Wyden criticizes DOE natural-gas export study, calls for do-over

“Although the NERA study acknowledges that some sectors of the economy will be hurt by exports, the NERA study fails to fully assess the impacts of rising natural gas prices on homeowners and businesses,” Wyden wrote in a Thursday letter to Energy Secretary Steven Chu.

The report concluded natural-gas exports would yield a net economic benefit. It also said the economic activity from exports would outweigh modest price increases that concern some Democrats and the manufacturing industry.

But several Democrats and the manufacturing industry have urged caution on natural-gas exports because of cost concerns. They contend resulting price increases would harm manufacturing, which has benefited from cheap natural gas, and raise electricity rates for homeowners.

Robert Dillon, spokesman with committee ranking member Sen. Lisa Murkowski (R-Alaska), said he expects many of the pricing issues to be aired in a hearing early this Congress.

Dillon downplayed the effect of price increases, telling The Hill that the hearing would help people “get beyond the hysteria,” adding, “If exports are going to raise prices, the public deserves to know that.”

Wyden’s office said a hearing on natural gas exports is likely, but said the committee has not finalized anything.

President Obama appears to back expanding natural-gas exports. He has said he wants to send more oil and gas abroad in hopes of turning the U.S. into an energy powerhouse during his second term.

Currently, DOE readily approves natural-gas exports with free-trade nations, but has a longer vetting process for countries without such a pact. Exports to those nations must be in the “public interest,” and many lawmakers and export supporters have said the study showed exports meet the criteria.

But Wyden, who wants the administration to examine all natural-gas exports, said the study used two-year-old domestic market data that understated demand.

He said the report did not account for the amount of natural gas used at export terminals. He also said natural gas is expected to become a bigger player in transportation fuels, and he questioned the study’s treatment of U.S. and Canada as a single North American export market.

“The shortcomings of the NERA study are numerous and render this study insufficient for the Department to use in any export determination,” Wyden said.

The report, however, said expanding natural-gas exports would not detract from supply for domestic use. Instead, it would encourage additional production specifically for export markets.

And while more than a dozen export applications are on file at DOE, it is unlikely all of those will be greenlighted, Dillon told The Hill.

Dillon said that while it is relatively inexpensive to submit a plan with DOE, the next step in the process — going through the Federal Energy Regulatory Commission (FERC) — requires a significant investment.

At that point, developers must file an environmental impact statement, contract with a buyer and perform other steps that add up, Dillon said.

“Once you get to the FERC stage, that’s where you’ve got to put your money where your mouth is. And that’s where a lot of these projects will probably disappear,” Dillon said.

Dillon noted exports also might facilitate a gold rush because of how costly it is to convert gas to liquid form, ship it and then turn it back into gas.

He said that while natural gas is fetching about $3 per million British thermal units (Btu) and $14 per million Btu in Japan, those aforementioned costs slim profit margins.