US senators clash over merits of LNG export study

Washington (Platts)--25Jan2013/435 pm EST/2135 GMT

The expansion of US liquefied natural gas exports is shaping up as the first significant clash between the top Republican of the Senate Energy and Natural Resources Committee and its incoming chairman.

In a letter sent Friday to Energy Secretary Steven Chu, Senator Lisa Murkowski, an Alaska Republican, forcefully backed a DOE-commissioned study on LNG export which Senator Ron Wyden, the Oregon Democrat and soon-to-be committee chair, has called "seriously flawed."

In her letter, Murkowski said the report "adequately completed the work it was tasked to do by the Department, namely, analyze the 'macroeconomic' impact of the export of LNG on the US economy."

"The Department did not ask NERA to analyze 'microeconomic' impacts, so the report appropriately did not provide explicit detail on specific impacts to various sectors of the US economy," Murkowski said.

In a January 10 letter to Chu, Wyden criticized the report for not considering the impact of LNG exports on gas demand growth in sectors such as transportation and industry. The study, Wyden wrote, "fails to fully assess the impacts of rising natural gas prices on homeowners and businesses."

Wyden also criticized the report for using outdated data, a point Murkowski refuted during a meeting with reporters this week.

"If it's just an issue of timing what more will you gain if you request another study?" Murkowski asked.

The study, conducted by NERA Economic Consulting and released in December, found expanded LNG exports would be a boon to the US economy and would not cause any major adverse effects on US household wealth, employment or industrial competitiveness. The DOE is expected to use the study in its decision on expanding LNG exports. The DOE has received thousands of comments on the study since its release.

By law, DOE must quickly approve exports to countries that have free trade agreements with the US, but the department can limit or block exports to non-FTA countries if it finds they are not in the public interest. In her letter, Murkowski pressed the DOE to start granting export licenses for LNG projects in the public interest.

"Exporting LNG, particularly to allies that face emergency or chronic shortages, but with whom we do not have free trade agreements, is in the public interest -- helping ensure that the US moves toward improved trade balance and energy security," she wrote.

Murkowski said increases in gas prices from LNG exports would likely be limited by market forces.

"Gas is a fungible commodity and markets will simply import supply from elsewhere if the price of gas in the US is more expensive than in other exporting countries," she wrote.

Wyden's committee is planning to hold a hearing on LNG exports next month, Murkowski said.

--Brian Scheid, brian_scheid@platts.com --Edited by Jason Lindquist, jason_lindquist@platts.com