To keep or to export? The Northwest's natural gas debate

Oct 16, 2012

Natural gas production in North America has increased so dramatically that no fewer than 17 companies have now applied to export the fuel overseas. Two gas export terminals are proposed in the Northwest -- one near Coos Bay, Oregon and the other at the Port of Astoria.

This week, federal energy regulators are getting an earful of public testimony.

As public meetings go, Monday’s visit by the Federal Energy Regulatory Commission to the Oregon Coast was more tense and raucous than usual.

Hisses and guffaws interrupted a presentation from energy developer Oregon LNG. Later, different factions in the audience unleashed boisterous applause when they heard something they agreed with, ignoring the moderator’s request for respectful quiet.

A parade of speakers alternately condemned or welcomed a multi-billion dollar proposal to build a natural gas import/export terminal at the mouth of the Columbia River. Some called it “immoral.” Others, a godsend of family wage jobs. The energy developer: appreciatively patted on the back or labeled a bamboozler.

Some of the same dynamics played out during a similar hearing earlier this month in Coos Bay. Another company has plans for a natural gas export terminal there. Both of these projects started years ago as gas import gateways. Then new drilling technologies and new discoveries in North America glutted our marketplace with cheap natural gas. It’s three or four times more expensive in Asia. So the Oregon-based exporters see a hot market for natural gas they plan to get mostly from Western Canada.  Here is a map of proposed North American natural gas export terminals (FERC)

The Northwest Construction Alliance likes the idea.

“This is a commodity that is going to go somewhere from Canada, which is enthusiastic about being in the export market," says Rick Metsger, who speaks for the consortium of labor unions. "So it’s an opportunity to create jobs here with nominal impacts on gas prices in the United States and certainly in the Northwest.”

Supporters and opponents of selling natural gas overseas wield dueling studies regarding the domestic price impact. Columbia Riverkeeper conservation director Dan Serres contends the volume of proposed exports will have a “dramatic impact” on regional energy prices.

“So what we’re looking at now is a jobs versus jobs argument. Increased energy prices will harm manufacturing, will harm Northwest jobs.”

Serres objects to giving away a competitive advantage.

“Low natural gas prices are a key feedstock (input) for a lot of industries in the Northwest. And low labor prices combined with low energy prices overseas would be very difficult competition for our industries.”

The chief executive of project developer Oregon LNG only concedes this export project could lead to a “minimal” increase in domestic natural gas prices. Around 35 cents per month for a typical household, says Peter Hansen. But he argues natural gas exports would lessen America’s trade deficit.

“The Obama Administration has pledged to double exports from the U.S. – over about a five year period I think," Hansen says. "This would be one way to do so. Here we have something that we as a country can export that other countries want and need. We should export it.”

The U.S. Department of Energy has put all pending applications for natural gas exports on hold while it awaits its own study on whether exports are in the public interest. That analysis was originally expected to be ready this summer. But now the target date is after the November election.

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