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As U.S. energy production surges—along with threats of conflict in Europe—industry heavyweights are insisting that now is the time for the United States to export more natural gas.
According to the Energy Information Administration (EIA), the U.S. is sitting on more than 2 trillion cubic feet of natural gas reserves—or more than a 92-year supply—creating an opportunity for exports. Opponents insist, however, that environmental concerns and economic risks do not support the export argument.
The United States already exports some of its natural gas, but only a small portion compared to the staggering amount of nat gas it consumes. In January, the U.S. exported 134 billion cubic feet of nat gas but consumed 3.2 trillion cubic feet, according to the EIA's most recent Natural Gas Monthly Report.
The debate on exports has been fast-tracked by recent tensions between Russia and Ukraine. Russia under President Vladimir Putin has been able to use energy as a powerful bargaining chip, because Ukraine relies heavily on it for natural gas. Western Europe also depends on Russian imports, and nations like Germany are critical to U.S. efforts to enforce economic sanctions against Moscow.
"Certainly the question of LNG export has gotten increased attention as of late because of the situation in Ukraine and Crimea," said Jason Hutt, partner in the Environmental Strategies Group at Bracewell & Giuliani. "I'm not sure anyone thought we'd see the day when President Putin would be viewed as the top lobbyist on LNG export, but he really has emerged in getting Congress' attention focused on the geopolitical benefits of LNG export for the United States."
Indeed, geopolitical events have increased pressure on the Obama administration to speed up approvals for natural gas export terminals. Currently the Department of Energy has received more than 20 applications, but has granted preliminary approval to only six facilities. Only one of those approvals has been issued to a company on the East Coast, Dominion Resources' Cove Point facility in Maryland. The company is currently waiting for additional regulatory approval and has secured 20 year contracts with GAIL of India and Sumitomo of Japan for its entire capacity.
Dominion's Cove Point has been in operation for 40 years as an import facility, but the company now wants to integrate a liquefaction plant on the site to be able to export nat gas.
"The Cove Point export project requires very little equipment addition," said Mike Frederick, Dominion's vice president of LNG Operations. "We have the storage tanks, the transfer lines, the offshore platform for loading the vessels. ... We only need to add equipment within the footprint, so it's very easy for us to become an export facility as well as import."
Even with DOE support, Dominion still needs approval from the Federal Environmental Regulatory Commission before it breaks ground on its proposed $3.8 billion liquefaction construction project. The commission is the agency that reviews engineering and safety issues. It also makes sure that environmental issues are addressed.
Dominion says it could have a decision on its project by midyear. If that estimate is accurate, construction could start in the third quarter, and its export terminal could be operational by late 2017.
Supporters of exporting nat gas say adding excess U.S. supply to the international market would help stabilize global prices, leveling the playing field so that gas-rich countries like Russia and Qatar can't manipulate prices. Additionally, they argue that many of the importers will replace coal as a major source of energy with natural gas, thus reducing the overall global carbon footprint.
"If the natural gas that we have found to be so abundant here in the U.S. is allowed to be exported, then I think you will see the benefits overseas with electricity generation switching from coal to natural gas, or at least having the incentive. If that happens, there is a greenhouse gas impact that is a positive one here in the U.S., because climate change is a ubiquitous air problem for the entire world," said Hutt.
The pro-export argument also holds that exporting natural gas could help the economy and boost jobs. Dominion's project, for example, will create thousands of construction jobs. An export terminal at Cove Point would also boost the company's overall head count when its export terminal is operational. The company will pay an additional $40 million in state taxes, generate over $20 million more in income taxes, and increase it's sales by $2 billion over the project's lifetime.
"I think that we have seen real hard evidence that the shale gas boom, even when limited to domestic consumption, has had a tremendous buoying effect on the economy both directly with the jobs for drilling, production and distribution, but also for all the jobs associated with it and we can only expect further benefits if the demand side was increased through the use of LNG export facilities," said Hutt.
However, Mike Tidwell, executive director of the Chesapeake Climate Action Network, makes the point that exports could actually hurt domestic manufacturers.
"Manufacturers are concerned," he said. "They've been organizing an opposition to gas exports because higher gas prices hurt their business."
Environmental groups like Tidwell's are also trying to slow the export approval process because of concerns over the dangers of hydraulic fracturing, or "fracking." They worry about the safety of residents in gas-rich areas and the danger of pollution of drinking water. They also say that while global prices could become more stable, prices for U.S. consumers could rise.
"The major concern from an environmental standpoint in exporting natural gas is that it will trigger more fracking," Tidwell said.
Nat gas price hikes are a controversial topic in and of themselves. Marty Durbin, president & CEO of America's Natural Gas Alliance, said "the good news is that we've got such an abundance of natural gas, it's not expected [that exports] will have any significant impact on the [domestic] price. There have been studies from the DOE and independent studies that show even with significant exports, we'll see a limited impact on price."
—By CNBC's Jackie DeAngelis.