Less than a decade ago, the U.S. seemed poised to rival Japan as the world’s largest liquefied natural gas importer. Domestic production couldn’t keep up with demand and investors poured billions into LNG import facilities.
But then the shale revolution turned the U.S. natural gas market upside down. Seemingly overnight, the U.S. became the world’s largest natural gas producer. Instead of a major LNG importer, we are soon going to challenge for the title of largest exporter. It’s an opportunity we should embrace.
The second LNG export terminal in the lower 48 states, the Cove Point facility in Southern Maryland, recently opened commercial operations. Several additional LNG export facilities are under construction. In total, the U.S. Energy Information Administration expects 9.6 billion cubic feet per day of LNG export capacity online by the end of 2019. And more export capacity is proposed.
While U.S. LNG exports are only in their initial stages, the once-theoretical benefits are becoming reality. Exports are pumping billions into local economies. For example, the Cove Point facility was a $4 billion investment that created 3,000 construction jobs and will generate an additional $40 million per year for the county that calls it home.
Furthermore, exports are pulling their supply from additional natural gas production, not existing production. That means domestic natural gas prices remain comparatively low and new production is pouring additional investment and jobs into gas-producing states. According to analysis by ICF International, LNG exports could contribute up to 452,000 jobs nationwide by 2040 and add up to $73.6 billion annually to the nation’s GDP. Alone, these figures make a strong case for exports but the benefits reach far beyond our shores.
U.S. exports are also helping improve the energy security of our allies by offering a new source of supply. A more robust global LNG marketplace will help defang traditional gas exporters that have used natural gas as a geopolitical weapon. Poland and Lithuania, for example, have already imported U.S. natural gas and have used their new diversity of supply as leverage in contract negotiations with Russia.
Along with security benefits, U.S. LNG exports are also helping achieve environmental progress. Just as greater use of natural gas for electricity generation has helped slash emissions of traditional pollutants and carbon dioxide here at home, a more robust global LNG marketplace is allowing other nations to embrace natural gas and reduce emissions as well.
China and India are both leaning on LNG imports to fuel their growing economies. In Beijing, greater use of natural gas lowered fine particulate matter by roughly 50 percent over the last three months of 2017. China has become the world’s second largest LNG importer behind Japan, and India has ambitious plans of its own to increase its LNG import capacity. India wants to more than double the share of natural gas in its electricity mix by 2022 and is eyeing the addition of 11 new LNG import terminals.
LNG exports are proving a multidimensional success story. We should be promoting this success story to the world. Increasing domestic LNG exports will create jobs, help our economy grow, and make our nation more energy secure. The Department of Energy is right to move forward with additional export facilities.
Further, multiple studies, including analysis from DOE, have shown that exports won’t significantly affect U.S. natural gas prices. So the market should be left to determine how much, or how little, U.S. natural gas is exported. The global LNG marketplace is highly competitive. Should U.S. natural gas prices begin to rise, importers will buy from cheaper competitors, putting a ceiling on our exports.
U.S. natural gas production has jumped more than 40 percent in a decade, and U.S. natural gas reserves have grown to a 52-year high. We have the capacity and know-how to meet domestic natural gas demand while also benefiting from exports. LNG exports are driving economic growth at home, strengthening the energy security of our allies and helping achieve global environmental progress. It’s a success story we would be wise to support.
