Two sparring members in Colorado’s congressional delegation are working to fast-track international exports of liquefied natural gas, a move touted as boosting the energy industry as well as creating American jobs.
Both Rep. Cory Gardner, R-Colo., and Sen. Mark Udall, D-Colo. — locked in a race for Udall’s seat in the general election in November — are working to secure quicker approval processes for applications to the Department of Energy for exporting LNG overseas to markets that are not part of free-trade agreements with the U.S. More than 20 applications are on hold.
“Colorado has a wonderfully abundant source of clean burning natural gas,” Udall said in an interview. “This would certainly add to our opportunity that we have as Coloradans to promote more energy security both here and abroad. This directly affects Colorado, and it’s not a partisan issue. We want to get U.S. natural gas onto the global market as quickly as possible.”
Though the idea of exporting America’s natural gas has gained steam lately amid the threat of Russia’s energy monopoly in European markets, it’s something that those in the oil and gas industry have pushed for the last couple of years as natural gas prices have fallen to unprofitable levels.
Jack Gerard, president of the American Petroleum Institute, has been lobbying hard to get such export approval. Gerard praised a recent committee vote on Gardner’s bill to reduce the approval timeline to 90 days.
“The case for natural gas exports is clear, and Congress is ready to see those benefits flow to U.S. workers,” said Gerard, in a news release. “America is now the world’s top producer of natural gas, and opening the doors to trade will allow us to harness that power on the international stage while bringing home thousands of jobs and growing our economy. We welcome the committee’s work to make LNG exports a priority, and we are optimistic that members will come together on bipartisan efforts to lock-in America’s trade advantage and strengthen our position as an energy superpower.”
It has been estimated that opening such exports could take 45,000 people off the unemployment rolls in four years.
Opponents of LNG exports have typically been against the move, as it would encourage more drilling, Gardner said.
The country’s energy boom from hydraulic fracturing and horizontal drilling has put such a glut of gas on the markets that even this year’s frigid winter wasn’t enough to deplete supply. Prices remain below $5 and a profitable level. It’s led to several companies pulling out of the gas drilling business and concentrating more on oil.
Drilling in the Wattenberg Field, which sits directly beneath the central part of Weld County, yields oil, natural gas and natural gas liquids. It’s widely believed that extensive drilling on the East Coast will soon put pressure on Rockies’ gas production as operators look for markets to sell their phenomenal amounts of gas.
“We’re supply constrained in that we have so much, we could end up seeing less investment into the extraction of the resource,” Gardner said in an interview. “If you have less investment, it could drive prices up because you have less supply. I look at this as a way to prevent price increases that occur.”
While low prices are driving some operators out of the gas game, it’s led to a manufacturing resurgence in America. Higher worldwide demand could boost prices.
Udall said price volatility already is a reality today.
“I believe opening markets would give us a tool to help stabilize prices, offering a source of swing supply during high demand and a release valve during low demand times,” Udall said. “Energy experts suggest by exporting a balanced amount of natural gas that you would create an international market for natural gas prices and it would benefit everyone who uses natural gas. This is a form of diversifying our energy policy.”
The U.S. already allows natural gas exports to countries that have free trade agreements with the U.S. Federal regulatory approval, however, is not guaranteed on non-free trade agreement countries, and applications for exports can be tied up for years.
Bills offered by Gardner and Udall would cap the approval process at 90 days, meaning applications would no longer languish for years. Formal approval would still take time, however.
The Federal Energy Regulatory Commission would still need to review the construction of facilities to export the LNG, which could in itself take two years. Gardner’s bill, HR 6, passed the House Energy and Commerce Committee 33-18 on April 30, and may go to the full House by the end of May. Getting it to the Senate would be another matter, however.
Udall recently introduced S.B. 2247, similar to Gardner’s bill, and he said he’ll work to push it through to a Senate committee vote soon.
Industry officials and lobbyists have been pushing President Barack Obama and Congress heavily in the last year to open up those exports — especially now in light of Russia’s monopoly on much of Europe’s gas markets.
Gardner said America’s allies are clamoring for U.S. LNG exports.
“We’ve heard from ambassadors from Hungary, the Czech Republic, Lithuania, all who said their No. 1 foreign policy goal is the passage of exports from the U.S. They believe it will help them in their energy security.”
He added, “In the Ukraine now, over 60 percent of its energy supplies come from Russia, which can manipulate price, and makes them beholden to an aggressive regime that just invaded the country.”
Udall said this effort is a priority for many across the aisle.
“This isn’t a partisan issue, this is about leveraging Colorado’s natural gas potential, and I have worked in every way possible to make that a reality,” Udall said. “We shouldn’t play politics with this opportunity.”
“We’re supply constrained in that we have so much, we could end up seeing less investment into the extraction of the resource. If you have less investment, it could drive prices up because you have less supply. I look at this as a way to prevent price increases that occur.
— Rep. Cory Gardner, R-Colo.