On June 12, 2018, the Office of Fossil Energy of the Department of Energy (DOE) filed a Notice in the Federal Register seeking comments prior to July 27, 2018 on its recently released study, entitled Macroeconomic Outcomes of Market Determined Levels of U.S. LNG Exports. As described in the notice, DOE wishes to consider the study in connection with the 25 pending applications to export liquefied natural gas (LNG) to countries with which the United States does not have a free trade agreement (non-FTA countries).
Pursuant to Section 3 of the Natural Gas Act (NGA), 15 U.S.C. § 717b, DOE must evaluate whether such exports are in the public interest. In making that determination, DOE considers factors such as economic impacts, international impacts, security of natural gas supply and environmental impacts. DOE typically relies upon LNG export studies in making these determinations.
Since 2012, DOE has commissioned five studies to examine the effects of LNG exports which were performed by various entities and which received a diverse range of comments. This latest study is also likely to generate a wide range of perspectives. Unlike prior studies—and presumably as a result of prior comments and criticisms—this study includes peer-reviewed probabilities of uncertainties surrounding developments in the international and domestic natural gas markets in 54 different export scenarios in an attempt to analyze uncertainties associated with natural gas supply conditions in the U.S. and the rest of the world, as well as demand scenarios in the U.S. and the rest of the world. In particular, the study seeks to assess the impact of “unconstrained LNG exports,” which are defined as market determined levels of LNG exports, making it the most ambitious study to date.
Relying on a range of assumptions applicable to both U.S. and international conditions, including, for example, a “low” U.S. demand case based upon “an aggressive national Renewables Mandate in line with California’s stringent RPS target,” the study concluded that the likely range of LNG exports in 2040 was from 8.7 to 30.7 billion cubic feet per day (Bcf/d) or 3.2 to 11.2 trillion cubic feet (Tcf) per year. Across the entire range of scenarios, the study further concludes that U.S. economic output is higher whenever global markets call for higher levels of LNG exports, assuming that LNG exports are unconstrained.