THE CASE AGAINST NATURAL GAS EXPORTS

Transcription

1 1 THE CASE AGAINST NATURAL GAS EXPORTS The United States has historically been a net importer of natural gas. If it acquires the capacity to export gas, it will because fracking is producing more shale gas than the domestic market can absorb. In other words, gas exports equal fracking; it s that simple. Today the U.S. lacks the necessary infrastructure to export gas, but nineteen giant liquefied natural gas (LNG) export terminals have been proposed for the lower forty-eight states. If the bulk of these facilities are constructed, the U.S. could become the largest gas exporter the world. Blocking the construction of these LNG terminals is critical to containing fracking because once we have the ability to export, it will be nearly impossible to prevent gas from being shipped overseas. Free trade treaties (and future trade agreements that the U.S. may negotiate with major energy consumers such as China and India) require that we give foreign nations access to our goods and raw materials.* Some have suggested that existing free trade treaties, in and of themselves, may be sufficient to compel the U.S. to construct export facilities, but pending legislation before Congress, and actions by the Obama Administration indicate this is not be the case. Earlier this year the Obama White House ordered the Department of Energy (DOE) to suspend approval of export terminals until after the election, but it also indicated that a final decision on the matter may be made before the end of * Export terminals must be licensed by the non-political Federal Energy Regulatory Commission (FERC), but DOE approval is also necessary.

2 2 WHAT S THE RUSH? AN INDUSTRY ON THE ROPES The shale gas industry is in crisis. Fracking has produced a gas glut. Last spring the domestic price for natural gas dropped to the lowest level in a decade. Stock prices have also plummeted. Shares of Chesapeake Energy are worth less than a third of their value at the height of the Marcellus leasing boom in Norse Energy shares are down 97 percent. Desperate to create new markets, the industry is now feverishly touting boiler conversions in urban centers such as New York City, and vehicle fleets powered by natural gas - and it has set its sights on overseas markets. While continuing to sell energy independence to the American public, the gas industry is selling LNG exports to investors. FIVE REASONS TO SAY NO TO EXPORTS 1. Exports threaten national security. According to the Energy Information Agency (EIA), the U.S. possesses just 4 percent of the world s total proved gas reserves, and the actual amount of our recoverable gas is subject to revision and dispute. In January, the EIA revised downward the volume of technically recoverable shale gas reserves in the United States by 42 percent after the USGS found that the amount of gas in the Marcellus formation had been grossly exaggerated. Today, according to EIA estimates, the U.S. has enough gas to last ninety-two years at the current rate of consumption, but several industry analysts maintain that this figure is wildly inflated. In a January 15, 2012, article in Petroleum News, Alan Bailey quotes geologist and industry analyst Art Berman as saying, It s unclear that shale gas production will support even the short-term expectations of abundance. Mr. Bailey goes on to say [G]as resources in place are not the same as the volumes of gas that could realistically be produced. An optimistic

3 3 assumption that half of the known resources could actually be developed, on top of current proven reserves of shale gas, leads to a forecast that shale gas supplies might last, not for 100 years, but for 20 to 22 years, Berman said. And that assumes a constant rate of gas consumption add in the possibility that consumption will increase, and the life of the shale gas supply shortens further, he said. Other analysts are even more pessimistic. In his forthcoming book, Bill Powers, editor of Powers Energy Investor, argues that the U.S. supply of natural gas will last only five to seven years. Mr. Powers and Mr. Berman may or may not be correct, but if there s even a reasonable chance they are right, then it would be foolhardy in the extreme to export energy supplies that we may need for domestic use within the next two decades. 2. Exports will hurt American consumers and American industry. EIA has estimated that exports will cause domestic gas prices to rise by 53 percent. Given the fact that natural gas prices in Europe and Asia are as much as four or five times greater than in the U.S., the actual impact on prices could be much greater. Exports will force American consumers to pay more for natural gas used for heating and cooking, and for electricity generated by gasfired plants. Goods and services will also be more expensive, as businesses pass on increased energy costs to their customers. Today s cheap energy gives domestic manufacturers a competitive edge that helps offset labor costs that are typically much higher here in the U.S. than in most Asian nations. If American industry loses its energy price advantage and is forced to raise prices, then U.S. goods will be less likely to find buyers in foreign markets. Even worse, higher energy costs could discourage business expansion in the United States and induce companies to locate overseas. Earlier this year, Dow Chemical Chief Executive Officer Andrew Liveris told a Businessweek reporter that it would be smart

4 4 for the U.S. to limit natural-gas exports to 10 percent of production and warned that excessive exports could kill investments such as Dow s proposed $4 billion expansion in Texas and Louisiana. The nineteen LNG export terminals already proposed for the lower forty-eight states will have a combined export capacity of billion cubic feet of gas a day, or trillion cubic feet of gas a year. That s equivalent to 44 percent of our total dry gas production 3. Exports will degrade our environment and compromise human health. While it s too soon to accurately measure the full extent to which fracking will harm human health and our environment, it s obvious that fracking for export will only multiply the instances of illness and contamination. Moreover, liquefaction facilities will be further sources of pollution. 4. Building export infrastructure would be a colossal misallocation of resources. Building out an export infrastructure will cost hundreds of billions of dollars. According to Bloomberg News, one proposed pipeline and export terminal in Alaska will cost fifty billion dollars, and terminals in the lower forty-eight have been priced in the ten billion dollar range, exclusive of pipelines and supporting infrastructure. Given the fact that the fossil fuel industry takes taxpayer subsidies that have been credibly estimated at between ten and fifty-four billion dollars a year, it is ridiculous to suppose that the American taxpayer won t end up paying a hefty price for these facilities. The U.S. should not commit scarce resources to expensive projects that will encourage fracking at home and perpetuate fossil fuel consumption abroad. Instead, we should invest in expanding our capacity to generate renewable energy and in building a competitive renewable energy industry that can compete in overseas markets. 5. Shale gas will exacerbate climate change. Industry apologists like to claim that an increased reliance on shale

5 5 gas will slow climate change because it produces less greenhouse gas than either coal or oil but this assertion is not supported by the evidence. An Environmental Protection Agency (EPA) study put wellhead emissions of methane at 2.8 percent, while a highly regarded study by the National Oceanic and Atmospheric Administration (NOAA) put that figure at 4 percent. And these so-called upstream emissions are only a part of the story: downstream emissions--gas escaping from pipelines, storage facilities, and distribution systems--must also be considered. Ten studies have estimated downstream emissions as anywhere from 0.7 percent to 10 percent of all gas produced. Cornell University Professors Robert W. Howarth and Anthony Ingraffea have stated that if just 2 percent of shale gas escapes into the atmosphere, then shale gas is more harmful than coal from a GHG perspective over twenty years, and if just 4 percent escapes, then it is also worse than coal over a one-hundred-year timeframe. By this measure, both the EPA study and the NOAA study (and many others as well) indicate that shale gas is actually more harmful than coal or oil from a greenhouse gas perspective. Catskill Citizens for Safe Energy November 2012