½red power plants to shut down. The success of this strategy will determine whether shale gas is indeed good for climate
change
LNG exports adds jobs to the economy
Cooper, President for Center of Natural Gas, 2013 (Bill Cooper, BILL COOPER has two decades of experience in various
aspects of the energy industry, having served in both the public and private sectors. Prior to serving in his full-time capacity as President of the
Center for Liquefied Natural Gas (CLNG), he was a partner at the law office of Hunton & Williams LLP. Mr. Cooper also served as counsel to the
US House Energy and Commerce Committee. He was a drafter and lead negotiator for the Pipeline Safety Improvement Act of 2002, and he was
also a lead negotiator for the House on several provisions of the national energy policy bills in the 107th and 108th congresses. Earlier in his
career, Mr. Cooper served as general counsel for a natural gas utility company. In addition, he is a frequent speaker on energy and natural gas
issues. CLNG is an association of LNG producers, shippers, terminal operators, energy trade associations and natural gas consumers. Its goal is
to enhance public education and understanding about LNG by serving as a clearinghouse for LNG information, “LNG: Fueling the Future” Online:
http://web.a.ebscohost.com.ezproxy.lib.utexas.edu/ehost/detail?vid=2&sid=204b7be8-96b3-4987-b6de868805e0875c%40sessionmgr4005&hid=4104&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=a9h&AN=85177983)
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A few short years ago, the
US was a net importer of natural gas. Today, due to the discovery of vast supplies of
natural gas and significant technological advancements in unlocking these reserves from shale, the US
is poised to become a net exporter of natural gas, which will help grow the nation's economy, create
thousands of jobs and improve the global environment. Despite a sluggish economy, America is faced with a
great opportunity. Its wealth of natural gas is so considerable that the US has enough resources to meet its own needs while uniquely
positioning itself to sell gas in overseas markets. Concerns that this could adversely impact the US economy have been alleviated with the
recent release of a highly anticipated report on liquefied natural gas (LNG) exports commissioned by the US Department of Energy. The
report confirms that, if the US allows the export of natural gas, the impact on prices will be minimal
and the US will experience net economic benefits. A boon to US industry. Selling a small percentage of
the US's natural gas resources to its trading partners will require the construction of LNG liquefaction
facilities. These facilities convert ordinary natural gas into a liquefied state by cooling it to -260°F, which enables it to be
economically transported by ship. Each facility represents a multibillion-dollar investment back into
the US economy. In addition to these investments, exporting LNG will help the US economy in a
number of other ways. First, LNG exports will generate tens of thousands of jobs. According to the US
International Trade Administration, $1 billion (B) in exports creates 6,000 new jobs. Current estimates
project between $13 B and $25 B in LNG exports, creating approximately 150,000 jobs. These jobs would
populate a number of industries throughout the supply chain, including manufacturing, natural gas processing and
pipefitting. The construction and operation of liquefaction facilities would require thousands of design, engineering and construction jobs.
Developing LNG will also produce additional natural gas liquids, which are vital feedstocks to the plastics and fertilizer industries.
Russia
LNG Exports check Russian expansionism
Editorial Board 3/20
[The Editorial Board publishes Oped articles for usatoday.com, “Export natural gas to weaken Putin: Our
view,” 3.20.14, http://www.usatoday.com/story/opinion/2014/03/20/natural-gas-export-russiapresident-vladimir-putin-editorials-debates/6670165/]
To Americans used to thinking of energy in terms of the Middle East, the names of the world's top producers of natural gas might
come as a surprise. No. 1 is the United States. No. 2 is Russia. Together they stand as the giants of gas production. What
separates them is that the U.S. consumes its gas, while Russia has become the world's largest exporter — a
key reason why President Vladimir Putin felt confident that he could seize Crimea from Ukraine and
get away with it. Russia supplies 30% of Europe's gas needs, making it hard for European leaders to
muster the resolve to resist. The good news is that the West can turn the tables on Putin, freeing Europe
from its dependency and in the process making Russia pay dearly. That can't be done fast enough to neuter the
current crisis, nor will it come cheaply. But if Putin believes his actions will drive Europe toward energy independence, he'll have to think twice.
Deprived of its biggest market, Russia's fragile, energy-based economy would erode, along with its
power and Putin's stratospheric popularity. OPPOSING VIEW: Ship know-how, not natural gas For starters, Europe could
produce more of its own natural gas, or find replacements. Poland is sitting on large fields and moving to develop them — a subject of
discussion during a visit this week from Vice President Biden. Germany could become much less dependent on Russia by approving hydraulic
fracturing (fracking for short) and reversing its foolish decision to abandon nuclear energy. Second, the
United States — now
nearly energy independent — could export liquefied natural gas to both Europe and Asia. There are
many good reasons for this. The USA has 100 years to 120 years of proven reserves and could
significantly boost its economy with the billions of dollars a year that would pour in from a significant
export program. The specter of Putin using natural gas spigots as a way to dominate Ukraine, while
keeping other nations at bay, is all the more reason to get going. The United States could export 12
billion cubic feet a day, equal to about 15% of current production, while hardly breaking a sweat. The
Energy Department estimates that this would have only a modest impact on domestic prices, more
than offset by the economic gain.
Russia experiencing recession now
BBC, 3/30/14 (BBC, “Russia Experiencing Recession now IMF says” Online:
http://www.bbc.com/news/business-27221345)
Russia is "experiencing recession now " because of damage caused by the Ukraine crisis, the
International Monetary Fund (IMF) has said. The fund, which cut its growth forecast for Russia, said $100bn (£59bn) would
leave the country this year. Antonio Spilimbergo, the IMF's mission chief in Moscow, said international sanctions were damaging the economy
and threatening investment. Russia's economy contracted in the first three months of this year. But Mr Spilimbergo said he expected that to
continue. "If you understand by recession two quarters of negative economic growth, then Russia is experiencing recession now," he added.
"The difficult situation and especially the uncertainty surrounding the geopolitical situation... and escalation of sanctions are weighing very
negatively on the investment climate."
The IMF cut its 2014 growth forecast for Russia to 0.2% from 1.3% and
said it expected the country's economy to grow by only 1% next year. Credit ratings agency Standard
& Poor's has already cut Russia's rating to one notch above "junk" status. And last week Russia's
central bank raised its key interest rate from 7% to 7.5% in an effort to defend the value of the rouble, which has lost
more than 8% against the dollar so far this year. Investor flight Mr Spilimbergo said the interest rate rise would reduce the rate of inflation, but
that it would not be enough to prevent consumer prices rising more than 6% in 2014. Russia itself has expressed concerns about investors
moving money out of the country amid tensions and sanctions over its intervention in Ukraine. Its central bank said $64bn had left the country
in the first quarter of the year - more than the capital outflows registered for the whole of 2013.
The investor flight has partly
been prompted by US and EU sanctions targeting a number of Russian companies and high-profile
business figures, including those close to President Vladimir Putin. T he Russian government has retaliated with a
warning that the sanctions could be damaging for Western energy firms. US Treasury Secretary Jack Lew has said the sanctions have so far
caused "a quite substantial deterioration in Russia's already weak economy".
Warming
LNG produces very low emissions
Mokhatab et. al. Saeid Mokhatab has been on the international advisory board of a number of petroleum/energy consulting firms
around the world and has been actively involved in several large scale gas-field development projects, concentrating on design,
2013
precommissioning and startup of processing plant, Independent Gas-Engineering,
, (Saeid Mokhatab ( Also John Mark, Jaleel Valappil,
Jaleel V. Valappil is a senior engineering specialist with Bechtel Oil, Gas & Chemicals in Houston, TX, USA. He has several years of experience in
process simulation, advanced process control and optimization of various processes including LNG, David Wood Dr. David Wood has more than
30 years of international oil and gas experience spanning commercial, fiscal and technical functions within the exploration and production
sector, holding senior corporate, strategic and operational management positions. His industry experience includes working with government
agencies, national oil companies, major and independent oil and gas operators in most continents, “Handbook of Liquefied Natural Gas” Book:
Handbook of Liquefied Natural Gas)
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A basic knowledge of LNG must begin with an examination of its chemical and physical properties, which
is a prerequisite for accurately assessing potential LNG safety hazards and risks. The properties of LNG vary with its composition, which depends
on the reservoir source of the original gas and its processing/fractionation history. While LNG is predominately methane (about 87 mole % to
99 mole %), its composition also includes other higher hydrocarbons, typically, the C2 to C4 and heavier, nitrogen and trace amounts of sulfur
(less than 4 ppmv), and CO2 (50 ppmv; see Table 1-1). LNG
is an odorless, colorless, and noncorrosive cryogenic liquid
at normal atmospheric pressure. When LNG is vaporized and used as natural gas fuel, it generates
very low particle emissions
LNG creates jobs, has no environmental impact and increases the GDP by 5 times
Green, correspondent and blogger for energy tomorrow, 5/20/14 (Mark Green, “The Benefit of Cove
Point LNG exports” Online: http://energytomorrow.org/blog/2014/may/the-benefits-of-cove-point-lngexports)
Last week’s finding by federal regulators that a proposed liquefied natural gas (LNG) exporting project in
southern Maryland would pose “no significant impact” on the environmental is great news for the local and state
economy, as well as for the United States, when it comes to broader trade and economic benefits from exporting
U.S. LNG. Let’s hope the commission quickly follows up to approve the $3.8 billion project at Cove
Point, Md. Recapping some of the economic benefits the Cove Point LNG project would bring: 3,000
jobs during the three-year construction period $125 million per year in value added during
construction An additional $45 million a year on average to host Calvert County in the first five years after the project is up and running
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Studies, including one done for the Energy Department and another by ICF International, project broad economic benefits for the United States
from exporting LNG. ICF
says average net job growth will range from 73,100 to 452,300 between 2016 and
2035, with a net effect on U.S. GDP ranging from $15.6 billion a year to $73.6 billion by 2035. Yet, the U.S.
risks losing out in the global LNG marketplace as competitors move to bring exporting facilities online. While the Energy Department has
approved seven export projects over the past year and a half, more than 20 remain pending. The U.S. has abundant natural gas reserves to
supply domestic needs and overseas demand. But the window to the global market could close. Federal officials should swiftly approve the
pending applications to give the U.S. the best chance to compete for world buyers – trade that would bring overseas wealth to this country,
boost domestic energy development and help create new jobs here.Exporting LNG is a win-win prospect for the United States, one that enjoys
bipartisan support. In a video produced by the American Council for Capital Formation, former U.S. Rep. Harold Ford Jr. says that “clearing the
way for LNG exports is something all sides can support.” Indeed, it is. For jobs, economic growth and a stronger America, we need progress on
projects like the Cove Point LNG export facility. The sooner, the better.
Manufacturing
LNG exports increases US manufacturing jobs and the US GDP
Snow, NICK SNOW has covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was
founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time
13 (Nick Snow, Online: http://www.ogj.com/articles/print/volume111/issue-5c/general-interest/icf-study-outlines-lng-exports-benefits.html)
LNG exports could create at least 73,100-145,100 and up to 220,100-452,300 new US jobs over 20
years while having a minimal impact on US gas prices, a new ICF International study commissioned by the American Petroleum
Institute concluded. The study, US LNG Exports: Impacts on Energy Markets and the Economy, also found LNG
exports would increase US gross domestic product by $15.6-73.6 billion/year from 2016 to 2035. The
Washington editor in October 2007, 5/27/
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projection included the impacts of liquids that would be produced with the gas, greater petrochemical (olefins) production from more abundant natural gas liquids
feedstock, and
all economic multiplier effects. As many as 25,000 of the new jobs would be in manufacturing, the
study indicated. "You're going to see a corresponding growth in manufacturing as LNG exports take off," said
US Rep. Bill Johnson (R-Ohio), who chairs the recently formed House LNG Export Working Group, which released the
report at its first public meeting on May 15. "I find that when I mention exporting natural gas, I get calls from other countries asking when we're going to decide to
do it," added Rep. James Lankford (R-Okla.), another member of the group who also chairs the Oversight & Government Reform Committee's Energy, Policy, Health
Care, and
Entitlement. Harry Vidas, an ICF International vice president who directed the study, said ICF used a base-case scenario with 4 bcfd of exports, a
medium case with 8 bcfd, and a high case with 16 bcfd. An 8-25% market share "There are many countries which are trying to market their excess
gas," he noted, pointing to 63 foreign LNG projects that potentially could export 50.5 bcfd. The US could wind up with an 8-25% incremental share of the potential
market, he indicated. The
study also found that 79-88% of US LNG exports would be offset by new domestic
production. "This would have a more positive economic impact than taking the gas from other uses," Vidas said. Gas liquid volumes would grow because they
would be stripped out of the gas before it is liquefied, he indicated. "[Natural gas liquids] such as ethane and propane are important to the petrochemical industry,"
Vidas said. "
A lot of manufacturing jobs associated with more LNG exports would be created ," Vidas said,
adding, "In order to drill wells to produce the gas, you need manufactured goods. There also would be a small net jobs gain in the petrochemicals sector." Vidas said
ICF's study basically confirmed conclusions National Economic Research Associates reached when it studied LNG export impacts for the US Department of Energy,
which is considering whether authorizing them to countries that don't have a free trade agreement with the US would be in the national interest. He
said
both studies found that LNG exports would produce net economic benefits that would grow as
volumes increased. Lankford said the Natural Gas Act presumes that LNG exports would be allowed. "We
need to make sure arbitrary limits aren't imposed," he maintained.
Stabilized Prices are key to Manufacturing
Ebinger, Charles K. Ebinger is the director of the Energy Security Initiative at Brookings, which is housed within the institution’s Foreign
Policy program. Previously, Ebinger served as a senior advisor at the International Resources Group where he advised over 50 governments on
various aspects of their energy policies, specializing in institutional and economic restructuring of their utility sectors. Ebinger has special
expertise in South Asia, the Middle East and Africa, but has also worked in the Far East, Southeast Asia, Eastern Europe, Central Asia and Latin
America, 2/2013 (Charles K. Ebinger, “The case for natural gas exports in the US” Online:
http://www.brookings.edu/research/articles/2013/02/us-lng-exports-ebinger-avasarala)
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It is predictable that prospective exporters like Cheniere, Dominion Resources, and Sempra Energy all argue that natural gas exports will help,
rather than hurt, the US economy. Exports, their argument goes, will require billions of dollars of investment
in liquefaction plant
infrastructure, new pipeline infrastructure, and will promote additional gas production, all of which would
boost domestic employment. They maintain that any domestic price increases resulting from exports would be marginal and would not hamper
the growth of domestic manufacturing. Prospective exporters are supported in their views by gas production companies, including Exxon Mobil
(which has plans for petrochemical plant expansions and for an LNG export terminal), and the American Petroleum Institute (API), the oil and
gas sector’s trade association. Companies and groups in favor of exports make some noteworthy points. First, a host of reports by third party
analysts have found that the pricing implications of exports are indeed modest. Studies from three consulting firms – Navigant, ICF
International, and Deloitte – and the Department of Energy’s Energy Information Administration (EIA) have all found that under reasonable
expectations for export volumes natural gas prices in 2035 would be between 2 and 11 percent higher if the USA does export LNG than if it
does not. (Most analysts, including us, estimate that 4–6 bcf/day of LNG would be exported under reasonable market conditions.) These price
increases should not sway the profitability of multi-billion dollar industrial investments. According to Kevin Book, Managing Director of
ClearView Energy Partners, another consulting firm, ‘if your margins are so thin that [modest price increases] could break them, then there isn’t
much benefit to putting up a plant here. Conversely, if it is so beneficial to do it here, then a small change in price probably won’t undermine
those benefits.’ Even if one cannot fault the industrial sector for being worried about potential price increases, given the high natural gas prices
experienced in the 2000s, the prospects of large volumes of new supply suggest that the industrial sector’s competitiveness is stable regardless
of US export policy. Today
the ratio of the price of oil to the price of natural gas is over 30:1, well over the
7:1 oil-to-gas price ratio at which US petrochemical and plastics producers are generally considered to
be globally competitive. (Competing European and Asian petrochemical producers use oil-based
products such as naphtha and fuel oil as feedstock, as they lack access to cheap natural gas.) Moreover,
the majority of gas used for exports will come from new production, according to both Deloitte and the EIA. Increased drilling will likely result in
greater production of natural gas liquids such as ethane, a valuable feedstock for industrial consumers. According
to a study by the
American Chemistry Council, an industry trade body, a 25 percent increase in ethane production
would yield a $32.8 billion increase in US chemical production. To the extent that increased gas
production linked to exports results in increased production of such natural gas liquids, they will
benefit the petrochemical industry.
Revenue
LNG substantially increases federal and state revenue
Levi, CFR Energy Fellow, June 2012 (Micheal Levi,”A Stategy for US Natural Gas Exports” Online:
http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf)
Allowing natural gas exports would increase government revenues by raising taxable U.S. output. In
addition, increased natural gas production resulting from exports would raise state revenues in places
that are home to drilling. I estimated earlier that allowing six billion cubic feet of daily U.S. natural gas
exports would increase net annual U.S. output by approximately $4 billion. Assuming a 35 percent marginal tax
The Hamilton Project • Brookings 25 rate on corporate profits, this would raise approximately $1.4 billion each
year; in practice, since a part of the profits would accrue to individual property owners and workers who face lower rates, the net increase in
revenues would be less. This total would, of course, be reduced if actual export volumes turned out to be lower. Increases in state tax
revenues would depend on the states in which production increased, but would total at most
approximately $400 million each year (based on the corporate tax rate for Pennsylvania, which is the highest among major gascqf
producing states). More significantly, increased production would also boost state revenues from severance taxes. Typical severance taxes in
major producing states are on the order of 5 percent to 8 percent of sales revenues (Allegheny Conference 2009). A full six billion barrels a day
of natural gas exports could thus be expected to generate increased severance tax revenues of $1 billion to $2 billion each year, including
revenues from new production and larger revenues from existing production due to higher prices.
Growth
LNG exports increase consumer welfare, GDP, investment, and consumption, that
outweighs any downsides
Montgomery et al, Economic Consultants for NERA, 2012
[W. David Montgomery, NERA Economic Consulting (Project Leader) is an expert on the economic issues
associated with climate change policy, and testifies as an expert witness in state and federal courts
Robert Baron, NERA Economic Consulting Paul Bernstein, NERA Economic Consulting, Dr. Bernstein
specializes in developing economic models applied to fields related to energy and the environment,
including climate change policy, Sugandha D. Tuladhar, NERA Economic Consulting, Dr. Tuladhar's work
focuses on economic analysis of regional, national, and international energy, environmental, and climate
policies. Shirley Xiong, NERA Economic Consulting, economic analyst and student at Yale Economic
Growth Center, Mei Yuan, NERA Economic Consulting, Dr. Yuan's work focuses on economic analysis of
energy and environmental policies. She specializes in general equilibrium modeling. “Macroeconomic
Impacts of LNG Exports from the United States,” December 3, 2012,
http://energy.gov/sites/prod/files/2013/04/f0/nera_lng_report.pdf]
Expansion of natural gas exports changes the price of goods and services purchased by U.S. consumers . In
addition, it also alters the income level of the consumers through increased wealth transfers in the form of tolling charges on LNG exports.
These economic effects change the well-being of consumers as measured by equivalent variation in
income. The equivalent variation measures the monetary impact that is equivalent to the change in consumers’ utility from the price
changes and provides an accurate measure of the impacts of a policy on consumers. We report the change in welfare relative to the
baseline in Figure 33 for all the scenarios. A positive change in welfare means that the policy improves welfare from the perspective
of the consumer. All export scenarios are welfare-improving for U.S. consumers. The welfare improvement
is the largest under the high export scenarios even though the price impacts are also the largest. Under these export
scenarios, the U.S. consumers receive additional income from two sources. First, the LNG exports
provide additional export revenues, and second, consumers who are owners of the liquefaction
plants, receive take-or-pay tolling charges for the amount of LNG exports. These additional sources of income for
U.S. consumers outweigh the loss associated with higher energy prices. Consequently, consumers, in aggregate, are better off as a
result of opening up LNG exports. Comparing welfare results across the scenarios, the change in welfare of the low export volume
scenarios for the High EUR case is about half that of the corresponding scenarios for the Reference case (see Figure 33). The welfare impacts
under the Reference case scenarios are higher than for corresponding High EUR case scenarios. Under the High EUR case, the wellhead price is
much lower than the Reference case and therefore results in lower welfare impacts. Similarly in both the Reference and High EUR cases, the
high export volume scenarios have much larger welfare impacts than the lower export volume scenarios. Again, the amount of wealth transfer
under high export volume scenarios drives the higher welfare impacts. In fact, the
U.S. consumers are better off in all of the
export volume scenarios that were analyzed. “Another way to measure the impact of a price change in monetary terms is to
ask how much money would have to be taken away from the consumer before the price change to leave him as well off as he would be after
the price change. This is called the equivalent variation in income since it is the income change that is equivalent to the price change in terms of
the change in utility.” (emphasis in original). 22 Consumers own all production processes and industries by virtue of owning stock in them. 2.
GDP GDP is another economic metric that is often used to evaluate the effectiveness of a policy by measuring the level of total economic
activity in the economy.
In the short run, the GDP impacts are positive as the economy benefits from
investment in the liquefaction process, export revenues, resource income, and additional wealth
transfer in the form of tolling charges. In the long run, GDP impacts are smaller but remain positive
because of higher resource income. A higher natural gas price does lead to higher energy costs and
impacts industries that use natural gas extensively. However, the effects of higher price do not offset
the positive impacts from wealth transfers and result in higher GDP over the model horizon in all
scenarios. In the high scenarios and especially in periods with high natural gas prices, the export revenue stream increases while increasing
the natural gas resource income as well. These effects combined with wealth transfer lead to the largest positive impacts on the GDP. In all
scenarios, the impact on GDP is the largest in 2020 then drops as the export volumes stabilize. In a subsequent section, we discuss changes in
different sources of household income. Under the Reference case, the change in GDP in 2015 is between 0.01% for the Low/Slowest scenario to
0.05% in the High/Rapid scenario. The increase in GDP in the High EUR case is as large as 0.26% because resource income and LNG exports are
the greatest. Overall, GDP 23 Welfare is calculated as a single number that represents in present value terms the amount that households are
made better (worse) off over the entire time horizon from 2015 to 2035. impacts are positive for all scenarios with higher impact in the short
run and minimum impact in the long run. 3. Aggregate Consumption Aggregate consumption
measures the total spending
on goods and services in the economy. In 2015, consumption increases from the No-Export case
between 0.02% for the low scenarios to 0.8% for the high scenarios. Consumption impacts for the High EUR
scenarios also show similar impacts (Figure 35). Under the High/Rapid scenarios, the increase in consumption in
2015 is much greater (0.10%) because higher export volumes result in leading to much larger export
revenue impacts. By 2035, consumption decreases by less than 0.02%. Higher aggregate spending or
consumption resulting from a policy suggests higher economic activity and more purchasing power for
the consumers. The scenario results of the Reference case, seen in Figure 35, show that the consumption increases or remains unchanged
until 2025 for almost all of the scenarios. These results suggest that the wealth transfer from exports of LNG provides net positive income for
the consumers to spend after taking into account potential decreases in capital and wage income from reduced output. 4. Aggregate
Investment Investment in the economy occurs to replace old capital and augment new capital formation. In this study, additional investment
also takes place to convert current regasification plants to liquefaction plants and/or build new green-field liquefaction plants. The investment
that is necessary to support the expansion of LNG exports is largest in 2015.24 The investment outlay under
each of the LNG export
expansion scenarios is discussed in Appendix C. In 2015 and 2020, investment increases to support higher
consumption (and production) of goods and services and investment in the liquefaction plants. As seen in
Figure 36, investment increases for all scenarios, except for the Low/Rapid scenarios. Investment in 2015 could increase by as
much as 0.10%. As the price of natural gas increases, the economy demands or produces fewer goods and services. This results in lower
wages and capital income for consumers. Hence, under such economic conditions, consumers save less of their income for investment. The
investment drop is the largest under the High EUR case for the High/Rapid scenario (-0.2%) where industrial 24 Each model year represents a
span of five years, thus the investment in 2015 represents an average annual investment between 2015 and 2019. decline is the largest because
of the increases in energy prices in general and the natural gas price in particular. As with consumption, the results for the low scenarios under
the Reference and High EUR cases (with the same level of LNG exports) show similar investment changes. The range of change in investment
over the long run (2030 through 2035) for all scenarios is between -0.05% and 0.08%. Figure 36: Percentage Change in Investment for NERA
Core Scenarios 5. Natural Gas Export Revenues As a result of higher levels of natural gas exports and increased natural gas prices, LNG export
revenues offer an additional source of income. Depending on the baseline case and scenario used, the average annual increase in revenues
from LNG exports ranges from about $2.6 billion (2010$) to almost $32.9 billion (2010$) as seen in Figure 37. Unsurprisingly, the high end of
this range is from the unconstrained scenario, while the low end is the Low/Slowest scenario. The
average revenue increase in all
of the high scenarios for each baseline is roughly double the increase in the low scenarios. The
difference in revenue increases between comparable rapid and slow scenarios is about 6% to 20%,
with the low scenarios showing a smaller difference between their rapid and slow counterparts than
the high scenarios.
LNG provides massive economic growth
Loris , the Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation, 2/11/13 (Nicolas Loris, “U.S. Natural Gas Exports: Lift Restrictions and
Empower the States” Online: http://www.heritage.org/research/reports/2013/02/us-natural-gasexports-lift-restrictions-and-empower-the-states)
Exporting natural gas would provide a tremendous benefit for the American economy, as it would
expand market opportunities. Given the disparity in prices between domestic and foreign markets
(Europe, Asia, and Latin America, for instance) those opportunities should prove to be plentiful even
with the costs of transport tankers and liquefaction plants. As part of its statutory requirement to
determine the public interest of exporting natural gas to non free trade agreement nations, the
Department of Energy recently released its second study on the macroeconomic effects of exporting
LNG from America. Produced by the economic consulting firm National Economic Research Associates
(NERA), the study found net economic benefits: an annual average increase in export revenue from
$10 billion to $30 billion as well as overall increases in welfare and real household income (up to $47
billion by 2020).[4] The Council on Foreign Relations estimates that the U.S. gains from trade would be
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$4 billion annually.[5] Whatever the magnitude, the direction of net economic effect is the same:
Americans can expect to benefit directly or indirectly from increasing LNG exports.
LNG exports are safe and key to long-term American growth
API 14
[American Petroleum Institute, March 2014, http://www.api.org/policy-and-issues/policy-items/lngexports/~/media/Files/Policy/LNG-Exports/LNG-primer/Liquefied-Natural-Gas-exports-lowres.pdf]
America is in the midst of an energy revolution. As of 2012, unconventional oil and natural gas development supported 2.1 million
jobs, and it is projected to support 3.9 million jobs by 2025. This year, according to EIA, we surpassed Russia as the world’s
energy superpower – producing more oil and natural gas than any other country. At the same time, we’ve reduced U.S. carbon dioxide
emissions to near 20-year lows thanks, in part, to the carbon advantages of natural gas. But, for American workers, the best is yet to come.
The export of liquefied natural gas – or LNG -- represents one of the most promising economic opportunities
of the shale revolution. These exports will significantly reduce our trade deficit, increase government
revenues, grow the economy, and support millions of U.S. jobs in engineering, manufacturing,
construction, and facility operations. America is in a global race to build this infrastructure and secure a competitive position in
the international market. More than 60 international LNG export projects are currently planned or under construction around the world, and
those nations that act quickly to attract these investments will reap the economic rewards. Fortunately, U.S. workers are in a very good position
to win that race. The
opportunities associated with LNG exports will extend beyond natural gas-producing
states. According to ICF, by 2035: • LNG exports could contribute as much as $10 to $31 billion per state to the economies
of natural gas-producing states, such as Texas, Louisiana, and Pennsylvania. • Non-natural-gas-producing states will also benefit,
partly due to the boost in demand for steel, cement, equipment, and other goods. States with a large
manufacturing base, such as Ohio, California, New York, and Illinois, will see economic gains as high as $2.6 to $5.0
billion per state. • Natural gas-producing states could see employment gains as high as 60,000 to 155,000 jobs; and
large manufacturing states, such as California and Ohio, will see employment gains upwards of 30,000 to 38,000 jobs
in 2035. • There could also be significant job growth in states where LNG export terminals could be built. For example, in a high export scenario,
in which an Alaska-based terminal is built,
Alaska can expect up to a $10 billion addition to state income and over
36,000 added jobs resulting from LNG exports. LNG, or liquefied natural gas, is a clear, odorless, noncorrosive,
nontoxic liquid that is formed when natural gas is cooled to around -260 F. This shrinks the volume by about 600 times, making the
resource easier to store and transport through marine shipments. LNG is not stored under pressure and is not explosive
or flammable in its liquid state, and it cannot be released rapidly enough to cause overpressures
associated with explosions. LNG has been safely handled for several decades, with LNG vessels having made more than 100,000
voyages without major accidents or safety problems. The LNG industry is highly regulated by the Federal Energy Regulatory
Commission, the Department of Transportation, the U.S. Coast Guard and the Department of Homeland Security, and other agencies to ensure
that vessels, facilities and personnel provide and deliver safe operations and transport.
Studies show LNG exports are good for macroeconomic growth
Levi, CFR’s senior fellow on Energy, 12
Michael Levi is the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of
the Maurice R. Greenberg Center for Geoeconomic Studies with expertise in climate change and energy
studies, 12.5.12, “Thoughts on a Long-Awaited Natural Gas Exports Study,”
http://blogs.cfr.org/levi/2012/12/05/thoughts-on-a-long-awaited-natural-gas-exports-study/]
Earlier today, the Department of Energy released a long-awaited (and long-delayed) study on the macroeconomic
impacts of liquefied natural gas (LNG) exports. The study, prepared by the consultants NERA, is the most in depth look at the
economics of LNG exports published to date. That means it’s long, and will take a while to digest. Here are a few quick observations and
context. I’ll write another post later on differences between the NERA results and what I reported in my own LNG exports study earlier this
year. The
study reaffirms that allowing exports would be good for U.S. economic growth. No matter
how NERA sets up its model – different assumptions about U.S. gas resources, domestic demand, or international markets – the
U.S. economy as a whole benefits from allowing exports. This shouldn’t be a surprise: the fact that economies gain
from allowing trade is pretty robust. The negative headline from the report is that allowing exports would lower average real wage
income. This happens despite little or no impact on nominal wages; it is due to higher natural gas prices, which imply slightly lower average real
wage income. As an isolated matter, this is fairly uncontroversial (though the impact on income after taxes and transfers like LIHEAP is unclear),
but I have concerns, which I’ll explain below. Either way, all of the macro numbers are pretty small. U.S. economic welfare rises by between
roughly 0.005 and 0.015 percent in most scenarios. Impacts
on GDP can be a factor of ten higher – still relatively small. No
sector loses more than 1 percent of output (aside from electricity generation in an extreme case); manufacturing, for example,
loses between 0.05 and 0.25 percent. Real wage income typically declines by about 0.1 to 0.2 percent. The study also supports those who are
skeptical that large-scale LNG exports will materialize, but suggests that there are ways for that to happen. When NERA assumes the DOE
reference cases for U.S. and international natural gas demand, no exports result, because they are uneconomic. If U.S. gas resources are scarcer
than mainstream estimates suggest, exports only materialize given extreme international demand, and only at low levels. Almost all
cases
come in at or below the 5-6 bcf/d that analysts often assume. Only when NERA combines assumptions of surprisingly
high availability of U.S. natural gas and a complete shutdown of the Japanese nuclear industry does it see exports approach 10 bcf/d by 2020.
When it adds on an end to the Korean nuclear program, and supply shortfalls elsewhere in the world, it
projects as much as 12
bcf/d in exports by 2015 and 15 bcf/d by 2020. It is difficult to imagine the path to that much investment, particularly by
2015. Despite these often-massive export volumes, NERA projects consistently limited natural gas price impacts. In only one scenario –
higher than expected U.S. shale resources and massive international demand leading to very large exports – do prices rise by more
than a dollar for a thousand cubic feet in the next decade. (They rise by $1.11 in that case.) Most results see an increase
closer to fifty cents. One can turn this around: substantial exports only exist because price rises are limited; if prices rose quickly, the economics
of exports would collapse, limiting volumes. A corollary is that U.S. prices always remain well below overseas ones despite exports.
Companies get at least 23 times the original investment on LNG exports and LNG is key to
jobs, growth and economic development
Fitterling, Executive Vice President for the DOW chemical company, one of the main natural gas and
LNG companies in the entire natural gas market, 2013 ,(Jim Fitterling Online:
http://www.dow.com/company/insights/multimedia/20130416a.htm)
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We are bullish on this point because we know this simple fact: Exporting natural gas returns a 1X value in terms of economic impact to the
United States.
But for every dollar the chemical industry spends on energy and feedstocks, we create $8
of direct value and an additional $15 of indirect value. That's a 23X return on investment. That's the valueadd impact natural gas offers… if we use it the right way. LNG supporters don't dispute that number. They don't even dispute the numbers on
this slide. It's a fact we agree on. What we do worry about is whether--in the name of an illusory free market in energy--we're about to throw
the United States' new economic baby out with the LNG bathwater. This is the largest economic question of our time and we have to get it
right. It affects too many Americans, too many American jobs and too much of our economic future to expect anything less. Jobs. Growth.
Economic Development. A
rare chance to increase America's competitive advantage--as an economic
powerhouse--by tapping the tremendous value-add inherent in a revitalized manufacturing sector.
That's why we believe that, for this country, the best jobs policy, the best competitiveness policy and
the best growth policy … all start with a robust energy policy that puts America's best 1terests first. Thank you for your time today.
And thank you for the important work you do to help keep our country moving forward.
Studies show LNG exports are good for macroeconomic growth
Levi, CFR’s senior fellow on Energy, 12
Michael Levi is the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of
the Maurice R. Greenberg Center for Geoeconomic Studies with expertise in climate change and energy
studies, 12.5.12, “Thoughts on a Long-Awaited Natural Gas Exports Study,”
http://blogs.cfr.org/levi/2012/12/05/thoughts-on-a-long-awaited-natural-gas-exports-study/]
Earlier today, the Department of Energy released a long-awaited (and long-delayed) study on the macroeconomic
impacts of liquefied natural gas (LNG) exports. The study, prepared by the consultants NERA, is the most in depth look at the
economics of LNG exports published to date. That means it’s long, and will take a while to digest. Here are a few quick observations and
context. I’ll write another post later on differences between the NERA results and what I reported in my own LNG exports study earlier this
year. The
study reaffirms that allowing exports would be good for U.S. economic growth. No matter
how NERA sets up its model – different assumptions about U.S. gas resources, domestic demand, or international markets – the
U.S. economy as a whole benefits from allowing exports. This shouldn’t be a surprise: the fact that economies gain
from allowing trade is pretty robust. The negative headline from the report is that allowing exports would lower average real wage
income. This happens despite little or no impact on nominal wages; it is due to higher natural gas prices, which imply slightly lower average real
wage income. As an isolated matter, this is fairly uncontroversial (though the impact on income after taxes and transfers like LIHEAP is unclear),
but I have concerns, which I’ll explain below. Either way, all of the macro numbers are pretty small. U.S. economic welfare rises by between
roughly 0.005 and 0.015 percent in most scenarios. Impacts
on GDP can be a factor of ten higher – still relatively small. No
sector loses more than 1 percent of output (aside from electricity generation in an extreme case); manufacturing, for example,
loses between 0.05 and 0.25 percent. Real wage income typically declines by about 0.1 to 0.2 percent. The study also supports those who are
skeptical that large-scale LNG exports will materialize, but suggests that there are ways for that to happen. When NERA assumes the DOE
reference cases for U.S. and international natural gas demand, no exports result, because they are uneconomic. If U.S. gas resources are scarcer
than mainstream estimates suggest, exports only materialize given extreme international demand, and only at low levels. Almost all
cases
come in at or below the 5-6 bcf/d that analysts often assume. Only when NERA combines assumptions of surprisingly
high availability of U.S. natural gas and a complete shutdown of the Japanese nuclear industry does it see exports approach 10 bcf/d by 2020.
When it adds on an end to the Korean nuclear program, and supply shortfalls elsewhere in the world, it
projects as much as 12
bcf/d in exports by 2015 and 15 bcf/d by 2020. It is difficult to imagine the path to that much investment, particularly by
2015. Despite these often-massive export volumes, NERA projects consistently limited natural gas price impacts. In only one scenario –
higher than expected U.S. shale resources and massive international demand leading to very large exports – do prices rise by more
than a dollar for a thousand cubic feet in the next decade. (They rise by $1.11 in that case.) Most results see an increase
closer to fifty cents. One can turn this around: substantial exports only exist because price rises are limited; if prices rose quickly, the economics
of exports would collapse, limiting volumes. A corollary is that U.S. prices always remain well below overseas ones despite exports.
Exports solve economy and decreases trade deficit
Mutikani, Correspondent of Thomas Reuters in Washington, reporter for 34 years, 7/3/14 (Lucia
Mutikani, “US trade deficit narrows as exports hit record high” Online:
http://www.reuters.com/article/2014/07/03/us-usa-economy-trade-idUSKBN0F819P20140703)
The U.S. trade deficit narrowed a bit more than expected in May as exports jumped to a record high,
suggesting trade could be less of a drag on second quarter growth than earlier feared. The Commerce Department said on
Thursday the trade gap fell 5.6 per cent to $44.4-billion. April’s trade deficit was revised slightly down to $47.0billion. Economists polled by Reuters had expected the deficit to narrow to $45.0-billion in May from a previously reported $47.2-billion
shortfall. When adjusted for inflation, the deficit narrowed to 51.96-billion from $53.88-billion in April. Trade
subtracted 1.5 percentage points from first-quarter gross domestic product. The economy contracted at a 2.9 per cent annual
pace in the first three months of the year. In May, exports increased 1.0 per cent to a record high of $195.5-billion. Exports were
driven by a surge in automobiles, parts and engines, which rose to a record high. Exports of consumer goods
were also the highest on record. Imports fell 0.3 per cent to $239.8-billion as petroleum imports tumbled to their
lowest level since November 2010. Non-petroleum imports, however, hit a record high in May. That points to an acceleration in
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domestic demand, which cannot be satisfied with locally produced goods, and is consistent with expectations of a rebound in growth in the
second quarter. The politically sensitive trade gap with China rose to $28.8-billion from $27.3-billion in April.
U.S natural gas production has significant growth, federal government already passing
plans to increase LNG export
Charles K. Ebinger is the director of the Energy Security Initiative at Brookings, 12’
(Charles K. Ebinger advised over 50 governments on various aspects of their energy policies, specializing in institutional and economic restructuring of their utility
sectors ,Liquid Markets: Assessing the Case for U.S. Exports of Liquefied Natural Gas, http://www.brookings.edu/research/reports/2012/05/02-lng-exportsebinger)
technological breakthroughs in unconventional gas production, major increases in U.S. natural
gas reserves and production have led to supply growth significantly outpacing forecasts in recent
years. As a result, natural gas producers have sought new and additional sources of demand for the newfound volumes. One proposed end-use is the
Driven by
exportation of U.S. natural gas in the form of liquefied natural gas (LNG). While the United States
already exports modest quantities of natural gas, mostly via pipeline, current proposals, some of which have
already received full or partial approval from the federal government, would increase substantially
the volume of LNG exports. There is a growing debate between policymakers, industry, and energy analysts as to the merits of exporting greater quantities of U.S.
natural gas. Some domestic natural gas consumers contend that exporting U.S. gas would result in an increase in domestic natural gas prices and therefore in higher prices for businesses and
Proponents of natural gas exports argue that they would provide valuable foreign exchange
and would be a source of economic growth and job creation.
households.
2NC – AT: Flares
New shale tech is good and is solving for flares
Percival, Engineer, Stock Trader, Trading Instructor, Natural Gas Systems Analyst, attended
Northeastern University, 7/5/14, (Scott Percival, “These 3 companies profit by Tacking Gas Flaring”
Online: http://www.fool.com/investing/general/2014/07/05/these-3-companies-profit-by-tackling-gasflaring.aspx)
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The New York Times reported that gas production in the Bakken could see a 40% increase by the end
of 2015 due to all the drilling activity. Companies such as ONEOK (NYSE: OKE ) and its master limited partnership,
ONEOK Partners (NYSE: OKS ) , are racing to build more gas gathering infrastructure. The report quoted Brad Borror, a
spokesman for Oneok, as saying, "By the end of 2015, you'll see a significant decrease in flame volumes." The Oil & Gas Journal
reported in April that Oneok had started up Stateline II, its third new natural gas processing facility in the area. Oneok,
one of the largest gas gathering operators in the Bakken, expects to increase its processing capacity from 390 million cubic feet of gas per day
technology to the rescue While Oneok races to build more
gas gathering and processing infrastructure, others are addressing the flaring issue with new
technology. Hess (NYSE: HES ) is expanding its use of a new mobile natural gas liquid, or NGL, extraction
system developed by Gtuit and Corval Group. According to Gtuit materials, the system can extract NGLs right
at the well site, and drillers can set up the mobile systems in less than one day. Hess also recently announced the
completion of its Tioga Gas Plant expansion, which reduced flaring from about 25% to 15-20% at the
company's operations. The announcement quoted Greg Hill, President and Chief Operating Officer of Exploration
and Production for Hess, as saying, "As a leading operator in one of the best shale plays in the world, the
Bakken will be the single biggest contributor to our production growth over the next five years." He added, "We expect that by 2018,
we'll be producing 150,000 barrels of oil equivalent per day from the Bakken."
to 590 million cubic feet per day by the end of 2015. New
LNG depletes US NG resources: LNG exports has little to no effect on domestic natural gas
supply
Levi, CFR Energy Fellow, June 2012 (Micheal Levi,”A Stategy for US Natural Gas Exports” Online:
http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf)
The amount of natural gas in the ground is finite and fixed. By increasing present consumption, U.S.
natural gas exports would reduce the amount of natural gas left. Some may worry that the United
States could become dependent on imports at an undesirably early date if, due to excessive
consumption, production began to fall sooner than it would have otherwise. This is not a large
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problem. According to recent EIA (2012c) modeling, were the United States to export LNG at the
highest rates discussed in this paper, it would produce as much natural gas in nineteen years as it
otherwise would have in twenty . If U.S. reserves were far smaller to start with than that analysis
assumes, prices would rise and the economic incentive to export would erode
Alt Solvency Mechanisms
Obama can use executive authority to remove LNG export bans
Kemp, Senior Market Analyst for Reuters in Washington, 12/18/2013 ( John Kemp, “ Obama could lift
U.S. oil-export ban without Congress: Kemp” Online:http://www.reuters.com/article/2013/12/18/usaoil-exports-idUSL6N0JX2U920131218)
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President Barack Obama has sufficient authority to lift the ban on U.S. oil exports on his own and does
not need approval from Congress. The various statutes on which the ban is based have either expired
or give the president broad discretion. Behind the scenes, U.S. oil producers, especially the small independents that dominate shale plays
such as the Bakken and Eagle Ford, have already begun a lobbying campaign to get the restrictions lifted. The influential opinion pages of the Wall Street Journal
and the Financial Times have both carried pro-export editorials recently: "Time to end the U.S. oil embargo" in the Financial Times on October 15, and "Exporting
American Oil" in the Wall Street Journal on December 18. The International Energy Agency has also lent its support. "Either U.S. crude is shipped abroad or it stays
in the ground," the agency's chief wrote in an article earlier this year ("U.S. must avoid shale boom turning to bust" Feb 6). Now the Obama Administration appears
to be preparing for a rethink. "Restrictions on exports were born, as was the Department of Energy and the Strategic Petroleum Reserve, on oil disruptions," Energy
Secretary Ernest Moniz told a conference last week. "There are lots of issues in the energy space that deserve some new analysis and examination in the context of
what is now an energy world that is no longer like the 1970s" he concluded, in remarks reported in the Wall Street Journal on Wednesday ("Moniz breaks the taboo
against selling U.S. crude overseas" Dec 18). Even the hint that the ban might be relaxed has drawn a strong response from refiners and politicians who want it
maintained. Senator Robert Menendez, a Democrat from the refining state of New Jersey, who is also chairman of the powerful Foreign Relations Committee, wrote
to the president on Monday "to express my deep concerns over the recent comments of Energy Secretary Ernest Moniz stating that your administration is
considering easing the ban on exporting domestically produced crude oil. "Easing this ban might be a win for Big Oil, but it would hurt American consumers,"
Menendez complained. "We must continue to keep domestically-produced crude here to lower prices for consumers ... Allowing
for expanded
crude exports would serve only to enhance the profits of Big Oil, and could force U.S. consumers to
pay even more at the pump," he added. Most observers assume lifting the export ban would require action by Congress, subjecting it to all the
usual complexity and delays of the legislative process. "Moniz is right to raise the issue, and we hope his comments will spur Congress into action," the Wall Street
Journal wrote. In fact, the ban could be lifted by the president acting alone. Easing
the restrictions or even lifting them altogether
is legally straightforward, though the politics may be harder, and it is not clear whether it is a priority for the White House
Politics NB
There is bipartisan support for LNG exports
Curry, History Major from Haverford College in PA reporter for TIME from 1986 to 1996, Political
correspondent for MSNBC since 1996, 8/8/12 ( Tom Curry, NBC news national affairs writer, “In
bipartisan call, House members urge OK for gas exports”Online:
http://nbcpolitics.nbcnews.com/_news/2012/08/08/13182831-in-bipartisan-call-house-members-urgespeedier-ok-for-gas-exports?lite)
But today, thanks to the shale gas boom in Pennsylvania and other states, the political struggle is over LNG exports , not
imports. A liquefied-natural-gas (LNG) tanker, leaves a berth in Yokohama City, Kanagawa Prefecture, Japan. This is not the flashy
politics of campaign ads, veep selection, and opinion polls, but the less theatrical inside-Washington politics of regulation.
Recommended: White House on Harry Reid: He speaks for himself A bipartisan group of 44 House members from
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Texas, Oklahoma, Louisiana, and Arkans as sent a letter Tuesday to Energy Secretary Steven Chu
urging him to speed up approval of LNG exports. In a dramatic reversal from 2006, when natural gas supplies in the U.S.
were tight, prices were high, and LNG imports were economically sensible, today there’s so much domestically produced
natural gas that prices are low. “This surplus of natural gas has produced very low prices for producers and an
absence of market opportunities for natural gas, leading to many well just being shut in," said Rep. Gene
Green, D-Texas, and Rep. James Lankford, R-Okla., in a letter joined by 42 other House members. They said the Energy
Department’s approval process for more LNG exports “does not seem to have a set timeline for
decisions or a sense of urgency.” Among the reasons they cited for federal regulators to allow more
LNG terminals to be built: job creation and the fact that exporting LNG would reduce the U.S. trade deficit as consumers
abroad paid for U.S.-produced energy. Under federal law, export of LNG and construction of LNG terminals require authorization from
the Department of Energy and from the Federal Energy Regulatory Commission. Related: State finances recovering, but new fiscal year brings
big tests As of now, there’s only one U.S. terminal
exporting LNG, in Nikiski, Alaska. The Energy Department and FERC
have given their approval to a new LNG terminal in Sabine Pass, La. But other proposed projects are in
limbo while the department awaits a macroeconomic study being done by an outside contractor. “As
part of the Department’s statutory responsibility to determine whether natural gas exports are in the public interest, the Energy
Department is assessing the economic impacts of increased natural gas exports,” said Jen Stutsman,
spokesperson for the Energy Department. “This includes a two-part study analyzing the macroeconomic impacts of proposed
U.S. LNG exports on the U.S. economy. When completed, the study will help inform the Department in its review of the pending
applications.”
AFF Answers
Shale Unsustainable
Shale is expensive and mines exhaust quickly
ISN, a geopolitical news publication run by ISN ETH Zurich, 13
[ISN security watch, “Shale Gas is Not a Saviour, it is a Thorn in Renewable Energy’s Side,” 20 September
2013, http://oilprice.com/Energy/Natural-Gas/Shale-Gas-is-Not-a-Saviour-it-is-a-Thorn-in-RenewableEnergys-Side.html]
But shale may yet fail to live up to its promise. The peculiar geology and economics of shale energy
production, compared to conventional oil and gas, make the US experience both unsustainable and
difficult to replicate. US shale oil and gas production growth has started to slow on the back of fast
rising costs and rapidly depleting reservoirs. Meanwhile attempts to produce commercial-scale shale energy in countries such
as China, which boasts the world’s biggest shale gas resources – and the third-largest recoverable shale oil deposits, after Russia and the US –
are running into technological, regulatory, political and economic problems. The
cost of drilling in the US has soared over
the last decade, in part because of higher expenses associated with fracking and horizontal drilling.
Fracking entails pumping combinations of water, sand and chemicals into shale at high pressures to create fissures along which gas or fluids can
reach a well. Sourcing
and transporting water to the well and disposing of wastewater is expensive. The
cost for drilling a crude oil well quadrupled from US$1 million in 2003 to more than US$4 million in 2007, according
to the US Energy Information Administration. Wells drilled recently in North Dakota’s Bakken formation, the
largest US shale oil deposit, have cost between US$8 million to$10 million. Similar cost escalation is
reported for natural gas wells. In addition to soaring costs, energy companies must contend with
steep decline rates unique to shale deposits. Oil and gas trapped in relatively impermeable and less
porous shale rock formations do not flow unaided to the well. As a result, production at shale wells
tends to fall off steeply after an initial few months of high output. Decline rates in the Bakken
formation run at more than 50 percent in the first year of production. Kodiak Oil & Gas estimates that its shale oil
wells in Bakken will experience declines of 75 to 85 percent in the first five years of production. That compares to annual decline rates of 5 to 8
percent in conventional oilfields. These
steep decline rates require ever-larger investments in new wells to
maintain production levels. Leonardo Maugeri, a fellow at Harvard University’s Belfer Center for Science and International Affairs,
estimates that it required 90 new wells per month to maintain oil production at the Bakken formation at its
December 2012 level of 770,000 barrels/day. At US$10 million per well, that adds up to an additional investment
of a staggering $900 million per month or US$11 billion per year. The Post-Carbon Institute estimates that
maintaining the entire country’s shale oil production would require more than 6,000 new wells
annually at a cost of US$35 billion per year. So far, Wall Street has been efficient in channeling
investment into shale oil and gas plays, but the scale of additional investment required to keep the
boom going appears unsustainable absent new technological breakthroughs. Indeed, there are signs emerging that exploration
and production firms are, if not stepping off the treadmill of ever-rising drilling intensity, at least starting to fall
behind.
Shale is expensive, inefficient, and hurts the public
Herry, Staff Writer at Worldwatch Institute13
Malo Herry, “Are We Living Through a Shale Bubble?” 6.24.13,
http://blogs.worldwatch.org/sustainabilitypossible/shale-bubble/]
J. David Hughes, geoscientist and author of “Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?” explained
why shale production
is not sustainable. Depending on the area, the quality of shale plays—geographic
areas targeted for exploration—can be totally different, which leads to a concentration of wells in
“sweet spots.” He said quality plays are “relatively rare.” 80 percent of shale gas production comes from only
five plays with several declining. The biggest issue is the high depletion rate of wells. For instance, wells in
the largest tight oil play of the country have an average depletion rate of 69 percent in the first year
and 94 percent in 5 years. Companies need to build more and more of them to maintain production levels, and it is often not enough.
For instance, in 2008, the benefits of the shale industry in Fort Worth, Texas, were $50 million for 44
wells. In 2012, it was $23 million for 397 wells. According to Hughes, shale gas is over-hyped in terms
of long-term supply. Production has grown explosively to reach 40 percent of US natural gas production but this increase
stopped in December 2011. The shale gas industry needs to drill 7,200 new wells every year to
maintain production, which cost over $42 billion. Of course, the industry started with the best plays.
According to Deborah Rogers, financial consultant, founder of the EnergyPolicyForum and author of “Shale and Wall Street: Was the Decline in
Natural Gas Prices Orchestrated”, US
shale gas and oil reserves have been overestimated by a minimum of 100
500 percent. In her report, Rogers explains that Wall Street is in part responsible for the
huge decline in natural gas prices. Investment banks put pressure on companies to produce a lot to
keep shares high by meeting financial analysts’ production targets. It creates a surplus in gas
production leading to prices lower than the cost of production. Investment banks profit from this
trend through various transactional fees. For instance, in 2011, shale mergers & acquisitions (M&A) accounted for $46.5 billion,
percent and a maximum of
one of the most important profit centers for some investment banks. In August 2011, Neal Anderson of Wood Mackenzie said: “It seems the
equity analyst community has played a key role in helping to fuel the shale gas M&A market, acting as chief cheerleaders for shale gas plays.”
Gas is not sustainable also because of its low EROEI (energy returned on energy invested), which is
basically how much energy it takes to produce energy. For instance, the average EROEI of oil fell from 100:1 in the 1920s
to 20:1 today. Natural gas is 10:1, tar sands oil 5:1 and shale gas 3-5:1—and companies know it. In her report, Rogers notes that
some can’t sell their plays and sometimes have to declare bankruptcy, such as Norse Energy. In the Bakken (North
Dakota), the shale industry recently abandoned a plan to build a pipeline to carry shale oil. It is interesting because a pipeline is an expensive
investment and must carry a consistent stream of oil or gas to recoup initial capital outlays. Then, as Rogers says, it becomes a “real cash cow.”
The abandonment of its plans suggests the
industry isn’t all that confident in the long-term viability of the play. In
also studied what were the costs and benefits of shale industry in different states. She
discovered that companies privatize profits and socialize costs, and it looks like the economic benefits
of shale are also over-hyped. For instance, in 2012, the Texas Department of Transportation explained
that “repairing roads damaged by drilling activity would ‘conservatively’ cost $1 billion for farm-tomarket roads and another $1 billion for local roads” (the analysis doesn’t include interstates and highways). In December
2012, the Associated Press stated that the first operating loss in about five years at a north-central
Pennsylvania hospital was due to the influx of gas field workers. Indeed, many subcontractors
attracted by the shale drilling boom do not provide health benefits to employees.
her report, Rogers
CP can’t Solve
The initial LNG investment is too high--- companies won’t want to invest
Knowles, Gearold L. Knowles is a partner in the law firm of Schiff Hardin & Waite, and is resident in the
firm's Washington, D.C. office. Mr. Knowles is a member of the firm's Energy, Telecommunications, and
Public Utilities Group, as well as the Asia Practice Committee, 2003, (Gearold L. Knowles, “Energy Law
Journal 24 Energy L.J. Vol 24:293 Page 294” Journal: Energy Law Journal 24 energy L.J.)
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Over the past three years there has been increasing discussion of the role imported liquefied natural gas (LNG)' may play in the supply of
natural gas for the U.S. market. This is
a result of the projections of domestic production and importation of
natural gas from Canada (compared with projections of the growing demand for natural gas), as well
as the significantly higher prices in the domestic spot markets. Forecasts of LNG consumption by 2015
range from 4% to 10% of domestic natural gas consumption, with more aggressive projections
reaching the 10% level by 2010. Durini 2002, LNG constituted approximately 1% of domestic natural gas consumption. LNG projects
are large endeavors requiring investments in the hundreds of millions of dollars for a single LNG terminal. A full supply chain
project can require investment in excess of $2.5 billion .3 The structure of future LNG projects and the regulatory
environment must be capable of encouraging and facilitating the necessary investments. The recent focus on the need to construct the
infrastructure to facilitate a sharp increase in the supply of LNG has resulted in significant policy changes by the Federal Energy Regulatory
Commission (FERC or Commission). LNG was viewed as a high-cost source of natural gas in the early years of its importation into the U.S. This
view changed during the periods of natural gas
Exports are controversial and logistically impossible – myriad resons
Miller,Executive Director of Post Carbon Institute, 5.21
Asher Miller became the Executive Director of Post Carbon Institute in October 2008, after having
served as the manager of our former Relocalization Network program. 5.21.13, “Export Delusions: Why
the rush to export natural gas is a fool’s errand,” http://www.resilience.org/stories/2014-05-21/exportdelusions-why-the-rush-to-export-natural-gas-is-a-fool-s-errand]
LNG exports have become a hot-button issue and enmeshed with the fate of an energy efficiency bill and a vote on approval
of the Keystone XL pipeline. It’s pitted Democrats against one another, though interestingly the split is between those from
states where drilling is taking place (export proponents) and those from manufacturing states who hope that cheap and abundant natural gas
supplies can bolster their economies. What seems to be entirely missing from the debate are a few realities that should render this debate
moot: Reality #1: The
U.S. is still a net importer of natural gas. Yes, you read that right. In 2013, we produced 24.28
trillion cubic feet (tcf) of natural gas, but consumed 26.03 tcf. Now, the gap between production and consumption has
been shrinking in the last decade as shale gas drilling went into overdrive, but our storage of natural gas supplies (needed in
preparation for the cold winter months) is at alarmingly low levels—more than 40% lower than it was
just a year ago. The idea that we have a surplus of natural gas to export is bogus. Reality #2: By the time
these LNG export terminals are completed, the “shale revolution” may have come and gone. As Post
Carbon Institute has documented in painstaking detail, shale wells deplete at breakneck speed—on the order of 70%
for a typical well in the first year and between 30-50% for entire fields. That means industry must
replace nearly half of production each year just to maintain current levels. But there are only so many
economically viable drilling locations. Unless drilling rates grow dramatically, it appears that all the major shale gas
plays—with the exception of the Marcellus—have already peaked. It’s likely that by the end of the decade, US
natural gas production will again be in decline. Reality #3: The industry is losing its shirt at current natural
gas prices—the real motivation behind the LNG export push. The shale gas drilling frenzy led to a
steep decline in natural gas prices; this was great for utilities and consumers but has led to a lot of
companies writing off assets and even more to rely on debt to keep the drilling treadmill going, since
many of these operators are losing money. Exporting natural gas would raise prices domestically,
something the industry badly needs in order to earn a profit. Reality #4: While the benefits are fleeting,
the costs will be borne for generations. There is a lot of debate about the climate and health impacts of shale gas drilling, with
studies showing conflicting findings (for a great, albeit wonky, resource for peer-reviewed papers on shale gas check out this library put
together by PSE Healthy Energy). But a few things are difficult to dispute: 1. Whether or not water
contamination has already
occurred, well casing failure is an inevitability 100% of the time. It’s just a matter of when. 2. The millions of gallons
of fresh water that are used on average for each shale gas well drilled can’t be returned to the
hydrological cycle. Whether or not industry gets better at recycling their waste water for use in other frack jobs, we’ll never again be
able to drink that water or use it to grow food. 3. The boom and bust phenomenon that comes with the shale gas (and tight
oil) drilling frenzy can create huge, negative social and economic impacts—increased crime, inflation, blight,
infrastructure costs, and social services that can no longer be maintained by tax revenue once the
boom ends. Export advocates are essentially arguing for sending all the benefits of fracking abroad
while keeping all the costs here at home.
Exports don’t help econ
They can’t solve for our manufacturing internal link: increased prices cause outsourced
labor
NPR No Date
[“LNG exports: Marcellus Shale goes global,” http://stateimpact.npr.org/pennsylvania/tag/lng-exports/]
the DOE report does say LNG exports will depress real wages, due to increased costs in fuel. ”Households
with income solely from wages or government transfers, in particular, might not participate in these
benefits.” So not everyone has rallied behind this report. Manufacturers in particular, have seen a resurgence with the
low price of natural gas in the U.S., both as a feedstock for plastics, and as a cheaper fuel. George Biltz, a former vice president
for Dow Chemical, told StateImpact Pennsylvania that shale gas has transformed the petrochemical industry. “It’s a
massive competitive advantage for this industry,” said Blitz. Biltz says in the late 1990s the U.S. started to run out of cheap natural gas. Prices
that were once about $3.50 per million British thermal units, jumped as high as $14 before 2008. Since
natural gas liquids are the
raw materials for plastics, and the largest cost to a manufacturer, a lot of those industries left the U.S.
But Biltz says those jobs are coming back thanks to cheap natural gas. Dow Chemical criticized the DOE’s study as
“flawed.” “The report issued by the DOE on liquefied natural gas (LNG) exports is flawed, misleading, and
based on outdated, inaccurate and incomplete economic data,” said DOW CEO Andrew N. Liveris in a
press release. “The report fails to give due consideration to the importance of manufacturing to the
U.S. economy. Manufacturing is the largest user of natural gas in the U.S., and creates more jobs and
more value to the U.S. economy from natural gas than any other sector.”
Exports cause warming
LNG is uniquely bad for biodiversity and warming
Sierra Club 14
[“EXPORTING LIQUEFIED NATURAL GAS (LNG) TO OVERSEAS MARKETS IS A DIRTY, DANGEROUS
PRACTICE THAT LETS THE INDUSTRY MAKE A KILLING AT THE EXPENSE OF HUMAN HEALTH.”
http://content.sierraclub.org/naturalgas/stop-lng-exports
While drillers continue to carve up private property and ignore basic environmental laws, the natural
gas industry is pressuring local governments and coastal communities to build new pipelines and
processing plants so gas can be turned into a liquid form, also known as liquefied natural gas (LNG)
and shipped overseas. Exporting natural gas would increase fracking and carbon emissions, put
sensitive ecological areas at risk, and do nothing to address our country's energy challenges. Natural gas companies
envision a network of winding pipelines and noisy, polluting compressors that connect the drills to the
docks, slicing through wild lands, rivers, and backyards. Pipelines and gas wells will inevitably leak or
rupture, risking lives and fouling the environment where people live and further polluting the air we
breathe and the water we drink. Not only that, the super-cooling process that turns fossil fuel vapor
into LNG requires an immense amount of energy -- so much energy, in fact, that the LNG lifecycle is as
dirty as coal. The industry wants to build enormous shipping terminals that would pave over fields, fill
wetlands, and destroy estuaries. The industry claims natural gas is the key to America’s energy
independence, yet they want to export almost half of daily U.S. production, leaving our communities
polluted while the gas industry profits.
Fracking causes air and water pollution and deforestation
Brune, Sierra Club Executive Director, 13
Michael Brune: executive director of the Sierra Club, holds degrees in Economics and Finance from West
Chester University in Pennsylvania “Top 5 Reasons LNG Exports Are a Very Bad Idea,”
http://ecowatch.com/2013/05/30/5-reasons-lng-exports-very-bad-idea/]
So far, the Department of Energy has failed to consider the environmental and health consequences of
such a radical increase in natural gas drilling. They really should, because both the potential risks and the known harms are
enormous. Here are five environmental reasons why LNG exports are a very bad idea:
1. The current shale-gas rush has
already had serious effects on our air quality. As the Department of Energy’s own Shale Gas Subcommittee reported:
“Significant air quality impacts from oil and gas operations in Wyoming, Colorado, Utah and Texas are well documented, and air quality issues
are of increasing concern in the Marcellus region (in parts of Ohio, Pennsylvania, West Virginia and New York).”
Because of natural gas
drilling, parts of rural Wyoming now have smog worse than that of downtown Los Angeles. This air pollution doesn’t
just spoil the
view—it’s been linked to respiratory disease, heart failure, and premature death.
2. Increased
fracking will endanger and further strain increasingly scarce water resources. A single fracking well
can require up to 5 million gallons of water. And because that water is contaminated during the
fracking process, most of it must be considered toxic waste and can never be used for human
consumption again. Meanwhile, contamination of surface and groundwater sources from spills and leaks
remains an ever-present risk.
3. Intense gas production can transform entire regions—and not for the better. We’re talking
hundreds of thousands of new wells, along with a vast infrastructure of roads, pipelines and support facilities. Pennsylvania’s forests
have already been decimated by fracking wells—we could see that pattern repeated from New York to Monterey.
U.S LNG exporting will lead to a mass environmental suicide
Michael Brune 13’ ( Michael Brune Holds degrees in Economics and Finance from West Chester University in Pennsylvania, Top 5 Reasons LNG Exports
Are a Very Bad Idea, http://ecowatch.com/2013/05/30/5-reasons-lng-exports-very-bad-idea/)
the Department of Energy has failed to consider the environmental and health
consequences of such a radical increase in natural gas drilling. They really should, because both the potential risks and the
known harms are enormous. Here are five environmental reasons why LNG exports are a very bad idea. The current shale-gas rush has already
had serious effects on our air quality. As the Department of Energy’s own Shale Gas Subcommittee reported: “Significant air
quality impacts from oil and gas operations in Wyoming, Colorado, Utah and Texas are well
documented, and air quality issues are of increasing concern in the Marcellus region (in parts of Ohio, Pennsylvania, West Virginia and New York).”
So far,
Because of natural gas drilling, parts of rural Wyoming now have smog worse than that of downtown Los Angeles. This air pollution doesn’t just spoil the view—it’s been linked to
. Increased fracking will endanger and further strain increasingly
scarce water resources. A single fracking well can require up to 5 million gallons of water. And
because that water is contaminated during the fracking process, most of it must be considered
toxic waste and can never be used for human consumption again. Meanwhile, contamination of surface and groundwater
sources from spills and leaks remains an ever-present risk.
3. Intense gas production can transform entire regions—and not
for the better. We’re talking hundreds of thousands of new wells, along with a vast infrastructure
of roads, pipelines and support facilities. Pennsylvania’s forests have already been decimated by fracking wells—we could see that
pattern repeated from New York to Monterey. 4. Higher natural gas prices could help revive the fortunes of the
declining coal-fired power industry. At a time when we should be working to move as fast as
respiratory disease, heart failure, and premature death
possible beyond all fossil fuels, burning more coal is beyond crazy— it’s suicidal .
5. Which brings us to
what may be the most important reason we shouldn’t ramp up gas production so we can export LNG: Increased use
of any fossil fuel is the wrong move if we want to limit climate disruption. The International
Energy Agency estimates that to have a shot at keeping global warming within a range that is
potentially survivable, we need to keep two-thirds of our known oil, coal and natural gas
reserves in the ground.
LNG export terminals are the latest example of how the Obama administration’s “all of the above” energy approach is misguided
and fundamentally at odds with its stated priority of fighting climate change . How can we justify taking a huge additional
percentage of U.S. fossil fuel reserves and selling them overseas for profit at the expense of
countless future generations? Then again, people once made economic arguments for perpetuating the slave trade and other morally repugnant enterprises.
They were profoundly wrong. Let’s not give history a reason to say the same of us.
LNG is uniquely harmful to the environment
Sierra Club No Date
http://content.sierraclub.org/naturalgas/stop-lng-exports
While drillers continue to carve up private property and ignore basic environmental laws, the
natural gas industry is pressuring
local governments and coastal communities to build new pipelines and processing plants so gas can be turned
into a liquid form, also known as liquefied natural gas (LNG) and shipped overseas. Exporting natural gas would
increase fracking and carbon emissions, put sensitive ecological areas at risk, and do nothing to
address our country's energy challenges. Natural gas companies envision a network of winding
pipelines and noisy, polluting compressors that connect the drills to the docks, slicing through wild
lands, rivers, and backyards. Pipelines and gas wells will inevitably leak or rupture, risking lives and
fouling the environment where people live and further polluting the air we breathe and the water we
drink. Not only that, the super-cooling process that turns fossil fuel vapor into LNG requires an immense
amount of energy -- so much energy, in fact, that the LNG lifecycle is as dirty as coal. The industry wants to
build enormous shipping terminals that would pave over fields, fill wetlands, and destroy estuaries.
Exports cause price spikes
Their authors are wrong – Exports double prices and devastate manufacturing
Ditzel, Plewes, and Broxson 13
Ken Ditzel Provides business consulting and expert witness expertise to the power generation. Bob
Broxson has been Vice President of the Energy & Environment Practice at CRA International Inc. since
September 07, 2012. is an associate principal in the Energy & Environment and Climate & Sustainability
Practices of CRA. “US Manufacturing and LNG Exports: Economic Contributions to the US Economy and
Impacts on US Natural Gas Prices,” February 25, 2013
http://www.crai.com/uploadedFiles/Publications/CRA_LNG_Study_Feb2013.pdf]
Our analysis disproves the notion that the shale-driven natural gas supply curve is flat and instead shows that it is upward sloping. The result is
that natural gas prices will rise under an extremely conservative demand outlook, such as the one projected in
the AEO 2013 ER (see Figure 28). Under a more reasonable demand forecast, we find that gas prices will almost
double from $3.3/MMBtu today to $6.3/MMBtu by 2030. Layering in additional demand from LNG exports in the
Likely and High Export scenarios would raise prices to $8.8/MMBtu and $10.3/MMBtu in 2030, respectively,
assuming no price-induced demand feedback. At these higher scenario prices, growth in the three main sectors
driving the natural gas economy going would be stunted
– A significant, gas-intensive sub-sector exists
that will be challenged in passing through high natural gas costs in the competitive, global market. This is illustrated in our ammonia case study.
Manufacturers will look to establish new plants and relocate existing operations in more favorable gas markets around the
world. The historical precedence of companies exiting US manufacturing is well documented and can happen again if LNG exports rise too
n – For the electric sector, generation providers will migrate to other generation technologies, such as wind and
nuclear, but only at higher relative costs. This
results show that electricity
will raise prices for the full spectrum of electricity consumers. Our
prices in 2030 will increase 60-170% in the Likely Export scenario and will increase 70-180% in the
– As shown in earlier in
Figure 21, NGV HDVs are economical at delivered natural gas prices below $14/MMBtu at current diesel prices of $4.2 per gallon.54 While this
is well above our Henry Hub natural gas price forecast in 2030, the costs of pipeline transportation and compression and liquefaction services
will raise the delivered price. CRA estimates that these costs could be $3–4/MMBtu, which would put NGV economics at the margin under the
High Export scenario. LNG exporters are the most immune to higher natural gas prices. Asian LNG import prices are tied tightly to an oil index,
which currently trades around $20/MMBtu. Subtracting the costs of liquefaction, shipping, and regasification (netback costs) of $6/MMBtu,
exports to Asia are attractive with domestic natural gas prices up to $14/MMBtu. This netback price is well above our 2030 Henry Hub forecast
price across all scenarios and, as a result, would induce LNG exports. We
find that the economy will lose at the expense of
the sizable LNG exports modeled in the Likely and High Export scenarios. The manufacturing sector
serves as an example of the unintended loss that would occur as the economic benefits of increased
manufacturing in the US economy are superior to LNG exports. These benefits are highlighted in Section 2 and
recounted
Manufacturing produces
$4.9 billion of additional, direct GDP, which is at least double the GDP contribution of LNG exports at
the same level of natural gas consumption
the investment required for LNG terminals at a given level of gas demand. At an additional 5 Bcf/d, manufacturing would produce more than
180,000 jobs in the economy compared to 22,000 for LNG exports. In addition, construction jobs
would increase by a factor
of 4 to 5 relative to LNG exports.
Announced manufacturing projects would reduce
the trade deficit by $52 billion annually, compared to $18 billion for exporting the same level of
natural gas as LNG. This discrepancy is important for a country focused on expanding exports and reducing imports. Our analysis of the
NERA Report reveals that they did not properly reflect these benefits. The reason is that NERA made two
fundamental flaws in its assumptions NERA did not separately represent the gas-intensive
components of the manufacturing sector. Like NERA, CRA has a computable general equilibrium model and understands the
nuances of the model they employed. NERA grouped gas-intensive manufacturing with a much larger subset of
manufacturing. This grouping produced a weighted average representation that muted the impact of
sectors highly sensitive to changes in gas prices. NERA’s authors are well aware of the “averaging” impact as stated in public
ce elasticity of
Asian importers. The result from NERA’s overestimations was that LNG would be exported only under extreme scenarios of supply and/or
demand shocks. This finding is contrary to market signals. The magnitude of LNG export terminal applications reveals a strong interest in LNG
export investment, and it is not likely that proposed exporters are banking on extreme scenarios in order to satisfy their required return on
investment. LNG
investors have already seen their investments turn sour with the substantial overbuild
of US LNG import capacity. As a result, they likely are applying a healthy amount of discounting to
their bullish view on US LNG export potential.
Exports will cause prices to double
Conti, Assistant Administrator for Energy Analysis. 12
John Conti is the Director of the Office of Intergrated Analysis and Forecasting “Effect of Increased
Natural Gas Exports on Domestic Energy Markets as requested by the Office of Fossil Energy,” January
2012, http://www.eia.gov/analysis/requests/fe/pdf/fe_lng.pdf]
Even while consuming less, on average, consumers will see an increase in their natural gas and electricity
expenditures. On average, from 2015 to 2035, natural gas bills paid by end-use consumers in the residential, commercial, and industrial
sectors combined increase 3 to 9 percent over a comparable baseline case with no exports, depending on the export scenario and case, while
increases in electricity bills paid by end-use customers range from 1 to 3 percent. In the rapid growth cases, the increase is notably greater in
the early years relative to the later years. The slower export growth cases tend to show natural gas bills increasing more towards the end of the
projection period. EIA projects that U.S. natural gas prices are projected to rise over the long run, even before considering the possibility of
additional exports (Figure 2). The
projected price increase varies considerably, depending on the assumptions
one makes about future gas supplies and economic growth. Under the Reference case, domestic
wellhead prices rise by about 57 percent between 2010 and 2035. But different assumptions produce different
results. Under the more optimistic resource assumptions of the High Shale EUR case, prices actually fall at first and rise by
only 36 percent by 2035. In contrast, under the more pessimistic resource assumptions of the Low Shale EUR
case, prices nearly double by 2035. U.S. Energy Information Administration | Effects of Increased Natural Gas Exports on
Domestic Energy Markets 7 While natural gas prices rise across all four baseline cases (no additional exports) considered in this report, it should
be noted that natural gas prices in all of the cases are far lower than the price of crude oil when considered on an energy-equivalent basis.
Projected natural gas prices in 2020 range from $3.46 to $6.37 per thousand cubic feet (Mcf) across the four
baseline cases, which roughly corresponds to an oil price range of $20 to $36 per barrel in energy-equivalent terms. In 2030, projected baseline
natural gas prices range from $4.47 to $8.23 per Mcf in the four baseline cases, which roughly corresponds to an oil price range of $25 to $47
per barrel in energy-equivalent terms. Figure 2. Natural gas wellhead prices in the baseline cases (no additional exports) Source: U.S. Energy
Information Administration, National Energy Modeling System Export scenarios—relationship
between wellhead and
delivered natural gas prices Increases in natural gas prices at the wellhead translate to similar
absolute increases in delivered prices to customers under all export scenarios and baseline cases .
However, delivered prices include transportation charges (for most customers) and distribution charges (especially for residential and
commercial customers). These charges change to much less of a degree than the wellhead price does under different export scenarios. As a
result, the percentage change in prices that industrial and electric customers pay tends to be somewhat lower than the change in the wellhead
price. The percentage change in prices that residential and commercial customers pay is significantly lower. Summary statistics on delivered
prices are provided in Appendix B.
More detailed results on delivered prices and other report results can be
found in the standard NEMS output tables that are posted online.
Exports cause a tripling of LNG prices – devastates the economy
AEA 13
[America’s Energy Advantage, “UNCHECKED EXPORTS COULD LEAD TO 3X INCREASE IN NATURAL GAS
PRICES,” http://www.americasenergyadvantage.org/blog/entry/unchecked-exports-could-lead-to-3xincrease-in-natural-gas-prices]
According to the report, US Manufacturing and LNG Exports: Economic Contributions to the US
Economy and Impacts on US Natural Gas Prices, allowing unchecked exports would have a direct
negative impact on US employment, manufacturing, and the economy due in large part to a vast
increase in the cost of natural gas. Some of the key findings of the report include: US manufacturing contributes
more to GDP, employment, and the reduction of the trade deficit as compared to LNG exports at a
commensurate level of natural gas use. A global LNG supply shortage of 20-35 billion cubic feet per
day by 2030 is projected, and US exports would likely play a major role in filling the gap, which in turn
could lead to a tripling of natural gas prices from current levels by 2030. Manufacturing is highly
sensitive to natural gas prices, and a significant portion of the US manufacturing sector is exposed to
impacts from projected increased natural gas prices. Current expectations for a low-cost, gas-driven electricity economy
and significant deployment of natural gas vehicles could be foregone due to LNG exports. As outlined in the report, a threefold increase
in the cost of natural gas under a high export scenario would be disastrous for our economy and
destroy the advantage to our homegrown manufacturers. In all, $90 billion of gas-intensive
investment in manufacturing could be on the line. That's a risk we can't afford, especially given all the
added benefits these investments bring to our economy.
Exports won’t be profitable – markets are overbuilt
Holeywell, Energy Reporter for the Houston Chronicle, 7.7
[Ryan Holeywell covers energy for the Houston Chronicle, “Profits from US natural gas exports could
disappoint, researcher says,” 7.7.14 http://fuelfix.com/blog/2014/02/19/profits-from-us-natural-gasexports-could-disappoint-researcher-says/]
HOUSTON — New natural gas export terminals in the U.S. might not be as profitable as once imagined — at least
for a few years — due to overbuilding, a new study from Rice University warns. From about 2016 to 2025, the cost
of liquefying natural gas in the United States and shipping it to Asia likely will exceed the difference in
the commodity’s price in the two regions, according to the study, released this week. Today, natural gas costs more than $18
per million British thermal units in Asia, while the U.S. price generally has held below $4 per million Btu during the past couple of years —
although it’s climbed over $6 recently, driven at least partly by winter heating demand. The
higher price natural gas commands
overseas has helped fuel a rush to build liquefied natural gas export facilities along the Gulf Coast and
in Canada, as producers view Asia as a major opportunity for big profits. But as new U.S. export
terminals come online and other nations flood Asia with natural gas, the price there will drop, said
researcher Kenneth Medlock, senior director of the Center for Energy Studies at Rice’s James A. Baker
III Institute for Public Policy. “The capacity that’s added will result in a price impact in the Asian market that’s pretty dramatic,” said
Medlock, who wrote the report, in a conference call with reporters this week. “Not until a decade later will prices settle in.” Price gap: Asian
nations eagerly eye cheap US natural gas U.S. natural gas prices have plummeted with the spread of shale gas drilling, while demand has kept
the price significantly higher in Asia. Natural gas producers have struggled to meet Asia’s power needs in the wake of the 2011 earthquake and
tsunami that knocked the majority of Japan’s nuclear power capacity offline. That increased demand for natural gas to fuel power plants and
sent gas prices in Asia to unprecedented levels. U.S. regulators have permitted six liquefied natural gas export facilities and more are seeking
approval. Meanwhile, other
countries are rushing to supply Asia with natural gas, too. Shale production in China;
Central Asia and South Asia; and LNG exports from Australia and East Africa all seek
to capitalize on the high price of gas in Asia. It could be too much too fast, at least for a while.
Medlock called the situation “a classic overbuild on the part of the industry.” According to Medlock’s
analysis, natural gas in Asia will continue to command a higher price than in the U.S. from 2016
through 2025. But the gap will narrow, and the cost of liquefying it and shipping it to Asia will exceed
the difference in price. In 2025 and beyond, the long-term price differentials between the U.S. and Asia will be comparable to the cost
pipelines from Russia,
of trade, according to Medlock’s analysis.
US exports can never compete
Levi, senior fellow for energy and environment at the Council on Foreign Relations (CFR), 2012
Michael A. Levi is the David M. Rubenstein senior fellow for energy and environment at the Council on
Foreign Relations (CFR), a nonpartisan foreign-policy council. June 2012, “A Strategy for U.S. Natural Gas
Exports,” http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf]
Yet despite extraordinary differences between U.S., European, and Asian gas markets, spot prices in all three have largely tracked each other
for twenty years—and all three have also tracked the price of oil (Figure 1). While Figure 1 primarily shows spot prices, most natural gas trade in
Europe and Asia does not occur on spot markets. Economists generally believe, however, that spot and contract prices cannot diverge much
over the medium and long run, since those bound by contracts will insist on renegotiating. This intuition is reinforced by comparing U.K. spot
prices and German import prices (which are dominated by contracts) in Figure 1. The historical relationships between the three markets,
however, appear to have broken down around 2009. U.S. natural gas output is on the rise as a result of breakthroughs in shale gas production.
Total U.S. natural gas production rose from 23.5 trillion cubic feet in 2006 to 28.6 trillion cubic feet in 2011, equivalent to 78 billion cubic feet
each day (EIA 2012b). This
flood of production has depressed natural gas prices in the United States. Yet, since
exports from the United States to Europe and Asia are generally not allowed, overseas prices have not followed. It is this difference in
prices that has sparked interest in U.S. LNG exports: before prices in the three markets blew wide
apart, there was no economic incentive for anyone to build an LNG export facility in the United States.
If a situation resembling the historical relationship returns, opportunities for exports will vanish.
Economists expect prices for commodities in a competitive environment to converge with the
marginal cost of supplying them over the medium term. For natural gas this could mean ample lowpriced competition from traditional suppliers within a few years, making U.S. LNG exports
uneconomic. Several Middle Eastern producers have marginal costs of production close to zero
(excluding shipping), either because natural gas is easy to extract or because it is a byproduct of oil
production. Russian and Caspian gas generally costs more than Middle Eastern gas to produce, but,
given sufficient pipeline infrastructure, delivering it could be much cheaper than shipping LNG.
Exports cause price spikes
Levi, senior fellow for energy and environment at the Council on Foreign Relations (CFR), 2012
Michael A. Levi is the David M. Rubenstein senior fellow for energy and environment at the Council on
Foreign Relations (CFR), a nonpartisan foreign-policy council. June 2012, “A Strategy for U.S. Natural Gas
Exports,” http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf]
The first way that prices could converge is through U.S. LNG exports, which could ultimately bring the
various prices together, net of transport costs (including an indeterminate risk premium paid to investors in risky LNG projects).
Indeed initial natural gas exports themselves will tend to shrink opportunities for subsequent exports. A recent DOE study projects
that with moderate U.S. gas resources and twelve billion cubic feet a day of exports, U.S. benchmark
prices would rise to more than $8 per thousand cubic feet by the middle of the next decade (EIA 2012c).
When combined with the cost of moving natural gas from the United States to overseas markets,
there is a strong chance that some exports would be unprofitable at that price. The same analysis found that if
U.S. resources were lower than anticipated, prices could reach $14 per thousand cubic feet by 2020,
making exports undoubtedly uneconomic at the margin. All that said, assuming U.S. LNG exports at the outset of this
analysis would make no sense, since their very existence depends on the particular export policy that is adopted. The second way that prices
could converge is through a return of the historically tight link between oil and natural gas prices in the U.S. market. Until recently, high oil
prices drove many U.S. manufacturers to substitute natural gas for distillate or residual fuel oil in their operations, while high natural gas prices
did the reverse. As a result, natural gas prices followed oil prices up and down. The same thing occurred in Europe and Asia. Since oil prices
were the same in all three markets, natural gas prices converged, too. Today, though, there
is very little switchable capacity left in
U.S. industry: as of 2006, U.S. manufacturers only had enough switchable oil-based capacity to accommodate an
additional 200 million cubic feet of daily natural gas consumption, a figure that has probably fallen since (EIA 2010b;
author’s calculations). Even if all nonswitchable capacity that currently uses fuel oil were retired and replaced with gas-based facilities (which
would require sustained natural gas prices far below oil prices to offset the costs of new equipment), this would absorb less than one billion
cubic feet of daily natural gas demand, around one percent of total U.S. production. Natural gas and oil prices could also become re-linked in
the United States through the robust use of natural gas in transportation. This could be more significant: displacing the equivalent of 150,000
barrels a day of refined petroleum products each year (about one percent of U.S. consumption and thus a reasonable prospect within a decade)
could absorb the equivalent of about one billion cubic feet of incremental daily natural gas production.4 But the link would be different from
before: because the
equipment needed to utilize natural gas to power cars and trucks is more costly than
the equipment needed for oil, a big difference between oil and natural gas prices—as much as $6-7
per thousand cubic feet—would remain.5
America can’t export enough gas to compete
Levi, senior fellow for energy and environment at the Council on Foreign Relations (CFR), 2012
Michael A. Levi is the David M. Rubenstein senior fellow for energy and environment at the Council on
Foreign Relations (CFR), a nonpartisan foreign-policy council. June 2012, “A Strategy for U.S. Natural Gas
Exports,” http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf]
It is far from clear that all or even most of this export volume would be used even if it were approved. A recent MIT study looked at
nine scenarios for U.S. and world natural gas markets; none of them led to the emergence of
significant U.S. natural gas exports, in large part because other lower cost producers undercut prices
offered by the United States in distant markets (MIT 2011). Other forces, discussed in Chapter 2, could also lead
global natural gas prices to converge even without U.S. exports, removing opportunities for
economically attractive U.S. LNG sales. Indeed, most analysts anticipate that less LNG will be exported
than currently pending permits would allow, even if all of those were approved. (They also expect to see more
permit applications, since the plans behind many of the pending ones are expected to eventually fizzle.) For example, Citigroup analysts
foresee up to 5 billion cubic feet a day of LNG exports by the end of the decade, barring regulatory
barriers (Morse et al. 2012). UK gas producer BG has projected up to six billion cubic feet a day by
then (Gismatullin 2012), the same volume that Deloitte (2011) analysts have focused their modeling on. Given this consistent view among
market analysts on the maximum likely volume of LNG exports from the United States, the main analysis in this paper focuses on the possibility
of up to six billion cubic feet of daily exports. This is approximately half the capacity currently awaiting approval and almost ten percent of
current U.S. natural gas production. I consider the possibility of significantly greater or lesser exports in Chapter 6; the qualitative conclusions
do not change, though the specific costs and benefits of allowing LNG exports do. To provide some context, Figure 2 shows natural gas
consumption and LNG trade by region.
CP Links to Politics
Controversy Over LNG & Oil Exports Heats Up As Production Expands
Jonathan Fahey, AP Energy Writer,
12’ (Jonathan Fahey, energy reporter for associated press, Natural gas glut means drilling boom must
slow, http://news.yahoo.com/natural-gas-glut-means-drilling-120019501.html)
So much natural gas is being produced that soon there may be nowhere left to put the country's swelling surplus. After years of explosive growth, natural gas producers are retrenching. The
underground salt caverns, depleted oil fields and aquifers that store natural gas are rapidly filling up after a balmy winter depressed demand for home heating. The glut has benefited
businesses and homeowners that use natural gas. But with natural gas prices at a 10-year low — and falling — companies that produce the fuel are becoming victims of their drilling successes.
Their stock prices are falling in anticipation of declining profits and scaled-back growth plans. Some of the nation's biggest natural gas producers, including Chesapeake Energy, ConocoPhillips
They've gotten way ahead of themselves, and winter got way ahead of them too," says Jen Snyder,
There hasn't been enough demand to use up all the supply being
pushed into the market." So far, efforts to limit production have barely made a dent. Unless the pace
of production declines sharply or demand picks up significantly this summer, analysts say the nation's storage facilities could
reach their limits by fall. That would cause the price of natural gas, which has been halved over the past year, to nosedive. Citigroup commodities analyst
and Encana Corp., have announced plans to slow down. "
head of North American gas for the research firm Wood Mackenzie. "
Anthony Yuen says the price of natural gas — now $2.08 per 1,000 cubic feet — could briefly fall below $1. "There would be no floor," he says. Since October, the number of drilling rigs
exploring for natural gas has fallen by 30 percent to 658, according to the energy services company Baker Hughes. Some of the sharpest drop-offs have been in the Haynesville Shale in
But natural gas production is still growing, the result of a five-year
They are instead being put to work drilling
for oil, whose price has averaged more than $100 a barrel for months. The oil rig count in the U.S is at a 25-year high. This activity is adding to the
Northwestern Louisiana and East Texas and the Fayetteville Shale in Central Arkansas.
drilling boom that has peppered the country with wells. The workers and rigs aren't just being sent home.
natural gas glut because natural gas is almost always a byproduct of oil drilling. Analysts say that before long companies could have to start slowing the gas flow from existing wells or even
take the rare and expensive step of capping off some wells completely. "Something is going to have to give," says Maria Sanchez, manager of energy analysis at Bentek Energy, a research firm.
U.S. natural gas production has boomed in recent years as a result of new drilling techniques that allow companies to unlock fuel trapped in shale formations. Last year, the U.S. produced an
But over that period consumption has grown half as
fast. The nation's storage facilities could easily handle this extra supply until recently because cold winters pushed up demand for heating and hot summers led to higher demand for air
average of 63 billion cubic feet of natural gas per day, a 24 percent increase from 2006.
conditioning. Just over half the nation's homes are heated with natural gas, and one-quarter of its electricity is produced by gas-fired power plants. But this past winter was the fourth warmest
in the last 117 years, according to the National Oceanic and Atmospheric Administration. It was the warmest March since 1950. Between November and March, daily natural gas demand fell 5
Yet production grew 8 percent over the same period
percent, on average, from a year earlier, according to Bentek Energy.
. "We haven't ever seen
a situation like this before," says Chris McGill, Vice President for Policy Analysis at the American Gas Association, an industry group. At the end of winter, there is usually about 1.5 trillion cubic
feet of gas in storage. Today there is 2.5 trillion cubic feet because utilities withdrew far less than usual this past winter. There is 4.4 trillion cubic feet of natural gas storage capacity in the U.S.
If current production and consumption trends were to
continue, Bentek estimates that storage facilities would be full on October 10. Storage capacity, which has grown by 15 percent over the past
decade, cannot be built fast enough to address the rapidly expanding glut. And analysts note there is little financial incentive to build more anyway. The low price brought on by the glut
If full, that would be enough fuel to supply the country for about 2 months.
has increased demand for natural gas among industrial users and utilities. Makers of chemicals, plastics and fertilizers that use natural gas as a feedstock are expanding. Garbage trucks, buses
and delivery vehicles are using more natural gas. Electric power producers are switching from coal to natural gas whenever possible. This won't add up to enough new demand quickly enough
Scorching temperatures this summer would do the trick, but Mother Nature is not
Temperatures this summer are forecast to be about normal
to relieve the pressure on storage facilities this summer.
expected to cooperate.
, and much cooler than the last two summers, says
David Streit, a meteorologist at Commodity Weather Group expects. Sultry winters, he said, do not usually develop into sultry summers
LNG is unpopular
Natural Gas Intelligence, Publishes a weekly reputable journal and oversees several natural gas
projects, 1/21/2009 (Natural Gas Intelligence, “FERC Makes Unpopular Decision to Approve Sparrows
Point” Online: http://www.naturalgasintel.com/articles/19185-ferc-makes-unpopular-decision-toapprove-sparrows-point)
Conceding that its decision was "not a popular" one, FERC last Thursday approved, subject to 169 conditions, the
CQF
controversial AES Sparrows Point liquefied natural gas (LNG) terminal project near Baltimore and associated Mid-Atlantic Express pipeline,
which would bring 1.5 Bcf/d of natural gas to growing markets in the Northeast. The agency also upheld on rehearing two order authorizing two
LNG projects -- Dominion Cove Point LNG on the eastern shore of Maryland, andNorthernStar Natural Gas Inc.'s Bradwood Landing LNG
terminal project in Oregon. With respect to Sparrows Point, "our primary concern is assuring public safety. We have done so in this order by
attaching 169 conditions that will protect public safety and mitigate any adverse environmental impact," said FERC Chairman Joseph Kelliher. "I
realize this is not a popular decision, but it is the correct decision, rooted in voluminous record and
based on sound science." The Sparrows Point project, which was been the target of intense opposition by state and federal politicians,
would have about 1.5 Bcf/d of regasification capacity with a potential for expansion to 2.25 Bcf/d. Regasified LNG would be delivered to
regional markets via Mid-Atlantic Express, an 88-mile, 30-inch diameter pipeline that would extend from the terminal to connections with
interstate pipelines at Eagle, PA.
Russia War Solvency Deficit
US gas exports crush Russian econ and influence
Walter Russell Mead, Professor of Foreign Affairs and Humanities at Bard College, 2012
(Henry A. Kissinger senior fellow for U.S. foreign policy at the Council on Foreign Relations, and Editorat-Large of The American Interest magazine The American Interest, North American Shale Gas Gives
Russia Serious Headache, online: http://www.the-american-interest.com/blog/2012/04/25/northamerican-shale-gas-gives-russia-serious-headache/)
North America’s shale gas boom is chipping away at the market for gas producers like Russia. What’s more, if the United States
becomes a gas exporter, Russia’s customers (especially in Europe) could decide to cancel expensive contracts
with Gazprom in favor of cheaper American natural gas. Here’s the story from the FT: “If the US starts
exporting LNG to Europe and Asia, it gives [customers there] an argument to renegotiate their prices
with Gazprom and Qatar, and they will do it,” says Jean Abiteboul, head of Cheniere supply & marketing.
Gazprom supplied 27 percent of Europe’s natural gas in 2011. While American gas is trading below $2 per MMBTU (million British thermal
units), Gazprom’s prices are tied to crude oil markets, and its long-term contracts charge customers roughly $13 per MMBTU, says the FT.
European customers would love to reduce their dependence on Gazprom and start to import American gas. Already Gazprom has had to make
concessions to its three biggest customers, and others are increasingly dissatisfied with their contracts. Worse, from Russia’s point of view:
evidence that western and central Europe contain substantial shale gas reserves of their own. Fracking is unpopular in thickly populated, ecofriendly Europe, but so are high gas prices. All
this ought to give Russia serious heartburn. Eroding Gazprom’s
dominance of the European energy market would be a major check on Russian economic growth and
political influence.
Russian econ collapse causes extinction
Filger 9 (Sheldon, Columnist and Founder – Global EconomicCrisis.com, “Russian Economy Faces Disasterous
Free Fall Contraction”, http://www.huffingtonpost.com/sheldon-filger/russian-economy-faces-dis_b_201147.html)
In Russia, historically, economic health and political stability are intertwined to a degree that is rarely encountered in other
major industrialized economies. It was the economic stagnation of the former Soviet Union that led to its political downfall. Similarly,
Medvedev and Putin, both intimately acquainted with their nation's history, are unquestionably alarmed at the prospect that Russia's
economic crisis will endanger the nation's political stability, achieved at great cost after years of chaos following the demise of the
Soviet Union. Already, strikes and protests are occurring among rank and file workers facing unemployment or non-payment of their salaries.
Recent polling demonstrates that the once supreme popularity ratings of Putin and Medvedev are eroding rapidly. Beyond the political elites
are the financial oligarchs, who have been forced to deleverage, even unloading their yachts and executive jets in a desperate attempt to raise
cash. Should the Russian economy deteriorate to the point where economic collapse is not out of the question, the impact
will go far beyond the obvious accelerant such an outcome would be for the Global Economic Crisis. There is a geopolitical dimension that
is even more relevant then the economic context. Despite its economic vulnerabilities and perceived decline from superpower status, Russia
remains one of only two nations on earth with a nuclear arsenal of sufficient scope and capability to destroy the
world as we know it. For that reason, it is not only President Medvedev and Prime Minister Putin who will be lying awake at nights over the
prospect that a national economic crisis can transform itself into a virulent and destabilizing social and political
upheaval. It just may be possible that U.S. President Barack Obama's national security team has already briefed him about the consequences
of a major economic meltdown in Russia for the peace of the world. After all, the most recent national intelligence estimates put out by the
U.S. intelligence community have already concluded that the Global Economic Crisis represents the greatest national security threat to the
United States, due to its facilitating political instability in the world. During the years Boris Yeltsin ruled Russia, security forces responsible for
guarding the nation's nuclear arsenal went without pay for months at a time, leading to fears that desperate personnel would illicitly sell
nuclear weapons to terrorist organizations. If the current economic crisis in Russia were to deteriorate much further, how
secure would the Russian nuclear arsenal remain ? It may be that the financial impact of the Global Economic Crisis is its least
dangerous consequence.
Empirically, Putin uses war to increase popularity
Dearden, Staff Writer at the Independent, 5.17
[Lizzie Dearden, “Ukraine crisis pushes Putin's popularity among Russians to six-year high,” 5.17.14,
http://www.independent.co.uk/news/world/europe/ukraine-crisis-pushes-putins-popularity-amongrussians-to-sixyear-high-9390719.html]
Vladimir Putin is known for his outlandish PR efforts but apparently all the Russian President needed to do to improve his
popularity was annex Crimea. According to Iran’s Press TV, his widely-condemned stance through the increasingly
bloody Ukraine crisis has endeared him to the Russian public, pushing ratings to a six-year high. The conflict
seems to have succeeded where topless horse riding and "finding" ancient Greek jugs have failed in securing positive public opinion. The
results of the poll, conducted by the All-Russian Centre for the Study of Public Opinion (VTsIOM) earlier this month, showed that Mr Putin’s
approval rating had increased from 82 per cent to 85 per cent since April, and by more than a third since the beginning of the
year. “Thus, this figure is virtually identical to the one recorded six years ago,” the poll said. His United Russia party also did well,
winning 60 per cent approval, up from just 41 per cent in January. Political analysts in the country believe the results are
closely tied to Russia’s controversial involvement in the Ukraine crisis. The annexation of Crimea was widely condemned
by the international community and called illegal by Anders Fogh Rasmussen, the secretary-general of Nato. Referendums in eastern Ukraine
last week were dubbed a “criminal farce organised by Russia” and diplomatic relations have become less police as strained relationships with
the West threaten to snap. The US has imposed ever heavier sanctions on Russia and several world leaders have condemned its
alleged support of separatist millitias. In a statement last month, David Cameron, Barack Obama and counterparts from Germany, France, Italy,
Japan, and Canada expressed “deep concern at the continued efforts by separatists backed by Russia to destabilise eastern Ukraine”. But
however loudly the rest of the world clucks in disapproval, many
Russians welcome any incursion as a step towards the
post-Soviet “Greater Russia”.
Russian stability is entirely dependent on Gas revenues
Aron, Director of Russian Studies at AEI, 13
Leon Aron is Resident Scholar and Director of Russian Studies at the American Enterprise Institute. He is
the author of three books and over 300 articles and essays. From 1999 to 2014 he wrote the Russian
Outlook, a quarterly essay on economic, political, social and cultural aspects of Russia. Dr. Aron earned
his Ph.D. from Columbia University, has taught a graduate seminar at Georgetown University, and was
awarded the Peace Fellowship at the U.S. Institute of Peace. “The political economy of Russian oil and
gas,” 5.29.13 http://www.aei.org/outlook/foreign-and-defense-policy/regional/europe/the-politicaleconomy-of-russian-oil-and-gas/]
Yet the most dangerous political legacy of the Russian petro-gas state is the centrality of oil and gas revenues, which amounted
to $215 billion last year,[21] to the loyalty of two groups that are essential for the regime’s survival: the
lower-income and elite segments. Trillion-ruble transfers help to maintain social peace in what is known as
“Russia-2”[22]—poorer regions, especially the volatile and increasingly violent Muslim North Caucasus, small towns and rural areas, and the
rusting “monotowns” (one-company towns) of Stalinist industrialization.[23] The sporadic raising of meager pensions and salaries for the
millions of Russians on the government payroll, including doctors and teachers (usually in the run-up to the Duma or presidential elections) is
gas rents are a vital component in elite management under
Putin’s neopatrimonial regime: a tacit but ironclad agreement between the Kremlin and the
bureaucracies from top to bottom that permits the latter to enrich themselves at the treasury’s
expense in exchange for their loyalty. So long as the regime continues to regard export revenues as a
palliative, if not a panacea, for economic, social, and political problems , they will impede or even obviate the need for
part of the same strategy. At the same time, oil and
economic and political modernization. “The problem of being a petro-state is that the natural resources trend corrupts the institutions,” said
Sergei Guriev, rector of the New Economic School in Moscow and a leading expert on Russian political economy. “This is
what is called
the ‘resource curse.’ This is a trap, where democratic political and economic institutions do not
develop because rents coming from natural resources provide incentives to the elite not to develop
institutions.”[24]
Exports make global prices liquid
Medlock, Fellow in Energy and Economic Resources at Rice University, 2.18
[Kenneth Medlock III, PhD, is the James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource
Economics at Rice University’s Baker Institute and the senior director of the Center for Energy Studies,
as well as an adjunct professor and lecturer in the Department of Economics at Rice University. Medlock
received his Ph.D. in economics from Rice in 2000, and held the MD Anderson Fellowship at the Baker
Institute from 2000 to 2001. “Natural Gas Price in Asia: What to Expect and What It Means,” 2.18.14,
http://bakerinstitute.org/media/files/Research/ac817540/CES-pub-NaturalGasPriceAsia-021814.pdf]
The eventual emergence of new suppliers in the global gas market makes it paramount to consider what the increased trade in LNG will do to
the nature of pricing. As
the US becomes an LNG exporter, the effects on global markets could be profound.
The global gas market will deepen and become physically linked to the most liquid continental natural
gas market in the world. This should in turn promote greater trade and ultimately alter the liquidity
paradigm that has dominated the Asia-Pacific market, which will in turn alter the manner in which
natural gas is priced in Asia. Moreover, when this happens, it will likely do so quickly; after all, the rise to current
price levels in Asia relative to prices elsewhere happened in only six months, a fact often forgotten in the discussion about future pricing in Asia.
Even if, ex post, the compression of the JKM-Henry Hub price differential renders US LNG liquefaction investments
less profitable than forecasts suggest, the establishment of a link from US supplies to foreign markets
will have potentially dramatic implications. A direct link between the US and abroad will only serve to
accelerate international market liquidity, thereby lowering liquidity risk. This could, all else equal,
alter the financing risk of LNG projects and lower the importance of oil-linked bilateral relationships.
In any case, as the story continues to unfold, the international gas market will evolve into something
dramatically different from what it is today.
China REM Mining Solvency Deficit
Not exporting natural gas ends Chinese Rare Earth Mineral Production
Levi, senior fellow for energy and environment at the Council on Foreign Relations (CFR), 2012
Michael A. Levi is the David M. Rubenstein senior fellow for energy and environment at the Council on
Foreign Relations (CFR), a nonpartisan foreign-policy council. June 2012, “A Strategy for U.S. Natural Gas
Exports,” http://www.hamiltonproject.org/files/downloads_and_links/06_exports_levi.pdf]
Conversely, if the United States were to restrain LNG exports, it would almost certainly face wider traderelated problems. The consequences could be broad, affecting support for open trade in general, but they would
likely have special impact on other resource-related disputes. Article XI of the General Agreement on Tariffs and Trade (GATT)
prohibits sustained quantitative restrictions on energy exports unless they are related “to the conservation of
exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption”
(Selivanova 2007). U.S. policy would be the opposite: it would be made in conjunction with efforts to encourage both domestic production and
consumption of natural gas. Indeed,
the United States has recently joined Europe and Japan in challenging
Chinese restrictions on exports of rare earth metals—which are critical to a variety of defense,
electronics, and energy technologies—at the World Trade Organization (WTO) (Palmer 2011). The arguments that the
United States would need to invoke in order to restrain LNG exports—particularly the prospects of
environmental damage and harm to domestic industry—are precisely those that China would like to
use to defend its own restrictions on rare earths exports; China could all but take the U.S. justification
of curbs on LNG exports, change a few words, and use it in its own defense. It would likely be difficult
for the United States to sustain limits to U.S. LNG exports while fighting Chinese limits on exports of
rare earth metals. Making U.S. curbs on LNG exports effective would also require actions that could
precipitate significant conflict with Canada and Mexico. Even then, those curbs might be undermined. The North
American natural gas market is tightly integrated. Constraints on U.S. LNG exports might thus be circumvented in a
straightforward manner by sending natural gas by pipeline to Canada or Mexico before exporting it from there as LNG. In that case, the U.S.
economy would
production), but
suffer all the downsides of LNG exports (through higher prices and environmental risks from increased
would forgo most of the benefits (aside from small profits from new natural gas output).
Chinese rare Earth mineral drilling causes severe pollution
Guardian 12’ (The Guardian Newsweekly Rare-earth mining in China comes at a heavy cost for local villages,
http://www.theguardian.com/environment/2012/aug/07/china-rare-earth-village-pollution)
a murky expanse of water, in which no fish or algae
can survive. The shore is coated with a black crust, so thick you can walk on it. Into this huge,
10 sq km tailings pond nearby factories discharge water loaded with chemicals use d to process the 17 most
sought after minerals in the world, collectively known as rare earths. The town of Baotou, in Inner Mongolia, is the largest Chinese source of these strategic
elements, essential to advanced technology, from smartphones to GPS receivers, but also to wind farms and, above all, electric cars. The minerals
are mined at Bayan Obo, 120km farther north, then brought to Baotou for processing. The concentration
of rare earths in the ore is very low, so they must be separated and purified, using hydro-metallurgical techniques and acid baths. China accounts for 97% of global output
of these precious substances, with two-thirds produced in Baotou. The foul waters of the
tailings pond contain all sorts of toxic chemicals, but also radioactive elements such as
thorium which, if ingested, cause cancers of the pancreas and lungs, and leukaemia. "Before the factories
From the air it looks like a huge lake, fed by many tributaries, but on the ground it turns out to be
were built, there were just fields here as far as the eye can see. In the place of this radioactive sludge, there were watermelons, aubergines and tomatoes," says Li Guirong with a sigh. It was in 1958 – when he was 10 – that a stateowned concern, the Baotou Iron and Steel company (Baogang), started producing rare-earth minerals. The lake appeared at that time
. "To begin with we didn't notice the
pollution it was causing. How could we have known?" As secretary general of the local branch of the Communist party, he is one of the few residents who dares to speak out. Towards the end of
Plants grew badly. They would flower all right, but sometimes there
was no fruit or they were small or smelt awful." Ten years later the villagers had to accept
that vegetables simply would not grow any longer. In the village of Xinguang Sancun – much as in all those near the Baotou factories – farmers let some
fields run wild and stopped planting anything but wheat and corn. A study by the municipal environmental protection agency
showed that rare-earth minerals were the source of their problems. The minerals themselves
caused pollution, but also the dozens of new factories that had sprung up around the processing facilities and a fossil-fuel power station feeding Baotou's new industrial fabric. Residents of what was now
known as the "rare-earth capital of the world" were inhaling solvent vapour, particularly sulphuric acid, as well as coal dust, clearly visible in the air between houses. Now the soil and
groundwater are saturated with toxic substances. Five years ago Li had to get rid of his sick pigs, the last survivors of a collection of cows, horses, chickens and
the 1980s, Li explains, crops in nearby villages started to fail: "
goats, killed off by the toxins. The farmers have moved away. Most of the small brick houses in Xinguang Sancun, huddling close to one another, are going to rack and ruin. In just 10 years the population has dropped from 2,000 to
300 people. Lu Yongqing, 56, was one of the first to go. "I couldn't feed my family any longer," he says. He tried his luck at Baotou, working as a mason, then carrying bricks in a factory, finally resorting to selling vegetables at local
markets, with odd jobs on the side. Registered as farmers in their identity papers, the refugees from Xinguang Sancun are treated as second-class citizens and mercilessly exploited. The farmers who have stayed on tend to gather
near the mahjong hall. "I have aching legs, like many of the villagers. There's a lot of diabetes, osteoporosis and chest problems. All the families are affected by illness," says He Guixiang, 60. "I've been knocking on government
doors for nearly 20 years," she says. "To begin with I'd go every day, except Sundays." By maintaining the pressure, the villagers have obtained the promise of financial compensation, as yet only partly fulfilled. There has been talk
of new housing, too. Neatly arranged tower blocks have gone up a few kilometres west of their homes. They were funded by compensation paid by Baogang to the local government. But the buildings stand empty. The government
is demanding that the villagers buy the right to occupy their flat, but they will not be able to pass it on to their children. Some tried to sell waste from the pond, which still has a high rare-earth content, to reprocessing plants. The
sludge fetched about $300 a tonne. But the central government has recently deprived them of even this resource. One of their number is on trial and may incur a 10-year prison sentence.
Terrorism DA
LNG will be attacked by terrorists
Kaplan, writer for cfr.org, 6
[Eben Kaplan, “Liquefied Natural Gas: A Potential Terrorist Target?” February 27, 2006,
http://www.cfr.org/natural-gas/liquefied-natural-gas-potential-terrorist-target/p9810#p2]
Yes, because of LNG's explosive potential, experts say. Al-Qaeda, for example, has specifically cited LNG as a desirable
target, says Rob Knake, senior associate at Good Harbor Consulting, LLC, a homeland-security private
consulting firm. Pipelines are not as attractive because the flow of gas can quickly be cut off and an
explosion easily contained. Terminals make better targets because an attack could result in a massive
fire that could potentially kill scores of people. They are also good targets because "if you take out
those terminals, you could have a significant disruption [in the U.S. gas supply,]" Knake says. But an attack
on an LNG terminal might not be so damaging. Terminals are equipped with emergency fire detection mechanisms designed to minimize the
impact of fires resulting from terrorist attacks or accidents. The
most attractive targets are the boats: 1,000-foot tankers with
double hulls and specially constructed storage tanks that keep the LNG cold. A report, put out by Good Harbor Consulting
assessing the risk of a proposed LNG terminal in Providence, Rhode Island, concluded that a successful
terrorist attack on a tanker could result in as many as 8,000 deaths and upwards of 20,000 injuries . It is
important to keep in mind that this is the worst case scenario. A report on LNG safety and security by the University of Texas' Center for Energy
and Economics explains LNG "tanks require exceptionally large amounts of force to cause damage. Because the amount of energy required to
breach containment is so large, in almost all cases the
major hazard presented by terrorists is a fire, not an explosion." The
Sandia National Laboratories report assesses four potential ways terrorists may target an LNG tanker
and the worst potential outcomes: Ramming: Terrorists may attempt to drive another vessel into an
LNG tanker or to divert a tanker into a stationary object. Unless the tanker is struck at a very high speed or the object
striking it is very sharp, it is unlikely that a breach of the hull will occur. However, if such a breach did occur, there is a chance LNG
would spill out and cause a massive fire. Triggered Explosion: Explosives, such as mines, may be placed in
the path of an LNG tanker or on the tanker itself. If powerful enough, such an explosion could cause the cargo
to spill and ignite. External Attack: There are several ways terrorists may attempt to assault an LNG tanker.
The 2000 U.S.S. Cole attack, in which terrorists detonated explosives after pulling alongside the
warship in a small vessel, is often cited as an example of such an attack. Other possible methods of
attack include firing missiles or rocket-propelled grenades at a tanker and or air strikes. Tankers are
particularly vulnerable as they traverse inland waterways en route to their destinations. The impact of an
assault would vary depending on the size and location of the attack, the worst-case scenario being a massive explosion. Hijacking: The most
catastrophic scenario involving an LNG tanker involves terrorists taking control of an LNG tanker,
sailing it toward a major population area and detonating the cargo.
Even assuming security measures, LNG is a WMD and endangers the public
Hurst, Analyst at IAGS, 8
[Cindy Hurst is an analyst at the Institute for Analysis of Global Security, “The Terrorist Threat to
Liquefied Natural Gas: Fact or Fiction?,” February 2008, http://www.iags.org/hurstlng0208.pdf]
On 14 February 2007, the Saudi Arabian arm of al-Qaeda put out a call to all religious militants to attack oil and
natural gas sources around the world. Through such attacks, according to the call, al-Qaeda hopes to “strangle” the
U.S. economy. 1 Such proclamations give fodder to those who highlight the possibilities that liquefied natural gas (LNG) could be
used as a lethal weapon of mass destruction. Industry officials on the other hand point out the improved security measures in
place as a result of 9/11. While the U.S. continues to pursue LNG as a way to diversify its natural gas resources in order to meet anticipated
future shortfalls and increase energy security, opponents and proponents of LNG have been locked in a bitter debate with no solid conclusion.
Proponents are correct in that both safety and security measures currently in place make LNG terminals and ships extremely hard targets for
terrorists. However, it
would be imprudent to believe that terrorists are either incapable or unwilling to
attack such targets. It would be equally imprudent to assume that these targets are impenetrable. If
anything, in today’s environment, insiders will always remain a potential threat. Dangerous Assumptions On 1 February 2007, the media
reported on a study by former White House counterterrorism chief Richard A. Clarke who worked as a consultant to a firm proposing an LNG
terminal in eastern Baltimore County. Clarke is said to have released a two-page summary of his report on the proposed Sparrows Point LNG
terminal in the Baltimore area. In it, he stated that the terminal would be located sufficiently far from homes and schools and would therefore
pose “no threat.” Clarke, according to media reports, went on to justify his findings by saying that terrorists “want to kill people. They want to
kill hundreds of people.”2 Therefore, since the proposed terminal would be located 1.2 to 1.3 miles from the Dundalk neighborhood of Turners
Station, according to Clarke, it would not be a sufficiently attractive target for terrorists. Additionally, he said that the facility would not be close
enough to Washington to be a “symbolic target.”3 However, recent studies run counter to Clarke’s alleged conclusion. One of the
best
ways to study al-Qaeda, or any other terrorist group, is through an analysis of historical trends. In early 2007,
Rand Corporation released a lengthy analytical report on terrorist targeting preferences for the Department of Homeland Security. The paper
focused on 14 terrorist attacks in which al-Qaeda was believed to have been somehow involved, either through association, sponsorship or
direction. According to the study, 10 out of the 14 attacks analyzed had either a medium or high casualty potential. In other words, these
attacks were meant to kill people—a lot of people. However, the other four attacks had a low casualty potential. The study further showed
a desire to damage the economy, with 10 of the 14 attacks indicating a medium or high potential to
damage the economy and the other four with a low 4 potential. Based simply on the Rand study, Clarke’s statement that the proposed
terminal location would pose “no threat,” is a dangerous assumption which leaves no room for error because al-Qaeda and its
associates, through propagations distributed via the Internet, have already expressed an interest in crippling the U.S.
economy. To further compound the argument against Clarke’s conclusion, energy experts expect LNG
imports into the U.S. to increase dramatically through 2030. This shift could potentially make LNG an
even more desirable target as the U.S. becomes increasingly dependent on LNG to satisfy its growing natural gas consumption
habits. The final argument against Clarke’s claim, and perhaps the most compelling one, lies within a study released by the Government
Accountability Office (GAO) in February 2007 on the public-safety consequences of a terrorist attack on LNG. 4 In its analysis, the GAO
scrutinized six completed studies on the potential hazards of an LNG spill. The GAO then drew a series of conclusions from the studies and
polled a panel of 19 experts to see whether or not they agreed with the findings. Not all experts agreed on the heat/hazard zone of an LNG spill.
One quarter of the experts polled during the study believed that one to 1.25 miles was not a sufficiently conservative estimate to describe the
heat hazard zone of an
LNG related fire. If the experts who disagreed with this distance happen to be correct, it would put
members of the general population located at the questionable threshold of 1.2 or 1.3 miles away
from the site in a risky location. Once ignited, as is very likely when the spill is initiated by a chemical
explosion, the floating LNG pool will burn vigorously…Like the attack on the World Trade Center in
New York City, there exists no relevant industrial experience with fires of this scale from which to
project measures for securing public safety.” “Professor James Fay, Massachusetts Institute of Technology
LNG explosions are apocalyptic
Lovins and Lovins, analysts, lectures and consultants on energy, resource and security policy 2001 (, Hunter Lovins
has degrees in Law, Political Studies and Sociology and an honorary doctorate, and is a member of the California Bar.. Amory
Lovins is a consultant experimental physicist, educated at Harvard and Oxford, who has published 23 books (many co-authored
with Hunter) and several hundred papers. He has held various academic chairs, received six honorary doctorates, served on the
US Department of Energy's senior advisory board, and consulted (often with Hunter) for scores of energy companies,
manufacturing firms, governments and international organisations. The Lovineses have received numerous awards for their
work. “Brittle Power : Energy Strategy for National Security” – Rocky Mountain Institute -https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CCsQFjAB&url=http%3A%2F%2Fwww.rmi.org
%2Fcms%2FDownload.aspx%3Fid%3D5084%26file%3DBrittlePower3PtCombo.pdf%26title%3DBrittle%2BPower%253A%2BEner
gy%2BStrategy%2Bfor%2BNational%2BSecurity&ei=O_u6U86OIsrM8QGw5YDIDQ&usg=AFQjCNFBIrAVUIQt95vMJnVjYL2QrK1bJ
w&sig2=kXIXhYqWyWy4fQJHrPhFGg]
Disasters Waiting to Happen : Liquified Natural Gas Natural gas can be sent by pipeline over long distances. For a price, it can be piped from
North Sea platforms to the British mainland, from Algeria to Italy, or from Siberia to Western Europe. But pipelines are not a feasible way to
send gas across major oceans—for example, from the Mideast or Indonesia to the United States. A
high-technology way to
transport natural gas overseas has, however, been developed in the past few decades, using the techniques of cryogenics—the
science of extremely low temperatures. In this method, a sort of giant refrigerator, costing more than a billion dollars, chills a vast
amount of gas until it condenses into a colorless, odorless liquid at a temperature of two hundred
sixty degrees Fahrenheit below zero. This liquefied natural gas (LNG) has a volume six hundred twenty times
smaller than the original gas. The intensely cold LNG is then transported at approximately atmospheric pressure in special,
heavily insulated cryogenic tankers—the costliest non-military seagoing vessels in the world—to a marine terminal, where it is
stored in insulated tanks. When needed, it can then be piped to an adjacent gasification plant—nearly as complex and costly as the liquefaction
plant—where it is boiled back into gas and distributed to customers by pipeline just like wellhead gas. Approximately sixty smaller plants in
North America also liquefy and store domestic natural gas as a convenient way of increasing their storage capacity for winter peak demands
which could otherwise exceed the capacity of trunk pipeline supplying the area. This type of local storage to augment peak supplies is called
"peak-shaving." Such plants can be sited anywhere gas is available in bulk; they need have nothing to do with marine LNG tankers. LNG is less
than half as dense as water, so a cubic meter of LNG (the usual unit of measure) weighs just over half a ton.1 LNG contains about thirty percent
less energy per cubic meter than oil, but is potentially far more hazardous.2 Burning
oil cannot spread very far on land or
water,but a cubic meter of spilled LNG rapidly boils into about six hundred twenty cubic meters of
pure natural gas, which in turn mixes with surrounding air. Mixtures of between about five and fourteen percent natural
gas in air are flammable. Thus a single cubic meter of spilled LNG can make up to twelve thousand four hundred cubic meters of flammable gasair mixture.
A single modern LNG tanker typically holds one hundred twenty-five thousand cubic meters of LNG, equivalent to
twenty-seven hundred million cubic feet of natural gas. That gas can form between about twenty and fifty
billion cubic feet of flammable gas-air mixture—several hundred times the volume of the Great
Pyramid of Cheops. About nine percent of such a tankerload of LNG will probably, if spilled onto water,
boil to gas in about five minutes.3 (It does not matter how cold the water is; it will be at least two hundred twenty-eight
Fahrenheit degrees hotter than the LNG, which it will therefore cause to boil violently.) The resulting gas, however, will be so cold that it
will still be denser than air. It will therefore flow in a cloud or plume along the surface until it reaches an
ignition source. Such a plume might extend at least three miles downwind from a large tanker spill
within ten to twenty minutes.4 It might ultimately reach much farther—perhaps six to twelve miles.5 If not
ignited, the gas is asphyxiating. If ignited, it will burn to completion with a turbulent diffusion flame
reminiscent of the 1937 Hindenberg disaster but about a hundred times as big. Such a fireball would burn
everything within it, and by its radiant heat would cause third-degree burns and start fires a mile or
two away.6 An LNG fireball can blow through a city, creating “a very large number of ignitions and
explosions across a wide area. No present or foreseeable equipment can put out a very large [LNG]...
fire.”7 The energy content of a single standard LNG tanker (one hundred twenty-five thousand cubic
meters) is equivalent to seven-tenths of a megaton of TNT, or about fifty-five Hiroshima bombs.