The DOE has currently approved only seven applications for permits to export liquefied natural gas (LNG) to non-Free Trade Agreement nations. At press time, there were 24 pending applications covering 22 facilities where U.S. businesses hope to build and operate terminals to process LNG for sales abroad.
NERA Economic Consulting’s new study, “Updated Macroeconomic Impacts of LNG Exports from the United States,” offers analysis of the cumulative impacts of LNG exports up to the maximum amounts the market would allow under various domestic and international market scenarios. It is an update to a study of the macroeconomic impacts of LNG exports that was issued by the DOE in December 2012. It updates all 63 LNG export scenarios modeled in the DOE study and adds several new scenarios. Findings confirm and extend the findings of the previous study that were endorsed by DOE in its Freeport Order (No. 3282) and subsequent LNG application approvals.
“LNG exports provide net economic benefits in all the scenarios investigated, and the greater the level of exports, the greater the benefits,” said W. David Montgomery, NERA senior vice president. The study found the market for LNG exports is self-limiting in that little or no natural gas will be exported if the price of natural gas in the United States increases much above current expectations. High levels of exports can be expected only if natural gas is plentiful and inexpensive enough to produce so prices remain below current levels even with high levels of exports.
The new report also responds to several issues raised since the DOE issued NERA’s first report including use of more current data, the cumulative impacts of additional license approvals, impacts on the competitiveness of the U.S. chemicals industry and impacts of LNG exports on employment.
“Updated Macroeconomic Impacts of LNG Exports from the United States” is based on the Energy Information Administration’s Annual Energy Outlook 2013 and International Energy Outlook 2013, which provide the most recent relevant data and available forecasts. The study findings show the United States is projected to remain one of the lowest cost producers of chemicals in the world even with the highest levels of LNG exports considered.
For its longer term forecasts of impacts on jobs creation, the NERA study uses the same assumption as the most recent Congressional Budget Office budget and economic outlook: the economy will return to effective full employment by 2018. The investment required by 2018 to build export facilities and increase natural gas production will speed the predicted return to full employment and is forecast to put up to 45,000 currently unemployed workers back to work during this period.
“Our analysis suggests there is no support for the concern LNG exports, even in the unlimited export case, will obstruct a chemicals or manufacturing renaissance in the United States,” the report said.
API has launched a Web-based map that tracks U.S. LNG export projects including those waiting for approval from the federal government. According to Erik Milito, API director of upstream and industry operations, approval of the multibillion-dollar export terminals could create thousands of American jobs, strengthen the U.S. geopolitical position, reduce global emissions and help the Obama Administration meet its promise to double American exports.
The seven facilities in the United States that have already been approved by DOE are noted in red on API’s map. Planned and constructed international LNG facilities are shown in purple. While all proposed U.S. facilities may not be built, factors that will influence construction opportunities include competition abroad, financing and regulatory delays.
A summary of anticipated capital investments, jobs and export volumes associated with each U.S. site as well as an estimated value of potential exports based on application documents is provided when site visitors click a location on the map. Facilities are listed according to the order the DOE expects to review each application.
To view API’s Web-based LNG map, visit www.api.org or for more information, call (202) 682-8000.
