Amidst all the campaign hype surrounding the Iowa Caucus this week, the public can be forgiven for not noticing that the Senate has begun debate on “The Energy Modernization Act.” However, now that a winner has been declared, they would do well to turn their attention to Washington. Introduced by Senators Lisa Murkowski (R-Alaska) and Maria Cantwell (D-Wash), this bipartisan bill not only represents the most significant overhaul of the nation’s energy polices in nearly a decade but could end up having a substantial impact on our economic bottom line.
As we look for continued ways to pump life back into the U.S. economy, liquefied natural gas (LNG) exports are one avenue. And a notable provision in this bill would go a long way to making that happen. Specifically, language in the bill would streamline the current approval process for LNG exports projects, allowing the United States to finally compete on a level energy playing field with its global competitors.
The language is necessary since as of last month, more than 30 applications to export LNG to non-free trade agreement countries are awaiting final approval from the Department of Energy and Federal Energy Regulatory Commission (FERC). As of today, the DOE has granted such approval to less than 10 U.S. facilities in four years, with many applications continuing to languish in regulatory purgatory. Expediting this approval process will serve to strengthen our position as a global energy leader while at the same time triggering much-needed economic growth for states and the nation.
The United States ranks fourth on the list of countries with the most recoverable shale gas, and those estimates of domestic natural gas reserves continue to climb — increasing to 388.8 trillion cubic feet in 2014 alone —as a result of better technology and more efficient operations. Analysis from ICF International confirms that virtually every state would benefit from LNG exports. Producing states would see gains ranging from $10 billion to $31 billion, while non-producing states could see gains of $2.6 billion to $5 billion by 2035.
The study also projected up to 665,000 jobs created nationwide. Clearly, we are poised to achieve greater success as an energy superpower. But none of this will come to fruition unless we mobilize natural gas exports.
In addition to the ICF findings, reports commissioned by the Department of Energy in 2014 and 2015 confirm, “Economic gains generally increase with the amount of added LNG exports,” and “Negative impacts in energy‐intensive sectors are offset by positive impacts elsewhere.”
Notably, the benefits also transcend U.S. borders into the global market. The U.S. natural gas industry is leading competitors in Europe and North-East Asia, where prices are two to five times higher than here at home. For example, JKM spot prices – the LNG marker for East Asia – were trading at $7.28 per million Btu for December delivery, down nearly two-thirds from early 2014 prices.
In contrast, EIA reported that 2015 natural gas spot prices at the national benchmark Henry Hub averaged $2.61 per million Btu—the lowest annual average since 1999.
The economic and global benefits of LNG exports are clear, and we must act now before this remarkable opportunity slips right through our fingers. The Energy Modernization act would require the Energy secretary to make decisions on export project applications no later than 45 days after FERC or the Maritime Administration has concluded its review.
While the ban on U.S. crude oil exports was finally lifted late last year, the current delay in approval of LNG applications amounts to an administrative LNG export ban in itself. With a vote expected today, senators should act now and support the LNG provision in this important piece of legislation. Then we can fully capitalize on America’s historic energy potential.