Washington, DC: American Exploration & Production Council CEO Anne Bradbury issued the following statement regarding the Biden administration’s announcement to freeze new US LNG exports for up to the next 15 months:
“The Biden administration’s decision to halt American LNG export approvals is nonsensical. It simultaneously harms the U.S. economy, threatens the security of our allies around the world, and stymies global emissions reduction goals.
“As we near the second anniversary of Russia’s invasion of Ukraine, our allies around the world are relying on the benefits of clean, reliable, and affordable American LNG and are keenly aware of the risks of relying on our adversaries for energy.
“Rather than unilaterally halting new US LNG export approvals, the administration should work with industry to grow the global use of US LNG to make America stronger and the world safer.”
BACKGROUND:
- The World Needs More Energy and More Natural Gas: Driven by population growth and increases in global standards of living, the Energy Information Agency (“EIA”) projects global primary energy consumption to increase through 2050 by somewhere between 16% and 57%. Coinciding with global demand growth, demand for oil and natural gas will increase through 2050 across EIA projections. According to the International Energy Agency (“IEA”), global demand for natural gas will increase by 41% by 2050. Also, according to IEA, an additional 240 bcm per year of LNG export capacity is needed by 2050 above what currently exists or is under construction.[1]
- The United States is currently the largest producer and exporter of natural gas. After the U.S., the next largest producers of natural gas are Russia and Iran. Reducing the amount of U.S. LNG in the world will not reduce emissions, but it will empower Russia and Iran.
- U.S. LNG plays a critical role in geopolitical stability: In March 2022, the Biden Administration recognized the importance of U.S. LNG exports as a geopolitical tool to help our European allies reduce their reliance on Russian energy and strengthen European energy security.[2] In November of 2022, the United States and the European Union renewed their energy security commitments, with Europe indicating that it would seek up to 147 bcm of LNG imports in 2023.[3]
- American Natural Gas Abundance: The U.S. has the sufficient natural gas supply to keep domestic prices low while meeting growing global demand: As the world’s largest natural gas producer, the U.S. is well positioned to meet the dual challenge of supplying the world with affordable, clean, and reliable energy- all while reducing global emissions. According to EIA, the United States, exported more LNG than any other country in the first half of 2023 and is poised to continue as the key swing supplier of spot LNG for the foreseeable future.[4] Despite debunked/misleading claims of fossil fuel opponents that LNG exports will hurt American consumers, the United States, as a result of the shale gas revolution, has more than enough natural gas to meet domestic demand and serve as the international LNG swing supplier. Plentiful U.S. supply has kept natural gas cheap for American consumers. For example, in 2023, when the U.S. came the world leader in U.S. LNG exports, domestic natural gas prices averaged $2.57, well below the 2010-2015 average of $3.64 before the U.S. started exporting LNG.[5] Multiple studies have also shown that projected future increases in exports will not meaningfully increase prices.[6]
- Restricting U.S. LNG Exports Hampers Global Emissions Reductions: Global coal use is at an all-time high and increasing as millions of people in the developing world seek access to affordable, reliable sources of energy. Coal is the single largest source of emission in the world, accounting for nearly half of all global emissions. Natural gas emits half as much as coal when combusted. Because of coal to gas switching in the US, America leads the world in emissions reductions. Approximately 60% of all emission reductions have been from coal to gas switching—more than from deployment of all renewables combined. Less LNG in the global marketplace means countries will turn to other, likely higher emitting sources of energy like coal, and world emissions will continue to grow, especially in places like Asia.
[1] “Outlook for Gas Markets and Investment: A Report for the G7,” International Energy Agency (May 2023).
[2] “FACT SHEET: United States and European Commission Announce Task Force to Reduce Europe’s Dependence on Russian Fossil Fuels,” The White House (March 25, 2022).
[3] “Joint Readout of U.S.-EU Task Force Meeting on Energy Security,” The White House (November 7, 2022).
[4] “Global LNG Supplies and Natural Gas Stocks Will Likely Meet Demand This Winter 2023-24, But Risks Remain,” U.S. Energy Information Administration (November 6, 2023).
[5] “U.S. Henry Hub Natural Gas Prices in 2023 Were Lowest Since mid-2020,” U.S. Energy Information Administration (January 4, 2024).
[6] “Analysis of U.S. Natural Gas Market Price Impacts from Increasing Natural Gas Supply Accessibility for Different Natural Gas Demand Outlooks,” American Council on Capital Formation (May 2023).
About the American Exploration & Production Council
AXPC is a national trade association representing 34 leading independent oil and natural gas exploration and production companies in the United States. AXPC companies are among leaders across the world in the cleanest and safest onshore production of oil and natural gas, while supporting millions of Americans in good-paying jobs and investing a wealth of resources in our communities.