Paul W. Parfomak
Specialist in Energy and Infrastructure Policy
Analyst in Environmental Policy
Ian F. Fergusson
Specialist in International Trade and Finance
As estimates for the amount of U.S. natural gas resources have grown, so have
the prospects of rising U.S. natural gas exports. The United States is
expected to go from a net importer of natural gas to a net exporter by
2020. Projects to export liquefied natural gas (LNG) by tanker ship have been
proposed—cumulatively accounting for about 41.4% of current gross U.S. natural
gas production—and are at varying stages of regulatory approval. Projects
require federal approval under Section 3 of the Natural Gas Act (15 U.S.C.
§717b), with the U.S. Department of Energy’s Office of Fossil Energy and
the Federal Energy Regulatory Commission being the lead authorizing
agencies. Pipeline exports, which accounted for 98% of all exports of U.S.
produced natural gas in 2012, are also likely to continue rising.
What effect exporting natural gas will have on U.S. prices is a central
question in the debate over whether to export. A significant rise in U.S.
natural gas exports would likely put upwards pressure on domestic prices,
but the magnitude of any rise is currently unclear. There are numerous factors that
will affect prices: export volumes, economic growth, differences in local
markets, and government regulations, among others. With recent natural gas
prices relatively low compared to global prices and historically low for
the United States, producers are looking for new markets for their natural
gas. Producers contend that increased exports will not raise prices
significantly as there is ample supply to meet domestic demand, and there
will be the added benefits of increased revenues, trade, and jobs, and
less flaring. Consumers of natural gas, who are being helped by the low
prices, fear prices will rise if natural gas is exported.
Electric power generation represents potentially the greatest increase in
natural gas consumption in the U.S. economy, primarily for environmental
reasons. Natural gas emits much less carbon dioxide and other pollutants
than coal when combusted. Other types of consumption are not likely to
increase natural gas demand domestically for a long time. Use in the
transportation sector to displace oil is likely to be small because
expensive new infrastructure and technologies would be required. There is
discussion of a possible revival of the U.S. petrochemicals sector, but the potential
extent of a change is unclear.
Getting natural gas to markets where it can be consumed, whether domestically
or internationally, may be the industry’s biggest challenge.
Infrastructure constraints, environmental regulations, and other factors
will influence how the market adjusts to balance supply and demand. Environmental
groups are split regarding natural gas use, with some favoring increased use to curb
emissions of certain pollutants, while others oppose expanded use of natural
gas because it is not as clean as renewable forms of energy, such as wind
or solar. The use of hydraulic fracturing to produce shale gas has also
raised concerns among environmental groups particularly concerned with its
possible impacts on water quality.
The possibility of a significant increase in U.S. natural gas exports will
factor into ongoing debates on the economy, energy independence, climate
change, and energy security. As the proposed projects continue to develop,
policymakers are likely to receive more inquiries about these projects.
Proposals to expedite and expand LNG exports have been raised in the 113th Congress, including in S.
192 and H.R. 580. Two other bills, H.R. 1189 and H.R. 1191, would reform
the DOE’s process for determining the public interest regarding LNG exports and
prohibit exports of natural gas produced on federal lands.
Date of Report: September 17, 2013
Number of Pages: 31 Order Number: R42074
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