LNG Exports Reveal Industry’s True Motive: Profits
A new report by Food & Water Watch reveals the many flaws in the oil and gas industry’s claims about fracking and U.S. energy security. But nothing is more revealing about the industry’s deceptive energy security rhetoric than its push to export liquefied natural gas overseas. Alongside the industry’s patriotic rhetoric, this push to export LNG is the height of hypocrisy.
As drilling and fracking for shale gas boomed, natural gas was overproduced. By April 2012 the “wellhead price” for natural gas had fallen from over $10 per thousand cubic feet in July 2008 to under $2. In 2010, ExxonMobil bought into the shale gas boom, becoming the largest producer of natural gas in the country with its purchase of XTO Energy, but by June 2012 CEO Rex Tillerson stated that because of low natural gas prices, “We are all losing our shirts today…. We’re making no money [on natural gas]. It’s all in the red.” Natural gas prices were far below those needed for the industry to break even, given the cost of drilling and fracking new shale gas wells.
In exporting natural gas, the industry sees a way out of this bind. As opposed to oil, the supply chain for natural gas is not yet globalized, and natural gas prices in Asia and Europe have remained high. This gives the oil and gas industry an opportunity not just to profit from exporting natural gas, but to avoid falling off of its drilling and fracking “treadmill” – that is, because shale gas production declines so steeply, and because the highest producing wells are the first to get drilled and fracked, the industry must keep increasing the rate of drilling and fracking just to maintain a constant level of shale gas production.
So, to stay on this treadmill, and to keep the shale gas bubble from bursting, the oil and gas industry is beating down the door of the Department of Energy, urging the agency to authorize a flood of liquefied natural gas exports. The 19 LNG export proposals, and counting, could amount to sending the equivalent of over 42 percent of current annual natural gas consumption out of the country each year. That is a lot of natural gas, and a lot of it would be shale gas from fracking.
Representative Ed Markey has introduced two bills in the U.S. House that could foil the industry’s plan. The first bill, H.R. 4024, would keep the Federal Energy Regulatory Commission from approving any new LNG export facilities until at least 2025. The second bill, H.R. 4025, would ensure that natural gas extracted from U.S. public lands is not exported, and further that no new pipelines on public lands would transport natural gas for export.
These two incisive bills are important to the larger fight to rein in an industry that, if allowed to write its own policies, will simply extract as much fossil fuel as possible, as fast as possible, for maximum profit, regardless of the long-term costs to local communities or the health of the planet. Without exporting natural gas to create more demand and get prices high enough to justify drilling and fracking, the oil and gas industry may decide it makes more financial sense to leave the natural gas deep underground. That is precisely where experts warn us fossil fuels need to stay if we are to avoid catastrophic global warming.
Take action today to stop the export of fracked gas.