okie52
12/17/2012, 04:58 PM
The department of energy is siding with the oil and gas industry and Dow chemical is crying.
Manufacturers push against natural gas exports
Fearing a financial hit, they advocate keeping export limits
By Jennifer Dlouhy | December 6, 2012 | Updated: December 7, 2012 8:21am
Comments 0 E-mail Print
Ads by Google
Natural Gas Forecast 2013Natural Gas Price Forecast: Where We Are and Where We're Going. www.InvestmentU.com/Natural-Gas
Dow Chemical Company is spending billions of dollars to expand its site in Freeport, which is already the largest integrated chemical manufacturing complex in the western hemisphere. The site employs 8,000 workers and has 65 manufacturing units over 7,000 acres. / HC
WASHINGTON - Manufacturers terrified that rising natural gas prices threaten their bottom lines are pressuring the Obama administration to limit exports of the fossil fuel in the wake of a study that said selling more overseas would broadly benefit the country.
The government-backed report released Wednesday will be a major factor as the Energy Department weighs whether to grant applications from more than a dozen companies to export a total of 21.5 billion cubic feet of natural gas daily to countries that don't have free trade agreements with the United States.
Chemical and manufacturing industry leaders insist that if the Energy Department approves too many export licenses, natural gas prices would be pushed skyward, jeopardizing some $90 billion in planned capital spending.
Dow Chemical Co.'s vice president of climate change and energy, George Biltz said the move could threaten $4 billion in Dow projects. Its projects linked to abundant, inexpensive natural gas include ethylene, propylene and herbicide facilities planned for St. Charles, La., and Freeport, Texas.
Planned domestic manufacturing facilities were announced "with the assumption we would have available competitive and affordable natural gas," Biltz said in an interview. "Our view is that too many exports would change that profile and would reduce the amount of investments that would be made."
Manufacturers previously have sounded alarms about a wide range of proposals that could bump up natural gas demand and make the commodity more expensive. For instance, some have lobbied against legislation designed to spur natural gas-powered vehicles.
The new study, conducted by NERA Economic Consulting for the Energy Department, concluded the U.S. could gain up to $47 billion in new economic activity. But it also predicted price increases and reduced capital return for companies that have high demands for energy produced by burning natural gas or that rely on the fossil fuel as a building block to produce chemicals, fertilizers and other products.
Manufacturers say the study used outdated 2011 projections of demand for natural gas and dismissed the effects on their sector while ignoring the positive contribution they have on the U.S. economy.
"The report does not compare the economic benefits of exporting natural gas versus using it as a domestic jobs creator," said Paul Cicio, president of the Industrial Energy Consumers of America. "If we use these resources domestically, it will maximize economic growth and job creation for this country."
Because natural gas prices aren't set globally - and the cost in some Asian and European markets can be three to five times higher than in the U.S. - American manufacturers have a competitive advantage when it comes to producing energy-intensive goods.
Biltz stressed that if a single cubic foot of natural gas is exported, it gives the U.S. a one-time jolt.
"But if you take that same cubic foot and you roll it through manufacturing, whether it's steel or chemicals or pulp and paper or rubber, this has as much as a 20x impact when you roll it through the whole GDP of the country," he said.
The new report doesn't guarantee the Energy Department will green light new natural gas exports, beyond a license it already gave to Houston-based Cheniere Energy.
The Energy Department stressed it would conduct its own review of the NERA study and take public comments through Jan. 24 before making any decisions on more export licenses.
The process won't move fast, suggested Kevin Book, managing director of ClearView Energy Partners. He predicted the first approval of a new license to export gas to a non-free trade country will come late in the third quarter of 2013.
While Cheniere's project garnered relatively muted opposition, its export approval was a wake-up call to environmental foes of the hydraulic fracturing process instrumental in unlocking natural gas reserves.
Dow wants their exports but doesn't want to let the oil and gas industry do the same. That's right up there with the brilliant Ed Markey that wanted a 22% tax on NG but then didn't want to have ng exported because of it giving manufacturers a strategic advantage.
Manufacturers push against natural gas exports
Fearing a financial hit, they advocate keeping export limits
By Jennifer Dlouhy | December 6, 2012 | Updated: December 7, 2012 8:21am
Comments 0 E-mail Print
Ads by Google
Natural Gas Forecast 2013Natural Gas Price Forecast: Where We Are and Where We're Going. www.InvestmentU.com/Natural-Gas
Dow Chemical Company is spending billions of dollars to expand its site in Freeport, which is already the largest integrated chemical manufacturing complex in the western hemisphere. The site employs 8,000 workers and has 65 manufacturing units over 7,000 acres. / HC
WASHINGTON - Manufacturers terrified that rising natural gas prices threaten their bottom lines are pressuring the Obama administration to limit exports of the fossil fuel in the wake of a study that said selling more overseas would broadly benefit the country.
The government-backed report released Wednesday will be a major factor as the Energy Department weighs whether to grant applications from more than a dozen companies to export a total of 21.5 billion cubic feet of natural gas daily to countries that don't have free trade agreements with the United States.
Chemical and manufacturing industry leaders insist that if the Energy Department approves too many export licenses, natural gas prices would be pushed skyward, jeopardizing some $90 billion in planned capital spending.
Dow Chemical Co.'s vice president of climate change and energy, George Biltz said the move could threaten $4 billion in Dow projects. Its projects linked to abundant, inexpensive natural gas include ethylene, propylene and herbicide facilities planned for St. Charles, La., and Freeport, Texas.
Planned domestic manufacturing facilities were announced "with the assumption we would have available competitive and affordable natural gas," Biltz said in an interview. "Our view is that too many exports would change that profile and would reduce the amount of investments that would be made."
Manufacturers previously have sounded alarms about a wide range of proposals that could bump up natural gas demand and make the commodity more expensive. For instance, some have lobbied against legislation designed to spur natural gas-powered vehicles.
The new study, conducted by NERA Economic Consulting for the Energy Department, concluded the U.S. could gain up to $47 billion in new economic activity. But it also predicted price increases and reduced capital return for companies that have high demands for energy produced by burning natural gas or that rely on the fossil fuel as a building block to produce chemicals, fertilizers and other products.
Manufacturers say the study used outdated 2011 projections of demand for natural gas and dismissed the effects on their sector while ignoring the positive contribution they have on the U.S. economy.
"The report does not compare the economic benefits of exporting natural gas versus using it as a domestic jobs creator," said Paul Cicio, president of the Industrial Energy Consumers of America. "If we use these resources domestically, it will maximize economic growth and job creation for this country."
Because natural gas prices aren't set globally - and the cost in some Asian and European markets can be three to five times higher than in the U.S. - American manufacturers have a competitive advantage when it comes to producing energy-intensive goods.
Biltz stressed that if a single cubic foot of natural gas is exported, it gives the U.S. a one-time jolt.
"But if you take that same cubic foot and you roll it through manufacturing, whether it's steel or chemicals or pulp and paper or rubber, this has as much as a 20x impact when you roll it through the whole GDP of the country," he said.
The new report doesn't guarantee the Energy Department will green light new natural gas exports, beyond a license it already gave to Houston-based Cheniere Energy.
The Energy Department stressed it would conduct its own review of the NERA study and take public comments through Jan. 24 before making any decisions on more export licenses.
The process won't move fast, suggested Kevin Book, managing director of ClearView Energy Partners. He predicted the first approval of a new license to export gas to a non-free trade country will come late in the third quarter of 2013.
While Cheniere's project garnered relatively muted opposition, its export approval was a wake-up call to environmental foes of the hydraulic fracturing process instrumental in unlocking natural gas reserves.
Dow wants their exports but doesn't want to let the oil and gas industry do the same. That's right up there with the brilliant Ed Markey that wanted a 22% tax on NG but then didn't want to have ng exported because of it giving manufacturers a strategic advantage.