UPDATE 1-U.S. natgas exports would raise energy prices but boost economy -EIA | Reuters

Oct 29 (Reuters) – Expanded U.S. liquefied natural gas exports would mean a modest price increase for domestic consumers, but those higher costs would be outweighed by a boost to the economy, the U.S. Energy Information Administration said on Wednesday.

Residential natural gas prices would likely be 5 percent higher than otherwise would be the case between 2015 and 2040 if U.S. LNG exports rose to 20 billion cubic feet per day, said the EIA report.

Growth of LNG exports would be supported mainly by more shale gas production, according to the report, which was commissioned by the U.S. Energy Department.

“Increased energy production spurs investment, which more than offsets the adverse impact of somewhat higher energy prices,” the EIA said.

The EIA report will likely bolster the case for allowing higher levels of U.S. natural gas to be exported.

More than two dozen applications have been filed with the Energy Department seeking permission to sell a total of nearly 40 BCF a day of LNG to countries without free trade agreements with the United States.

“We continue to believe that the regulatory outlook for U.S. LNG exports remains favorable, and expect substantial licensing activity at DOE … in the coming months,” Patrick Hughes, analyst for Height Securities, said of the report.

A group of industrial companies led by Dow Chemical has argued the government should not allow unlimited gas exports because it could lead to expensive energy prices at home.

In May, the Energy Department asked the EIA, its statistics arm, to conduct a preliminary study assessing the economic impacts of LNG exports between 12 BCF and 20 BCF a day.

The EIA’s findings will be used to support a larger, more detailed study of the macroeconomic ramifications of selling higher levels of U.S. gas abroad. That study will be conducted by a private firm selected by the Energy Department.

These reports update a two-part study completed in 2012 for the department, which found that exports up to 12 BCF a day would help the overall U.S. economy.

While EIA analyzed higher LNG export levels in its latest report, the agency said reaching 12 BCF a day of gas exports by 2020 “is extremely aggressive, indeed almost impossible.”

Only three projects have received final approval from the Energy Department to export natural gas to all locations, while six projects have conditional approvals.

Since LNG export facilities cost billions of dollars to construct, many analysts expect few of the projects seeking export permits to actually move ahead.

Bill Cooper, president of the Center for Liquefied Natural Gas, a trade group, said the report does not even consider all of the benefits of international trade that would come from selling the gas abroad.

Cooper said the report’s conclusions show that even “in the light most favorable to those that might oppose LNG exports, it’s still a positive outcome for exports.”

For full report: 1.usa.gov/1nQWmro (Reporting by Ayesha Rascoe; Editing by Ros Krasny, Steve Orlofsky and David Gregorio)

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