August 25, 2020 Read More →

LNG export industry proving to be economic, climate disaster


In mid-July, Secretary of Energy Dan Brouillette signed an order authorizing the export of liquefied natural gas, or LNG, from a proposed $10 billion terminal and gas pipeline project in Oregon. The news release accompanying Brouillette’s order hailed the approval as having “profound economic, energy security, and environmental implications, both at home and abroad.”

Although the project, known as the Jordan Cove LNG terminal, has struggled to obtain state permits and faces vocal opposition from tribes and others, this consistent Trump administration refrain has not changed. The Obama administration made similar claims about natural gas production and energy security, jobs, and the environment, when it oversaw a rapid expansion of the LNG export industry. 

President Obama and President Trump were on the same page about LNG exports. They also share something else in common: They were both dead wrong. 

The LNG export industry is an economic disaster and is also a climate disaster, factors that are both contributing to its downward spiral. And while the Department of Energy has talked about exporting “freedom gas” to American allies to improve energy security, when the largest potential customer is China and current headlines highlight a potential new U.S.-China cold war, that isn’t a very credible argument, either. 

A report released in July by the Institute for Energy Economics and Financial Analysis (IEEFA) details the many reasons why the U.S. LNG export industry is so poorly positioned to succeed financially, as well as why expanding export capacity with projects like Jordan Cove makes no economic sense. 

One important reason is that while the U.S. LNG export market has been a financial disaster, the same is true for the Chinese LNG import market as well. Both markets need the prices to go in opposite directions to have a chance to make money. A move in either direction in price will be good for one market but a fatal flaw for the other. As the IEEFA analysis concludes, there is “no upside” to U.S. LNG exports to China.  

Clark Williams-Derry, one of the authors of the new IEEFA report, explained the economic reality of the U.S. LNG market to CNBC. “It is not so much that the coronavirus crisis is going to last for a long time,” Williams-Derry said. “It is more that the ‘new normal,’ post-COVID, may be one in which the U.S. LNG export dream seems out of reach.”

[Justin Mikulka]

More: U.S. LNG Industry’s Business Model Doesn’t Work

Posted in: IEEFA In the News

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