87
•
The costs associated with eminent domain, which may be necessary to build new
pipelines to transport natural gas;
•
The costs of hazards associated with LNG developments, such as costs for police,
fire, and security personnel overseeing LNG tanker deliveries; risks associated with
LNG-related explosions; and threats related to natural disasters, terrorism, and
disruption of LNG facilities, storage tanks, and related systems;
•
The potential regulatory costs and impacts of environmental regulations governing
hydraulic fracturing and natural gas drilling; and
•
The social costs of carbon and methane associated with natural gas emissions.
2.
DOE/FE Analysis
All environmental issues are discussed below. See infra §§ IX-XII.
F.
Prices and Volatility
1.
Natural Gas Price Volatility
a.
Comments
Several commenters, such as IECA, Sierra Club, MA Rohrer, and Citizens Against LNG,
address potential natural gas price volatility associated with LNG exports. They contend that
there is little evidence that domestic natural gas price volatility will be reduced by LNG exports.
Rather, they argue that increases in LNG exports will increase demand for natural gas, driving up
prices in the United States and adversely affecting electric and natural gas utility consumers,
EITE industries, and residential consumers.
Sierra Club, Citizens Against LNG, and Torrey Byles also assert that, as domestic natural
gas prices rise due to LNG exports, some electric power companies will want to switch from gas-
based to coal-based electric generation. However, because there is less coal-fired capacity to
switch to, coal-fired options could be limited, which will drive natural gas prices higher than
expected. In this regard, they state that the 2014 EIA Study indicates that increasing exports of
88
LNG will cause increased domestic coal use in all export scenarios, but fails to address or
quantify the environmental impacts of this switch.
b.
DOE/FE Analysis
Natural gas price volatility can be measured in terms of short term changes—daily or
monthly volatility—or over longer periods. Short term volatility is largely determined by
weather patterns, localized service outages, and other factors that appear unlikely to be affected
substantially by DOE export authorization decisions. Moreover, the 2014 and 2015 Studies were
long-term analyses covering a 25-year period, and thus were not intended to focus on short term
shocks or volatility.
To the extent commenters are concerned about the risk of large upward price spikes
sustained over longer periods, such as those that occurred in 2005 and 2008, we do not agree that
LNG exports will necessarily exacerbate this risk. First, as noted above, when domestic
wholesale gas prices rise above the LNG netback price, LNG export demand is likely to
diminish, if not disappear altogether. Therefore, under some international market conditions,
LNG export facilities are likely to make natural gas demand in the United States more price-
elastic and less conducive to sustained upward spikes. Second, in light of our findings regarding
domestic natural gas reserves explained above, we see no reason why LNG exports would
interfere with the market’s supply response to increased prices. In any capital intensive industry,
investments are made based on observed and anticipated market signals. In natural gas markets,
if prices or expected prices rise above the level required to provide an attractive return on
investment for new reserves and production, industry will make that investment to capture the
anticipated profit. These investments spur development of reserves and production and increase
availability of natural gas, exerting downward pressure on prices. This is part of the normal
business cycle that was captured in the 2014 and 2015 Studies. On balance, we are not
89
persuaded that LNG exports are likely to increase substantially the volatility of domestic natural
gas prices.
2.
Linking the Domestic Price of Natural Gas to World Prices
a.
Comments
Commenters, including IECA and Citizens Against LNG, argue that LNG exports could
link domestic natural gas prices to the price of natural gas in the world market, and that this
could exacerbate the potential increase in domestic natural gas prices as well as increase price
volatility.
By contrast, API argues that natural gas prices will not rise to global prices because the
market will limit the amount of U.S. natural gas that will be exported, since liquefaction,
transportation, and regasification costs act as a cushion. API argues that, if this cushion
disappears and the U.S. export price rises to the global LNG price, market forces will bring U.S.
exports to a halt.
b.
DOE/FE Analysis
The 2015 Study examined changes in three benchmark prices across the export scenarios:
the Henry Hub price in the United States, the National Balancing Point (NBP) price in the United
Kingdom, and the Japan Korea Marker (JKM) price. In general, the Henry Hub price rises as
LNG exports increase, while the other benchmark prices decline. The 2015 Study stated that this
is the result of allowing increased trade from the United States, thereby serving to relax the
highly constrained supply situation internationally in the scenarios.
206
The 2015 Study presented
the price spreads among JKM and Henry Hub and NBP and Henry Hub for all of the cases
considered from 2015-2040. The JKM-Henry Hub price spread in 2040 ranges from $5 to over
206
2015 Study at 58.
Dostları ilə paylaş: |