Around the times of both the Republican and Democratic national conventions, Americans will hear just how different the parties are in terms of solving problems and creating opportunities. But the two parties have been quietly working together to craft an energy bill — one with many facets, although for purposes of this story, a key feature is exporting homemade natural gas.
The reference, of course, is to liquefied natural gas, or LNG, which is supercooled and shipped to needy places, like Europe and Asia. Producers here want to sell to foreign markets where they can get a premium for their product, while also converting their LNG import facilities to export terminals; when they were constructed in the 1990s, everyone thought the US would become a net importer — and then came the shale gas revolution.
Earlier this year, Cheniere Energy opened up its Sabine facility in the Gulf Coast. And Freeport McMoran Inc. is doing the same.
A handful of others will get permission to ship overseas in the coming years: Energy Transfer Partners Lake Charles LNG, Sempra Energy’s Cameron LNG, Dominion Resource’s Cove Point and Southern Co’s. Elba Island. When they are all online, the U.S. will be the world’s second largest natural gas exporter behind Qatar. But dozens more are getting held up, which is where the energy bill now pending comes into play.
“Gas is the fastest growing fossil fuel supported by strong supply growth, particularly of US shale gas and liquefied natural gas (LNG), and by environmental policies,” says BP’s 2016 annual energy analysis, which looks out to 2035. It goes on to grow at about 1.8 percent a year, it adds, aided by ample supply and supportive environmental policies.
“The majority of the increase in demand comes from emerging economies, with China and India together accounting for around 30 percent of the increase and the Middle East over 20 percent,” the report says. “The increased use of gas in emerging markets is fairly evenly split between use in the industrial sector, as these economies continue to industrialize, and use for power generation.”
The Energy Policy Modernization Act is fairly broad and touches on a number of key outcomes, including investments in promising technologies such coal gasification as well as facilitating LNG exports. To that end, the US could become the second biggest export of LNG behind Qatar.
To be sure, the broad nature of the bill does mean that there is more in it to be shot down. Opponents of fracking — the method by which the unconventional shale gas is drilled out of the ground — don’t like the idea of more exports. They feel that it will be lead to more production and more environmental problems associated with both drinking water and air emissions, like carbon.
Supporters counter that by saying that the shale gas would be replacing mostly coal — especially coal burned in pollution-heavy China — and therefore it will be a win-win: producers here will have new markets while global climate conditions will improve; even BP says the use of more natural gas will help curb carbon releases, although overall global economic growth will mean that such emissions will rise over time.
Circling back to domestic politics and the effect that will have shale production and exports: Hillary Clinton has track record that tends to favor shale gas, mainly to supplant coal use for power generation. However, during the campaign, she said that drilling rights would be harder to come by than they are today. Donald Trump, meanwhile, has indicated he would streamline LNG export permitting rights while also making it easier to drill here for shale gas.
A reconciliation between the competing House and Senate energy bills is not certain. But it looks quite possible by summer’s end, making it a bit ironic in a presidential election year.