WASHINGTON -- Even as the shale gas boom slows in North Texas, where drilling rigs working the Barnett Shale recently hit a 10-year low, the "shale gale" continues to grow elsewhere, adding to the glut that has driven prices lower.
Should that relatively cheap gas stay in the United States, where consumers and domestic manufacturers will enjoy its economic benefits? Or should the federal government allow it be exported overseas, where it is worth several times more than Americans pay?The Fort Worth-based Barnett Shale Energy Education Council, along with most of the industry, backs exports."It is very important to develop a new market for domestic natural gas," said Ed Ireland, the group's executive director.Ireland argues that natural gas should be viewed no differently than other U.S. products."Does anyone argue that because Apple sells iPads worldwide, that somehow increases the price of iPads for U.S. consumers?" Ireland asked in an interview.But there's a powerful voice of skepticism in Oregon Democratic Sen. Ron Wyden, the new chairman of the Senate Energy and Natural Resources Committee. He worries that exports will raise domestic prices, killing a "manufacturing renaissance" the nation badly needs."If you don't get it right, you can do a lot of damage," Wyden said at a recent natural gas forum in Washington. Exports are among the top energy issues for Congress and the White House, and have dominated the first Senate energy committee hearing under Wyden.Should American gas be for Americans?The Natural Gas Act of 1937 and the Energy Policy and Conservation Act of 1975 treat natural gas and crude oil as special resources, giving the federal government discretion regarding their export. What's new is the surging domestic production of both, leading many to predict the United States could ultimately become a net oil and gas exporter.Wyden's not alone in his view. Powerful interests ranging from chemical manufacturers to utilities to manufacturers, to whom natural gas is an expense, not a profit source, would gain from restrictions on natural gas exports.Dow Chemical CEO Andrew Liveris expressed alarm over the idea of mass exports at Wyden's Feb. 12 hearing. Liveris described natural gas as the "first indispensable ingredient for everything that is made and consumed in this country." The petrochemical industry argues that eight times more value can be created for the economy by using natural gas domestically as a building block for manufactured goods, rather than simply exporting the gas itself."America's natural gas bounty is more than a simple commodity. It's a once-in-a-generation opportunity," he said.But from the perspective of a producer, it is a commodity looking for the best market."There's a lot of natural gas today," Exxon Mobil Senior Vice President Michael Dolan said Friday at the IHS CeraWeek energy conference in Houston. "All of those molecules are owned by some company, some private landowner in the United States," he said, and if, "in their view, exporting natural gas is the best way for them to get value for the risks that they've taken, then that's what they should be able to do."The Department of Energy is considering 16 applications for terminals to export American natural gas to energy-hungry countries such as Japan, China and India. Only one is approved and under construction, the Cheniere Energy terminal in Sabine Pass at the Texas-Louisiana border on the Gulf Coast. It's expected to come online by late 2015 or early 2016.The White House hasn't made a decision on the rest, some of which would be in Texas.Senior White House energy adviser Heather Zichal said America has the lowest natural-gas prices in the world. That makes the nation attractive for business, she said."The abundance of affordable natural gas is supporting a new dawn in American manufacturing," she said last week at the Center for Strategic and International Studies in Washington.Zichal said allowing some of America's energy bonanza to go to foreign lands would provide an opportunity to create oil and gas industry jobs in the U.S. But that has to be balanced with the impact on manufacturing, national security and home energy bills, she said."As a general rule of thumb, we are not opposed to the notion of exports," Zichal said. "But that's through the lens of making sure we are not doing that in a manner that is going to undermine American consumers."Is there enough for everybody?The oil and gas industry argues that fears of exports are misplaced. American natural gas production would go up if there were new foreign markets, Ireland said. So the supply would increase along with the demand and keep prices down, he said.He said the dilemma for natural gas producers is that the nation's natural gas supply skyrocketed and it's taking longer for U.S. demand to catch up.New natural gas-fired power plants and petrochemical operations take time get on line, he said. So rigs have left the Barnett Shale and other natural gas fields in favor of drilling for oil, which commands a much higher price.The number of active rigs in the Barnett Shale topped 200 in 2008. It hit a 10-year low of 27 in February before rising to 32 last week.The big Haynesville Shale gas field in Louisiana and East Texas also is seeing declining interest, said Philip Budzik, an analyst with the Energy Information Administration, part of the U.S. Department of Energy."The only natural gas play that seems to be really heavily focused on right now is the Marcellus in Pennsylvania and West Virginia," he said in an interview. "I think part of that is due to the fact that gas there has received a higher price because it's closer to [the biggest] markets."A DOE study in December supported the idea of exporting natural gas after analyzing the impact on the economy."Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports," said the NERA Economic Consulting report.Wyden called the study "seriously flawed" and said it shouldn't be used to decide whether to allow exports.Wyden said he didn't oppose all exports. He said he wants to see if there's a "sweet spot" where producers could make money and U.S. natural gas prices could stay cheap."Let's just spend some time looking before we do the leaping," he said.Staff writer Jim Fuquay contributed to this report.Have more to add? News tip? Tell us
