The Obama administration on Friday gave Freeport LNG approval to broadly export domestically harvested natural gas, marking only the second time a U.S. company has won such a license.
The export license ensures that the Texas-based project will be able to liquefy natural gas to Japan, Taiwan and other countries that do not have free-trade agreements with the United States.
The company still must win approval from the Federal Energy Regulatory Commission to convert its existing Quintana Island, Texas terminal for importing LNG into a facility capable of liquefying natural gas and shipping it overseas.
If additional environmental reviews are completed and the Federal Energy Regulatory Commission (FERC) approves, the facility will be able to export 1.4 billion cubic feet of natural gas daily for the next 20 years.
This is only the second LNG export license to non-free trade agreement counties approved by DOE in the last two years.
Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy said the decision “represents an important next step in the recognition that America is well positioned to be a global energy leader.“ The United States is “now in a position to become more self-reliant and still be able to export energy resources as market conditions warrant,” she added.
LNG exports will create jobs and improve economic growth in two ways. First, there are the jobs involved in the export of LNG. Second, there are the jobs that will result from more markets for American natural gas. Knowing that customers in Europe and Asia can buy LNG will encourage more investment in energy development in places like Texas and Arkansas. This will mean more jobs on drilling sites and for businesses providing the ancillary goods and services that support them.
DOE released a report last year concluding that LNG exports would be an economic positive. DOE reaffirmed this view in today’s approval saying, “[W]e find that the exports proposed in this Application are likely to yield net economic benefits to the United States.”
DOE’s decision is good news for American energy and exports, but there are other applications awaiting approval. There’s more work to be done.
Canadian Prime Minister Stephen Harper traveled to New York City yesterday to talk up the benefits of the Keystone XL pipeline and Canadian energy in general. [Video of his conversation at the Council for Foreign Relations is here.] As the Toronto Globe and Mail reports, this is part of campaign by the Canadian government to lay out the benefits of the United States importing more Canadian energy and approving the pipeline.
Also yesterday, the House Transportation and Infrastructure Committee passed a bill that would allow construction of the pipeline connecting Alberta's oil sand production to Gulf Coast oil refineries. In a statement, Committee Chairman Bill Shuster (R-PA), said “This bill will finally allow construction of the Keystone XL pipeline, creating thousands of American jobs and displacing overseas imports with millions of barrels of safe and secure oil supplies.”
One way the Keystone XL pipeline will spur job creation is by supporting increased development of Canada’s oil sands. For example, Peter Bowe, president of Ellicott Dredge Enterprises in Baltimore, MD sells equipment to companies developing Canadian oil sands. He told the House Small Business Committee that increased development will mean demand for his company’s dredges for decades to come. Ellicott Dredge isn’t an isolated case. “About 2500 US companies export goods and services to Canada in support of oil sands,” Bowe told lawmakers.
Jobs will also be created by increased economic activity surrounding construction of the pipeline. As an example, in the same Small Business Hearing, Brent Booker, Secretary-Treasurer of the AFL-CIO’s Building and Construction Trades Department, talked about the economic benefits from the southern portion of the pipeline under construction from Cushing, OK to the Port Arthur, TX:
KBMT News in Port Arthur did a recent story detailing how the construction of the southern leg was providing a boost to the local economy, as workers are spending heavily on things like clothing, hotels, and restaurants.
Additionally, from lumber to sand, and from gravel to fuel, massive quantities of materials that are needed for the project are being purchases locally up and down the trough between Cushing and Port Arthur.
For small businesses, the indirect economic effects are key. As workers deploy to communities along the pipeline’s path, significant opportunity may be created for local small business growth. In addition, small firms involved in the manufacture of pipeline components stand to benefit should this initiative receive regulatory approval. Taken together, this project represents real benefits for small businesses.
By the State Department’s estimates, 42,000 jobs will be supported by Keystone XL. In a labor market crying out for more jobs, this would be welcome.
Unfortunately Keystone XL’s approval is bogged down in politics. The Houston Chronicle editorialized:
With every passing day, President Obama's decision to delay completion of the Keystone XL pipeline looks more like partisan folly and less like high-minded abundance of caution to ensure that the environment is protected. Let us count the ways:
Completion of the Keystone XL pipeline remains stalled, even though its route has been moved to satisfy concerns it would affect water quality and despite the fact that it is state of the art in construction, safety and engineering.
Further delay frustrates our Canadian friends, blocks job creation, and keeps us from improved energy security.
Rep. Shuster told reporters that he expects a vote in the House next week.
I was hoping Interior Secretary Sally Jewell would pass her first test on fully embracing America’s energy abundance. Unfortunately with the Bureau of Land Management’s (BLM) new draft rule on hydraulic fracturing on federal lands, she failed. As Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy put it, “BLM’s rule is a solution in search of a problem.” “States are much better suited to regulate hydraulic fracturing and have done an effective job.”
Harbert noted that BLM’s second try at a draft rule acknowledges that it duplicates state regulatory efforts. The text reads:
[S]ome states…have issued their own regulations addressing disclosures and oversight for oil and gas drilling operations.
Operators with leases on Federal lands must comply with both BLM’s regulations and with State operating requirements, including State permitting and notice requirements to the extent they do not conflict with BLM regulations.
In a statement, Independent Petroleum Association of America (IPAA) President and CEO Barry Russell, echoed Harbert:
Unfortunately, the rule solves no existing problem, but creates additional burdens for independent oil and natural gas producers and state regulators. If the Department of Interior believes there are gaps in state regulations of oil and natural gas, they should work with the states to implement changes rather than imposing a costly and burdensome rule on independent producers.
This rule means more red tape and less energy development. It won’t reverse the trend of falling oil and natural gas production on federal lands, and it won’t shorten the average span of 307 days it takes to get an oil and gas drilling permit. In fact, this rule is likely to exacerbate both of these.
The United States is sitting on a lot of coal. If policymakers don’t want it used to generate electricity, we should be able to ship it to countries that want it, right?
Not if you’re anti-energy environmentalists. In the Pacific Northwest, groups like the Sierra Club want to stop the construction of new export facilities in Oregon and Washington that would ship coal from Wyoming and Montana to Asian markets. One of their “anything goes” tactics is launching a frivolous lawsuit against coal and railroad companies over coal dust blowing off trains traveling to ports.
Jeff Ostermayer at Shopfloor links to an op-ed by Roger McClellan, a former chairman of the Environmental Protection Agency’s Clean Air Scientific Advisory Committee who writes that these groups’ legal argument is too simplistic:
Just because a piece of coal is found in the water or coal dust is found near a rail track does not mean humans are exposed to it. Coal is not a substance that breaks down easily. Coal is relatively innocuous. Simply moving it by trains or trucks or barges does not equate to a risk to the environment or human health.
Coal continues to play an important role in meeting energy needs around the world, with steady improvements made in its transport and use. Coal has been transported through the Northwest by rail for decades and there has never been any evidence of harm associated with this rail transport.
In an op-ed in the Bellingham Herald, Mike Elliott, a member of the Brotherhood of Locomotive Engineers and Trainmen, first notes that in his two decades of working on trains he never heard complaints about coal dust from fellow union members. Second, he explains why he supports these exports projects:
We should be supportive of responsible construction projects in the Northwest and follow established procedures for evaluating and permitting those projects. Trying to influence a legitimate process by filing nuisance lawsuits is counterproductive to U.S. industry, job creation and our economy in general.
The middle class of the 1950s and ’60s was, in large part, a blue-collar workforce that built and manufactured right here in the United States. We must remember the importance of these blue-collar jobs, sustain the ones we have and help create more of them.
Responsible projects that meet or exceed today’s environmental standards should not be delayed simply because someone can go down to the courthouse and file a lawsuit.
Judging from their behavior, these groups will use any trick in the book to oppose these export facilities and block the jobs and economic growth that will come from exporting American coal.
Underneath Pennsylvania and New York state runs the Marcellus Shale, a formation rich with natural gas. The two states’ differing policies on the use of hydraulic fracturing, or fracking, to extract natural gas have created a natural economic experiment. In Pennsylvania, hydraulic fracturing is allowed. New York has had a moratorium on fracking since 2010.
In a new study, Manhattan Institute researchers, Diana Furchtgott-Roth and Andrew Gray, examine the outcomes of this stark policy contrast. Analyzing Pennsylvania county data, they conclude:
Pennsylvania counties where hydraulic fracturing takes place have performed better economically on average than those with little or no such drilling.
Specifically, per capita income levels…
Employment effects were more pronounced. The number of jobs…
Furchtgott-Roth and Gray then built a model to estimate how much economic growth New York State counties sitting above the Marcellus Shale missed out on due to the moratorium. Based on this analysis:
[H]ad New York State counties on the Marcellus Shale been allowed to use these resources, economic growth would have been substantially higher—at up to 15 percent for a given four-year period, or 6 percent greater than would otherwise be expected. This corresponds to a potential $8 billion in extra income in upstate New York.
This study offers valuable food for thought for policymakers in New York state, North Carolina, and in other states where fracking technology could be employed. If Pennsylvania is any indication, natural gas development using hydraulic fracturing will reap job and economic growth benefits.