Don’t gamble with natural-gas exports

5/15/2013

By ROBERT S. BLACK

My great-grandfather, Robert G. Stitt, founded Waterville Gas & Oil Co. 125 years ago, during Ohio’s last great oil and natural-gas boom of the late 19th century. My family’s company has survived depressions and gas shortages. We have seen cheap gas and skyrocketing prices, as supplies have ebbed and flowed.

Now we are preparing for the coming shale-gas bonanza in Ohio. Recent technological advances in drilling and extraction have opened American gas fields that previous generations thought were depleted. We must decide how best to use this gift.

Many gas production and processing executives are pushing for the ability to export this new gas production. During the past two years, the U.S. Department of Energy has quietly rubber-stamped applications to ship U.S. gas in giant tankers, in liquefied form.

A recent study commissioned by the Energy Department supports the export of as much as 30 percent of current U.S. gas production to countries with which we do not have free-trade agreements. The study argues that such exports would provide a net benefit to the United States, even as it acknowledges that gas prices could rise substantially for domestic consumers and businesses.

An export facility for liquefied natural gas (LNG) is on the verge of launching major construction. The Energy Department is making a crucial policy decision without meaningful national debate or even a proper review process.

Americans need to speak up now. Once these LNG ships have sailed, the benefits of cheap natural gas to this country may be lost forever.

In the winter of 2005-06, the price of U.S. natural gas climbed to heights that had never been imagined. But since 2008, new extraction processes have helped reduce the price of gas by 60 percent.

With new shale production in Ohio, Pennsylvania, and West Virginia, companies are exploring the option of reversing the historical flow of gas from the Gulf Coast to the Midwest and northern states, and instead piping gas south for additional processing.

Natural gas provides a cheaper, cleaner, more stable source of energy for heating, electricity, and even, potentially, automobiles, while dramatically improving the competitiveness of U.S. manufacturing. But a demand spike caused by planned LNG exports could increase gas prices by as much as 150 percent. That could cost natural gas and electricity customers, both residents and small businesses, as much as $1.8 trillion during the next 25 years.

Export proponents argue that this country’s natural gas supply is abundant, and that the price response to exports should be almost immaterial. Yet as recently as five years ago, experts predicted we were on the verge of running out of natural gas.

I have spent more than 40 years in the natural gas business. I’ve heard far too many estimates of a 100- to 150-year supply of natural gas, only to find a few years later that demand for gas exceeds our production capabilities.

This rush to export our newly realized sources of clean natural gas is ill advised. Many Americans associate natural gas with heating and cooking. But gas plays a significant, and too often hidden, role in our manufacturing economy as well.

Such massive gas exports, if they are allowed, will again require America to outsource important manufacturing processes to overseas nations. We will be forced to buy back products that could just as easily, and more cost-effectively, be made here.

I’m not opposed to some exports. But we are much too early in this new game to start allowing gas producers to gamble again with our energy future and security.