Skip to content
Link copied to clipboard

Commentary: LNG exports represent next step to U.S. energy security

With all the focus on volatile oil prices, it would not be surprising if most people missed one of the most important energy developments of the year: last month's first export cargo of liquefied natural gas (LNG) from the continental United States.

At Dominion Resources' LNG import terminal near Lusby, Md.
At Dominion Resources' LNG import terminal near Lusby, Md.Read moreCLEM MURRAY / Staff Photographer

With all the focus on volatile oil prices, it would not be surprising if most people missed one of the most important energy developments of the year: last month's first export cargo of liquefied natural gas (LNG) from the continental United States.

Dispatched from the Sabine Pass terminal in Louisiana, this LNG shipment - and additional ones to come - not only reinforce America's role as the leader in global energy production but provide another tool for enhancing our relationships with allies, competing with our rivals, and improving our economic and national security.

This would have been unthinkable a little more than a decade ago. In 2005, the United States imported 30 percent of the energy it used. At that time, the Energy Information Administration (EIA) projected that to satisfy domestic demand, we would need to increase LNG imports 16-fold in 2025 - from 0.4 trillion cubic feet to 6.4 trillion cubic feet. But thanks to technological breakthroughs and private-sector ingenuity, all these forecasts turned out to be way off base. Last year, the United States produced the largest volume of natural gas in its history. Even with record consumption, the United States is now exporting LNG, and EIA's 2015 Annual Energy Outlook projects that we will be a net energy exporter sometime between 2020 and 2030.

The benefits are numerous. For domestic producers, who are currently coping with record low natural gas prices, the ability to access global markets provides a welcome, if modest, boost.

This is especially critical for states like Pennsylvania that have enjoyed tremendous economic gains as a result of the Marcellus Shale gas boom. In fact, from 2008 to 2014, Pennsylvania counties involved in Marcellus Shale operations had 8.7 percent employment growth, compared with just 0.6 percent in non-Marcellus counties, according to the Bureau of Labor Statistics.

Increasing LNG exports can only help the Keystone State's economy grow stronger. According to a study conducted by ICF International, an East Coast consulting firm, Pennsylvania could see more than 59,000 jobs created by 2035, with an additional $10.3 billion in revenue. And notably, these numbers don't take into account the extra jobs and income that will result from modernizing Pennsylvania's infrastructure, such as ports and pipelines, which is necessary to meet the increasing demand for American LNG.

Besides the regional and national benefits, there are also global advantages.

Take Europe for example. Eight of the 28 European Union nations, including Poland, Estonia, Lithuania, and Latvia, remain heavily dependent on Russia for as much as 80 percent of their annual natural gas use. The Europeans recognize that the availability of ample and reliable U.S. supplies will alter that dynamic. Maros Sefcovic, the European Union's energy chief, recently commented in the Wall Street Journal, "Like shale gas was a game changer in the U.S., American gas exports could be a game changer for Europe."

In Asia, we see similar benefits. The International Energy Agency projects that global demand for natural gas will continue to grow 2 percent annually until 2020, with more than 50 percent of incremental growth coming from Asia. With the availability of U.S. LNG supplies, allies like Japan, Taiwan, and South Korea - all of which import more than 90 percent of their energy resources - will be better positioned to diversify their energy supplies. Additionally, U.S. natural gas can help developing nations in Asia replace more carbon-intensive fuels and meet their climate goals.

The United States will not transform worldwide energy markets overnight. However, we can - and should - take the lead in strengthening the global energy market.

Congress is considering comprehensive legislation that includes a provision to streamline federal approval of LNG export applications. With current market conditions, we may not see an immediate flood of long-term contracts and new facilities. But that is no reason to maintain the status quo.

Lawmakers should ensure that we have an efficient and predictable permitting system. The advantages of U.S. LNG exports - many of which we are seeing already - are too important to ignore.

Jeffrey Kupfer, the former acting deputy secretary of the U.S. Energy Department, is an adjunct professor of policy and management at Carnegie Mellon University's Heinz College. jkupfer@cmu.edu