The US energy industry must vigorously oppose efforts to restrict exports of liquefied natural gas, ExxonMobil Chemical President Stephen Pryor said Wednesday at the IHS World Petrochemical Conference.
As the US Department of Energy considers applications to export LNG to non-free trade agreement nations, lobbying from some of Exxon's petrochemicals rivals as well as utilities for a block on such trade has ramped up.
With lots of supply and relatively low natural gas prices, US petchems companies in particular are enjoying a cost advantage over their overseas competitors if they use gas as a feedstock.
It is the first time in many years that they have enjoyed such a cost advantage, and they fear it will not last if significant LNG exports are approved.
"These proposals to block LNG investments ... represent a selective and harmful departure from the free market and free trade principles," Pryor said.
Calling the proposals an affront to US trading partners, Pryor said such protectionist measures would undermine efforts to build closer trading ties and hurt domestic markets as well.
"For example: Why should the EU block tariffs on American chemicals made from advantaged natural gas, if the US blocks exports of that gas in liquefied form?" Pryor said.
"Likewise, how can the US secure sanctions against China for restricting exports of rare-earth minerals, without inviting sanctions on the US for restricting exports of natural gas? And how can the US ask Japan, a close ally still suffering from energy shortages, to stop importing oil from Iran, if we prevent Japan from importing gas from the US?" he added.
ExxonMobil is one several oil and gas majors planning to export LNG as a way to relieve the glut of gas in the US caused by increased production from shale plays. US proven reserves of gas have increased nearly 50% since 2005, Pryor said.
Other companies seeking to export LNG include Shell, Total and BP. In all, the Department of Energy has received 25 export applications.
ExxonMobil wants to export LNG through the Golden Pass terminal, a joint venture located in Sabine Pass, Texas, whose shareholders include Qatar Petroleum, which is the majority partner, and ConocoPhillips.
Pryor pegged the cost of the project, which aims to retrofit an import terminal as an export hub by installing up to 2.6 Bcf/d of liquefaction capacity, at $10 billion.
Restricting LNG exports would go beyond affecting trade relationships, Pryor said. It could return the US to the days of price controls in the 1970s and 1980s, which caused drops in production and supply shortages, he said.
"Protectionist pleas are often wrapped in pious appeals to nationalism, but the real agenda is to unlevel the playing field and stifle the competition," Pryor said, adding: "As an industry we must vigorously oppose protectionist measures that limit access to markets around the world. We must also promote free-trade initiatives.
"Likewise, we must oppose protectionism in our home markets, such as calls to restrict natural gas exports," he said.
