Regulatory Logjam on U.S. Liquified Natural Gas Exports Threatens Ohio Jobs

MARIETTA, Ohio — Now that the United States has an abundance of natural gas — enough to last for a century or more — we cannot prudently postpone dealing with two important questions: Why aren’t we exporting more of the clean-burning fuel to countries that need it? And if we did, would U.S. industries that rely on domestic supplies of low-cost natural gas be harmed?

Thanks to the shale boom, ranging from Pennsylvania and Ohio to Texas, the United States now ranks as the the leading natural gas producer in the world with a projected 2,900 trillion cubic feet of producible natural gas reserves. This volume is expected to grow even more as shale gas exploration increases due to natural gas replacing coal in electricity production and industries using more gas in manufacturing. From all indications, there will be plenty of low-cost gas to meet the needs of the power generation sector, the petrochemical industry, and other heavy users of natural gas in the years ahead.

U.S. gas production has been increasing as a result of new innovations in horizontal drilling and shale-gas stimulation or hydraulic fracturing, more commonly referred to as “fracking.”

But that won’t last unless more natural gas is either consumed in the United States or is allowed to reach the world market. If that doesn’t happen, drilling will slow down, workers will be laid off and the economies of gas-producing regions, especially Appalachia, will suffer. This can be prevented, but it will require prompt action by the incoming Trump administration and by Congress to speed up the licensing process for companies seeking permits to export liquefied natural gas (LNG).

The licensing process for developing LNG exporting facilities is tortuous. In the United States, approval is required from multiple regulatory agencies. Companies have to wait two or more years for a government permit to export natural gas.  Other gas-exporting countries are able to issue permits within a few weeks.

The United States is now a net exporter of natural gas as the global market for LNG continues to grow. Markets for LNG span from South America to the Middle East, Europe, and Asia.

Given the enormous global demand for LNG, it makes no sense to continue using a licensing system that stifles the growth of an industry that could have a huge impact on the oil and gas industry and the U.S. economy.

Here in the United States, LNG is being exported from a single facility – the Sabine Pass terminal in Louisiana. The first cargo was sent to Brazil earlier this year, followed by shipments to Argentina, India, Spain, Chile, Jordan, the United Arab Emirates, and Kuwait. A few other LNG facilities are under construction in the United States, but there are 30 applications for additional terminals pending, some of which were submitted years ago.

Meanwhile, the global demand for LNG continues to grow. Eastern Europe represents a particularly attractive target market for LNG exports. Russia has an economic stranglehold on countries like Lithuania and Poland which depend on Russian natural gas to meet the bulk of their energy needs.

LNG exports from the United States could be used as a geopolitical wedge to loosen Russia’s economic and political hold on these and other eastern European nations.

Another compelling reason for ramping up LNG exports is to help Asian countries replace coal with cleaner-burning natural gas in electricity production. China and Japan, in particular, need natural gas to reduce air pollution and carbon dioxide emissions. If they can’t rely on U.S. exports of LNG, they are likely to turn to Australia and Indonesia, which are already expanding their LNG export facilities.

The U.S. energy industry is the greatest in the world. America is well-positioned to become a leader in the global LNG export business if the incoming Trump administration and Congress move quickly to cut through the red tape and expedite the permitting process for constructing LNG facilities. It deserves to be part of the grand plan to make America great again.

Robert W. Chase is an Emeritus Professor in the Department of Petroleum Engineering and Geology at Marietta College.