19
result in economic benefits to the Louisiana coast region by stimulating new production of
natural gas and utilizing existing processing services in the area.
56
B.
Adequacy of Domestic Supply
Delfin argues that, in light of the “dramatic” recent successes of domestic natural gas
exploration and production, sufficient reserves exist to satisfy both domestic demand for LNG
and Delfin’s proposed exports.
57
Relying on the 2012 NERA Study, Delfin argues that all
available data continues to confirm (and, indeed, strengthen) DOE/FE’s conclusion in recent
LNG export orders that adequate natural gas supplies exist to meet the demands for LNG.
According to Delfin, DOE/FE has recognized that proved reserves of domestic natural gas have
been increasing dramatically—with EIA’s estimates of proved reserves increasing from 177,427
Bcf in 2000 to 304,625 Bcf in 2010 (a 72 percent increase), compared to an increased production
of 16 percent over that period.
58
Delfin also asserts that EIA’s estimates—as well as the latest
study by the Potential Gas Committee of the Colorado School of Mines—show that the United
States’ technically recoverable reserves (TRR) have “skyrocketed” over the past decade.
59
According to Delfin, recent estimates of TRR equate to over 90 years of supply at the 2012
domestic consumption level of 25.63 Tcf.
60
Next, Delfin asserts that increased demand for natural gas to be exported as LNG will
stimulate additional production of domestic natural gas supplies. Delfin cites a study by ICF
International concluding that 79 to 88 percent of LNG export volumes will be offset by
increasing domestic natural gas production.
61
Delfin further contends that this natural gas
56
See id. at 17.
57
See id.
58
See id. at 18.
59
Id. at 19.
60
See Delfin App. at 19 (citations omitted).
61
See id. at 20 (citing ICF Int’l, U.S. LNG Exports: Impacts on Energy Markets and the Economy (May 15, 2013))
[hereinafter ICF International study].
20
production will have the added benefit of increasing the production of natural gas liquids
(NGLs), which it asserts will contribute more broadly to the public benefit of LNG exports.
For these reasons, Delfin states that all available evidence and projections show that
current natural gas reserves will support the expected demand for LNG, including the proposed
exports, through at least 2040. Accordingly, Delfin argues there is no “domestic need” for its
proposed exports, and thus its proposed exports are consistent with the public interest.
62
C.
Impact on Domestic Natural Gas Prices
Citing DOE/FE precedent, Delfin states that DOE/FE takes very seriously the economic
impacts of higher natural gas prices and any potential increase in natural gas price volatility that
could result from LNG exports. Delfin points to the 2012 LNG Export Study—and, specifically,
the conclusions in the NERA Study—in asserting that the impact of LNG exports on domestic
natural gas prices will be relatively minor.
63
Delfin contends that other economic studies that
considered the likely price effects of LNG exports have reached conclusions similar to that
reached by NERA, including the ICF International study cited above.
64
Delfin emphasizes that, when assessing the impact of any projected cost increases from
LNG exports, historically low natural gas prices constitute the current base line. Delfin also
points out that natural gas consumers have enjoyed tremendous savings as a result of the success
of the shale gas revolution. For example, using data from the 2010 Manufacturing Energy
Consumption Survey, EIA announced that the average annual natural gas price paid by
manufacturers decreased by 36 percent between 2006 and 2010 (from $7.59 to $4.83 million).
65
Delfin asserts that natural gas prices have fallen further since that survey was conducted.
62
See id. at 20.
63
See id. at 21 (citing NERA Study, Exec. Summary, at 2).
64
See id. at 21-22.
65
See id. at 22-23 (citing EIA, “Cost of Natural Gas Used in Manufacturing Sector Has Fallen” (Sept. 13, 2013)).
21
Delfin next argues that incremental demand of natural gas from new uses, such as LNG
exports, is needed to spur on the natural gas production boom that has benefitted consumers.
According to Delfin, even if LNG exports increase natural gas prices marginally, U.S. natural
gas prices will remain attractively priced. Delfin contends that domestic manufacturers and other
consumers will continue to enjoy the competitive advantage of inexpensive domestic natural gas
supplies, as overseas consumers of U.S.-sourced LNG will bear the significant added costs
associated with liquefaction, tanker transportation, and regasification. Finally, Delfin asserts that
new baseload demand associated with LNG export projects should reduce, not increase, price
volatility.
66
D.
Domestic Benefits of LNG Exports
Citing the NERA Study, Delfin maintains that the United States will experience net
economic benefits from LNG exports regardless of the level of exports.
67
Delfin asserts that this
conclusion has been confirmed by other studies, including those undertaken by the Brookings
Institute and ICF International. In fact, Delfin argues, the ICF International study found even
stronger support for LNG exports than the NERA Study, projecting an increase in gross domestic
product (GDP) and job growth as LNG exports increase.
68
Delfin next argues that the increased jobs associated with LNG exports are an important
part of the public interest consideration. Delfin points to the White House’s 2010 National
Export Initiative
69
and a 2010 report by the U.S. Department of Commerce’s International Trade
Administration to demonstrate the “fundamental role” that exports play (and will continue to
66
See id.
67
See Delfin App. at 24.
68
See id. (citing ICF International study at 2).
69
National Export Initiative, 75 Fed. Reg. 12,433 (Mar. 16, 2010).
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