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Study included scenarios in which LNG exports were unconstrained. Should the U.S. resource
base be less robust and more expensive than anticipated, U.S. LNG exports would be less
competitive in the world market, thereby resulting in lower export levels from the United
States. By way of example, the 2015 Study modeled a number of low resource recovery
scenarios, which had U.S. resources that were less robust and more expensive than other
cases. In these low resource recovery scenarios, U.S. wellhead natural gas prices were driven up
by higher production costs, and prices increased to a level that lowered demand for exports
compared to the Reference case . In other unconstrained cases evaluated with the high resource
recovery scenarios, domestic natural gas production was able to keep up with the increased
demand for U.S. LNG exports compared to the Reference case. In all of these cases, the supply
and price response to LNG exports did not negate the net economic benefit to the economy from
the exports.
c.
Supply Impacts Related to Renewable Energy Sources
To the degree that natural gas prices may increase, alternative sources of energy will
become more attractive to consumers and investors. Accordingly, the 2014 Study forecasts
increases in electricity from renewable energy resources across the LNG export cases over the
2015-2040 timeframe. Therefore, we do not agree with the suggestion that LNG exports would
diminish investment in renewable energy.
Further, the 2014 and 2015 Studies did not evaluate the steps to become energy
independent, as that was not part of the criteria evaluated. However, both Studies concluded that
the United States has ample supplies of natural gas resources that can both meet domestic needs
for natural gas and allow for participation in the LNG export market, without a significant
impact on supplies or prices for the period of the analysis under the assumptions made.
85
D.
Modeling the LNG Export Business
1.
Comments
Several commenters, including Hair on Fire Oregon, Torrey Byles, Sierra Club, and
Citizens Against LNG, contend that the 2015 LNG Export Study incorrectly assumed that the
financing of investments in natural gas supplies for export and in the LNG export projects that
will be used for export operations would originate from U.S. sources. These commenters assert
that, in fact, a substantial portion of the investment is being made by foreign entities, and these
foreign entities—not domestic corporations—will reap the benefits of export activity in the form
of royalties, tolling fees, income, and tax proceeds from the resale of LNG overseas.
In addition, Clarence Adams contends that the 2015 Study misrepresents the amount of
natural gas used by LNG terminals in the liquefaction process, which understates the demand
associated with exports. He contends that any volumes used in the liquefaction process
(approximately 10 percent of the export volume) should be considered domestic consumption.
2.
DOE/FE Analysis
The 2014 and 2015 Studies did not discuss the impact of foreign investment. The 2015
Study concluded that the main path for positive impacts to GDP from increased U.S. LNG
exports is through higher production and greater investment in the natural gas sector in the
United States. These positive impacts are “due to the fact that most of any U.S. LNG exports
would be made possible by increased extraction rather than the diversion of natural gas
supplies.”
203
The 2015 Study also noted that the model assumes U.S. producers receive the U.S.
benchmark Henry Hub price on LNG exports rather than the price in the international destination
203
2015 Study at 83.
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market.
204
The 2014 Study stated that “increased energy production spurs investment, which
more than offsets the adverse impact of somewhat higher energy prices when export scenarios
are applied.”
205
As for consideration of the natural gas consumed in the liquefaction process, both the
2014 and 2015 Studies assumed a consumption level equal to 10 percent of the natural gas
feedstock, which is included in the models.
E.
Cost of Environmental Externalities
1.
Comments
Sierra Club, along with Citizens Against LNG, Hair on Fire Oregon, Cascadia Wildlands,
Oregon Wild, Torrey Byles, MA Rohrer, and Harriet Heywood, maintain that LNG exports will
increase demand for natural gas, thereby increasing negative environmental and economic
consequences associated with natural gas production. These and other commenters assert that
the 2015 Study failed to consider the cost of environmental externalities that would follow such
exports. The externalities identified by these commenters include:
•
Environmental costs associated with producing more natural gas to support LNG
exports, including the costs, risks, and impacts associated with hydraulic fracturing
and drilling to produce natural gas; and costs associated with increased water scarcity
to support hydraulic fracturing, especially in the drought-stricken regions of the West
Coast;
•
Environmental costs associated with the life cycle of U.S. LNG (hydraulic fracturing
of shale gas, liquefaction, and export) in the form of increased emissions of GHGs
and other air pollutants, climate change, and local impacts such as ocean
acidification;
•
Local and regional costs associated with LNG exports, including impacts on local
communities and industries;
204
Id. at 64.
205
2014 Study at 12.
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