The U.S. Department of Energy released its much-anticipated study entitled Energy, Economic and Environmental Assessment of U.S. LNG Exports. It is now in a 60-day comment period.
Five key findings: Secretary of Energy Jennifer Granholm issued a statement on 17th December, summarizing what she feels are the study's five key findings and considerations.
“The pace of growth of U.S. natural gas exports in recent years is truly astounding, and many analysts say continued growth on this trajectory will quickly outpace global demand,” the statement reads.
While increasing LNG exports generate wealth for export facility owners and create jobs across the value chain, “unfettered exports of LNG would increase wholesale domestic natural gas prices by over 30 percent” and “increase costs for the average American household by well over $100 more per year by 2050.”
LNG facilities tend to be concentrated in communities that already shoulder environmental burdens from existing refining, petrochemical, and other industries. Pollution problems would get worse, “if volumes of LNG exports continue to dramatically increase.”
“While some tout LNG as a means to reduce the use of coal overseas (and to date that has been the case with some importing countries),” the study shows “additional U.S. LNG exports displace more renewables than coal globally.”
“Over the past few years, U.S. LNG has proven critical for our allies in Europe” as they become less dependent on Russian gas. China, already the world’s largest LNG importer, is expected to double its LNG import between now and 2030. Future approvals “should consider where those LNG exports are headed and whether targeted guardrails maybe utilized to protect the public interest.”
The article reads, “Now we know the ‘pause’ was a political ruse,” and the authors believe facts from the study conflict with Secretary Granholm’s conclusions. “Secretary Jennifer Granholm makes clear she thinks it justifies a permanent ban,” the article says.
The WSJ Editorial Board challenges Secretary Granholm’s suggestion that permitting more LNG exports isn’t in the public interest since some might go to China. The article says, “Would she prefer that Russia supply China with gas, or that China burn more coal instead? Why would exporting LNG to China harm Americans?”
Other voices:
“This study confirms that Donald Trump’s plans to supercharge LNG exports will come at the expense of consumers and the climate,” said Raena Garcia from Friends of the Earth, according to the Financial Times.
Energy expert Daniel Yergin was quoted in an FT article as having said, “At this point, LNG is part of Nato’s arsenal. Putin was convinced that he could use the energy weapon and undermine the coalition in Europe. It failed because of LNG.”
What’s next:
The comment period will continue into Trump’s second term, so his administration will make the decision regarding Biden’s current LNG pause.
President Trump and his appointed Secretary of Energy Chris Wright will almost certainly terminate the LNG permit pause after they take office.
Go deeper:
You can enter your comments on the DOE study directly through this link.
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In late December, Argentinian state company YPF and Shell signed a Project Development Agreement to become a 50:50 joint venture partner in the development of the $50 billion Argentina LNG project. Shell will replace Petronas, YPF’s previous partner.
Agreement details:
YPF and Shell will develop the first phase of the 10-mtpa project.
The agreement aims to take FID for the first phase of the project in 2025, instead of the previous target FID in 2024.
The LNG project will be based in Argentina’s Río Negro province.
Feed gas will be provided from gas blocks in the Vaca Muerta region via a 580-km gas pipeline to the port city of Sierra Grande.
Gas and LNG potential in Argentina:
Argentina is trying to develop its LNG export in three phases. First, it will develop two FLNG projects for 5 mtpa. A second phase will be a 10-mtpa onshore LNG export facility. Lastly, the onshore project will be expanded further for another 10 mtpa.
The Southern Energy FLNG project is led by Pan American Energy (40 percent), Pampa Energía (20 percent), YPF (15 percent), Harbour Energy (15 percent), and FLNG technology specialist Golar LNG (10 percent).
According to YPF, Argentina has the world’s second largest shale gas resources. The Vaca Muerta field alone is estimated to have 308 TCF.
Argentina aims to become a net energy exporter in the early 2030s.
The onshore LNG project could start up in 2029 and initially produce up to 12 mtpa. Argentina has the potential to produce 30 mtpa of LNG by 2032, if the onshore facilities are built on schedule.
What they’re saying: “As a pioneer in the LNG market, Shell’s knowledge and experience will be instrumental in helping to position Argentina as a reliable and competitive global energy supplier,” said Horacio Daniel Marín, YPF CEO and Chairman.
Why it matters: There are potential investment and technology sharing opportunities for American shale and LNG producers with Argentina.
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