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Exxon Urges U.S Congress To Soften LNG Export Laws

Exxon Urges U.S Congress To Soften LNG Export Laws

Exxon Mobil Corp. says the United States may be a big loser in both energy and trade if it doesn’t open up the export of liquid natural gas (LNG).

“If policymakers don’t revisit and redress some significant legal and regulatory problems … then the U.S. could be left behind during one of the great historic developments in global energy and trade,” Rob Franklin, president of Exxon Mobil’s Gas & Power Marketing Co., told the Johns Hopkins School of Advanced International Studies in Washington.

Franklin said Congress should repeal the law requiring a public-interest determination for exporting LNG to countries with which the United States doesn’t already have a free-trade agreement. He said this 1938 law, called the Natural Gas Act, amounts to an export ban on LNG. Related: Oil Price War May Benefit Both US Shale And Saudi Arabia

While American energy companies are forced to sit idle, Franklin said, other countries that are building LNG terminals already are enjoying the profits of trading in LNG – the same benefits that the United States would have if it opened up its exports to more countries.

Franklin also said increasing export capacity would necessarily mean a parallel rise in US gas production while keeping the sales price competitive. “The marginal cost curve to add 30 billion cubic feet per day of production is so flat that increased exports raise US prices only slightly,” he said. Related: What Happens To US Shale When The Easy Money Runs Out?

Exxon Mobil has already begun a $10 billion project with Qatar Petroleum International to convert the LNG regasification terminal in Golden Pass, Texas, into an LNG export terminal. The company asked the Department of Energy (DOE) two years ago for permission to use Golden Pass to export the fuel to non-free trade countries.

In 2014, though, the DOE changed the rules and today will not consider applications for export to non-free trade countries until they’ve received environmental approval from the Federal Energy Regulatory Commission (FERC). Company officials at Golden Pass have requested FERC approval by July 2015, with the project’s proposed start-up in September. Related: BG Deal May Leave Shell’s Arctic Ambitions In Limbo

“If we are serious about having a U.S. LNG industry and capturing the tremendous opportunities in front of us, then we need to ensure that the case of LNG exports does not become just another casualty of bureaucracy,” Franklin said.

That shouldn’t be allowed to happen, he said, given that the demand LNG worldwide is expected to grow threefold between 2010 and 2040, mostly in existing and emerging markets in the Asia Pacific region and in the Middle East. But under current law, he said, little of this demand would be met by the United States.

And yet, Franklin noted, President Obama’s Council of Economic Advisers issued a report two months ago that said robust LNG exports would create jobs, promote cleaner energy worldwide, increase the US gross domestic product – all while maintaining America’s competitive edge in international trade.

By Andy Tully of Oilprice.com

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