December 19, 2012

Understanding LNG Exports

Macroeconomic Impacts of LNG Exports from the United States  was prepared for and reported to the Department of Energy / Office of Fossil Energy in early December 2012.   In reading the Executive Summary and Key Findings, it becomes quite clear that in order for LNG exports to be a profitable income model it is a "go big or stay home" scenario.
Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased.
It is clear that the push for New York shale gas development is crucial to the success of the natural gas industry.  This is not just a plan to add another source area.  The Marcellus and Utica shales are very important to the success of the industry overall.   If HVHF gas drilling begins in our state, there would be no reason to think that drilling operations would be contained to small scale plays.  Only large scale production would make sense.  That means an expansive quantity of well pads, pipelines, compressors, water needs, toxic waste, toxic storage, road traffic - just to name a few issues. 

Not everyone will benefit equally. The continued growth of natural gas production and exports could actually worsen the economic status of certain economic groups while benefiting a very limited class - the owners.  Our country is already divided into have and have-not conflicting groups.  Expanding a schism between economic classes can only lead to more disruption, inequality and decay in our society.
How increased LNG exports will affect different socioeconomic groups will depend on their income sources. Like other trade measures, LNG exports will cause shifts in industrial output and employment and in sources of income. Overall, both total labor compensation and income from investment are projected to decline, and income to owners of natural gas resources will increase.
I find it particularly interesting that the LNG industry looks at the same report as a confirmation and green light to push for more LNG exports and worldwide dependency on natural gas!  Lots of key upbeat phrases are used but the one aspect of the report the strikes me as severely lacking is the absence of acknowledging the net result of the method of production when increasing natural gas supplies for export.  Adverse damaging affects to the environment, and fresh water supply cannot be ignored.   

As a national policy to improve and strengthen a viable energy source in conjunction with the overall economic health of all US citizens, it seems clear that natural gas is not the key.  Investing in and developing technologies for alternative, renewable, truly clean energy makes sense for the good of this country and all of the citizens.

The full NERA report on the macroeconomic impacts of LNG exports from the US is available online

No comments:

Post a Comment