Manufacturers Call for Pause on LNG Export Permits

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Published Aug 17, 2017 9:36 PM by The Maritime Executive

The Industrial Energy Consumers of America (IECA) warned on Wednesday that the United States is set to use up 60-70 percent of its natural gas reserves by 2050 if all permitted LNG export terminals are built out. 

IECA represents manufacturers from all levels of the supply chain, with combined annual turnover of $1 trillion, and and many of its members are major gas consumers.  The association is a supporter of the "all-of-the-above" approach to energy development, including oil, gas, coal, nuclear and renewables.

Despite its pro-energy stance, however, it does not support increased gas exports. On Wednesday, IECA called on the Department of Energy to halt further permit approvals for exports to non-free trade agreement countries until the agency reviews its application procedures. The group asserts that these overseas shipments are "inconsistent with President Trump's fair-trade and 'America First'" policies.   

Last year, industrial users consumed about a quarter of America's domestic natural gas production. IECA is concerned that under the permitting policies of the Obama administration, the cumulative volume of future, permitted LNG projects grew too high, reaching fully 70 percent of today's total domestic demand – leaving less for industrial consumers. 

Rising exports also mean rising domestic prices, warns IECA – more than double the current level by 2025, according to forecasts by the Energy Information Administration. Higher gas prices mean higher input costs, reducing the incentive for manufacturers to expand. "Total LNG export volumes already approved by the U.S. Department of Energy (DOE) represent a serious threat to U.S. manufacturing competitiveness and jobs," IECA warned. Further, American gas exports could reduce the natural gas prices paid by foreign manufacturers in nations that purchase American LNG – reducing American manufacturers' competitiveness. 

By contrast, the pro-export Center for Liquefied Natural Gas (CLNG) asserts that America has an abundant supply for domestic consumers and that exports will provide "trading partners abroad with the energy they need . . . a win-win for the American economy." IECA contests CLNG's calculations, and it maintains that manufacturing is a better tool for creating jobs and economic growth.