The last several months have offered no shortage of news and with the recent Colonial Pipeline cyberattack, and subsequent gasoline shortages along the East Coast, the importance of energy abundance in our country is apparent now more than ever. In February’s Natural Gas Monthly, the U.S. government’s official energy statistician, the Energy Information Administration (EIA), reported that U.S. natural gas exports for 2020 were the highest since it began tracking the annual numbers in 1973.
That matters a lot – for the economy, for the environment, and for geopolitics. And Louisiana has played a central role.
Five years ago, the U.S. had one small liquefied natural gas export (LNG) facility located in Alaska. Now the United States boasts six operating export terminals, including two in Louisiana. Within five years, the U.S. has gone from dabbling in LNG to becoming the world’s third largest exporter.
It’s noteworthy that this success has continued during a tumultuous year. In January 2020, right as the pandemic hit, the U.S. had just hit a new LNG export record of 8 billion cubic feet per day (Bcf/d). The global slowdown then took its toll, with exports rapidly declining from April to July. But since that time, there has been a consistent rally, and by December, the U.S. reached a new record high of almost 10 billion cubic feet per day.
Assuming policy restrictions do not get in the way, that growth is expected to continue. A few weeks ago, EIA projected that overall LNG exports will exceed natural gas pipeline exports in two quarters of 2021 and for all of 2022. Before this year, there had only been one month since 1998 where LNG exports exceeded pipeline exports and that was only by a minimal amount.
Louisiana already has two LNG export facilities – Sabine Pass and Cameron – that provide more than half of the U.S. exports. And the nation’s next LNG export site – the first to come online since 2018 – will soon be opened right here in Louisiana. Analysts expect that Venture Global’s Calcasieu Pass LNG export plant south of Lake Charles will become operational by year’s end, well ahead of the originally projected completion date in late 2022. This $4.5 billion investment will add significant new capacity and have a long term economic impact in the surrounding community. This is in addition to three other proposed sites that Venture Global is developing in the Bayou State.
Why does this all matter? First, the export terminals and the related natural gas infrastructure have supported thousands of jobs in Louisiana and the region – and will continue to do so in the future. That’s also why it is important for the Biden Administration to continue to allow leasing of federal lands and waters; an analysis from the Louisiana Mid-Continent Oil and Gas Association warned that a ban on development could cost the state $95 million in revenue and 48,000 jobs.
Second, worldwide use of natural gas has delivered environmental benefits. LNG has allowed many countries to replace coal with a reliable and cleaner-burning fuel. And there is room to grow. An analysis by the American Petroleum Institute, for example, found that if China, Germany, and India used U.S. LNG instead of coal for electricity generation, it would reduce greenhouse gas emissions by about 50%.
Third, LNG exports provides geopolitical benefits. U.S. exports to Europe have helped to diversify the continent’s fuel supply and reduced many countries’ dependence on Russian natural gas. There’s also demand from many emerging countries in Asia, and U.S. LNG would provide another important link to those countries. In fact, LNG exports to Asia increased 67% in the past year and now account for almost half of all US LNG exports.
Despite some uncertainty during the presidential campaign, the Biden Administration has sent early signals embracing the value of LNG. In written answers to the Senate Energy and Natural Resources Committee, the new Secretary of Energy, former Michigan Governor Jennifer Granholm explained, “I believe U.S. LNG exports can have an important role to play in reducing international consumption of fuels that have greater contribution to greenhouse gas emissions.” And in a subsequent interview, Granholm reinforced this comment, noting that the Department has an obligation under the law to permit LNG facilities.
In his confirmation hearing, the new Deputy Secretary of Energy David Turk noted, “We’re a democracy; we’re the leader of the free world. I think it’s a much better outcome for Japan or others to get their energy supplies from the U.S. than to get it from Russia or other countries.”
As the Biden Administration implements its agenda, let’s hope that this rhetoric is reflected in its actions. Besides providing a way to bridge party divides and attract Republican support, it’s the right thing to do. Growth of LNG exports during the last five years has resulted in economic, environmental, and national security benefits for the US. We should build on that success. It’s a win for our country and for the people of Louisiana.
Jeff Kupfer is a former acting deputy secretary of energy in the Bush administration and an adjunct professor of policy at Carnegie Mellon University’s Heinz College.
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