Oil firms, governors urge DOE to expand natural-gas exports

Republican Govs. Bob McDonnell (Va.) and Matt Mead (Wyo.) and energy giants ExxonMobil and Royal Dutch Shell have joined a growing list of parties pressing the Energy Department (DOE) to loosen restrictions on liquefied natural gas (LNG) exports.

The oil firms and governors last week sent letters to DOE on the export issue, officially joining the cacophony of politicians, state officials, trade groups and businesses calling for more LNG exports.

“This surge in clean, domestic, affordable energy is stimulating local economies, creating millions of jobs, and enabling new opportunities. But the opportunity could be greater and the impact more far-reaching,” McDonnell wrote to Energy Secretary Steven Chu.

DOE is currently sitting on more than a dozen export applications, and feeling the heat from supporters and detractors of sending more LNG abroad.

Much of the tug-of-war so far has centered on a DOE-commissioned study that concluded LNG exports would be an economic win for the United States.

While the report garnered praise from export backers, some lawmakers and manufacturing firms worry sending too much LNG overseas would raise domestic energy prices.

In their letters, the governors and oil companies said DOE should waste no time opening the gates for exports.

Anders Ekvall, vice president of Shell Americas’ LNG operations, wrote that the U.S. “can play an important role in the global LNG market,” but warned “regulatory delays could allow this opportunity to bypass the United States.”

Japan is hoping the U.S. moves fast on LNG exports. In comments on the export study, a group of Japanese utilities and businesses urged “expedited” action on outstanding permits.

The island nation is trying to fill an energy supply gap caused by shuttering nearly all its nuclear reactors following the March 2011 Fukushima Daiichi meltdown. Before that disaster, nuclear energy had supplied about 30 percent of Japan’s power.

Meanwhile, Shell is positioning itself to export LNG from the East Coast. The firm announced Monday that it would partner with Kinder Morgan to convert its LNG import facility at Elba Island, Ga., into an exporting one.

Shell said it planned to send LNG to nations that have a free-trade agreement with the U.S., as well as those without such a pact.

DOE has readily approved LNG exports to free-trade nations, but has greenlighted just one to nations without free-trade status. In a statement, Shell said Kinder Morgan expects the terminal to get approval for transactions with non-free trade nations “in due course.”

Under law, the department must determine whether exports to such countries meet the public interest. Export backers say the DOE-commissioned study solved that issue by saying sending supplies abroad would yield a net economic benefit.

Shell’s planned terminal is welcome news to the more than 100 lawmakers who have advocated expanding exports.

But several manufacturing companies and a handful of lawmakers want DOE to take a cautious approach on exports.

Some senior Democrats are worried unfettered exports would raise domestic natural-gas prices, undercutting economic competitiveness.

A coalition of manufacturers known as America’s Energy Advantage also wants DOE to exercise restraint.

But export proponents contend domestic price increases would be minimal.

They note the DOE-commissioned study said LNG processing costs would subdue export activity.

“Therefore, Shell expects that North American LNG exports will increase, but at a far slower rate than the list of pending export applications would imply,” Ekvall said.

CORRECTION: This story was updated at 10:52 a.m. on Jan. 29 with the proper name of America’s Energy Advantage, a coalition calling for restrictions on liquefied natural-gas exports. An earlier version of this story misstated the coalition’s name.