U.S. Liquefied Natural Gas Exports:

America’s Opportunity and Advantage

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2002 to 2012 A Decade Makes a Difference

Then Now

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60-year supply and falling

Shale known but uneconomic to develop

Underground gas storage primarily traditional reservoir, operationally not very flexible

Pipeline capacity growing incrementally

Rising prices with several spikes

100+ years supply and growing

Flourishing production, vast shale resources now accessible

Storage boom with more flexible salt-cavern facilities and additional market area storage

16,000+ miles of interstate pipeline added since 2000

Plentiful supplies moderate prices and provide supply diversity

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Horizontal Drilling = Access + Lower Impact

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Hydraulic Fracturing = Access + Lower Impact

Industry is Committed to Doing it Right: Safety and Environmental Protections Are Keys to Success

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An Abundant Resource Endowment

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Energy Revolution = Abundant Resources

2003: U.S. Natural Gas = 1,100 Tcf

2011: U.S. Natural Gas = 1,900 – 3,500 Tcf

[U.S. Consumes About 24 Tcf Per Year]

U.S. Natural Gas Marketed Production

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40

45

50

55

60

65

70

75

Av

era

ge

Bcfd

Top Natural Gas Producing Countries, 2011

U.S.

Russian

Federati

on

Canad

aIra

nQata

rChina

Norway

Saudi A

rabia

Algeria

Indonesia0

10

20

30

40

50

60

70

Bcfd

Source: BP Statistical Review of World Energy June 2012

Top Gas Exporting Countries, 2011

Russia

Qatar

Norway

Canad

a

Algeria

Other A

frica

Indonesia

Netherla

nds

Australi

a

Trinidad

& Tobag

o02468

101214161820

Bcfd

Source: Deloitte, Exporting the American Renaissance; Global Impacts of LNG Exports from the united States, Jan. 2013

What is LNG?

• LNG is clean, odorless, noncorrosive, nontoxic liquid

• LNG is formed when natural gas is cooled to -260 F

• In liquid state, the volume shrinks by about 600 times, making it easy to store and transport via vessel

• LNG has been safely handled for decades• LNG is not stored under pressure and is not

flammable in its liquid state• LNG vessels have made more than 135,000

voyages without major accidents or safety problems

• LNG is highly regulated: FERC, DOT, USCG, DHS…

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What is the issue?Various applications to export LNG are pending before DOE

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What is the solution?DOE should confirm that LNG exports are in the public interest and expeditiously approve pending LNG export applications

In 1938, Congress passed the Natural Gas Act, which established a rebuttable presumption that all natural gas exports, including LNG, are in the public interest and shall be permitted. In the Energy Policy Act of 2005, Congress revisited the issue of LNG imports and exports – and confirmed that LNG exports are presumed to be in the public interest.

LNG exports to countries with which the United States has signed a Free Trade Agreement are automatically deemed to be in the public interest and applications “shall be granted without modification or delay.”

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Estimates of U.S. Total Natural Gas Resource Base vs Total U.S. LNG

Exports and Consumption

*20 years of 6 bcf/d of LNG exports phased in between 2015 and 2020 reaching 6 bcf/d in 2020 and thereafter.Source: EIA AEO 2013ER

567 Tcf

2,303 Tcf (EIA)

3,505 Tcf (ICF)

41 Tcf

Current U.S.Natural Gas

Resource BaseEstimates

LNG Exports (2015 to 2035)

Consumption (2015 to 2035)

The U.S. will only export 1 to 2% of the total resource base

Exports will:• Create and support thousands of jobs all over the

U.S. • Each additional Bcf of shale gas production

supports 32,000 total jobs throughout the economy (IHS Global Insight, 2010)

• Generate billions of dollars in government revenues

• Reduce our trade deficit • Enhance U.S. energy security and provide support

to strategic allies in Europe and Asia

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The Benefits of Exporting LNG

The Benefits of Exporting LNG

Exports will:• Increase domestic production of natural gas

An additional 2 Tcf of U.S. NG production predicted if exports are fully permitted (EIA, 2012).

• Increase domestic production of associated natural gas liquids (NGLs), putting downward pressure on prices of chemical manufacturing feedstocks including ethane.

Exports will not:• Stymie the manufacturing sector. This is not a zero

sum game. In fact, as NG is exported, more NG will be produced, enhancing the manufacturing revolution, not hindering it.

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Competition to Export is Steep

• Not every project currently proposed in the U.S. will be built. In fact, when the U.S. was looking to import LNG,

only 7 of the 25 projects proposed were built.• Siting and construction of an LNG export facility is

capital intensive and requires extensive financing.A single project can cost $5 - $45 billion

• The U.S. is competing with other countries, some of which have already started building export facilities.

• Timing is everything – the longer the U.S. waits, the less competitive our projects will be in the global market.

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Competition for Worldwide LNG Demand will be Steep

The proposed U.S. capacity is greater than projected global demand

* ICF estimate for year end 2011.**FTA Applications to DOE as of Nov. 29, 2012. ***Dec 2012 ICF estimate based on current worldwide project list.~Poten, BG Group, Credit Suisse, Facts Global

Oil & Gas OperatorsOil & Gas Service

CompaniesLaw FirmsEngineering FirmsConstruction

ContractorsElectrical ContractorsLand Service ProvidersPipeline Contractors

LaborersTruck DriversEquipment OperatorsWeldersSurveyorsLawyersAccountantsEngineersEnvironmental ScientistsArcheologistsBotanistsElectriciansMechanics

Direct EmployersDirect or Contracted Jobs

Economic Impacts: Jobs, Jobs, Jobs

NERA Study: Macroeconomic Impacts of LNG from the United States (December

2012)“Across all scenarios, the U.S. [is] projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increase[] as the level of LNG exports increase[s]. In particular, scenarios with unlimited exports always ha[ve] higher net economic benefits than corresponding cases with limited exports.” (page 1)

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NERA Study: Macroeconomic Impacts of LNG from the United States (December

2012)“Natural gas price changes attributable to LNG

exports remain in a relatively narrow range across the entire range of scenarios.” (page 2)

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NERA Study is Available for Public Comment (77 Federal Register 238,

December 11, 2012)• DOE Initial Comment Period: January 24,

2013• DOE Reply Comment Period: February 25,

2013• Comments are intended to help inform DOE

in its public interest determinations

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