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US LNG Exports: Impacts on Energy Markets and the Economy


Author: ICF International

Date:  May 2013

Page Count: 156

From the document:

In order to inform the current policy debate surrounding the granting of licenses for U.S. exports of liquefied natural gas (LNG), the American Petroleum Institute (API) commissioned ICF International to undertake a study of the energy market and economic impacts of LNG exports. The main conclusions of this study are: The net effects on U.S. employment from LNG exports are projected to be positive with average net job growth of 73,100 to 452,300 between 2016 and 2035, including all economic multiplier effects. This wide estimated range reflects the fact that the net job impacts will depend, in part, on how much "slack" there is in the economy and how much the demand for LNG-export-related labor will "crowd out" other labor demands. Manufacturing job gains average between 7,800 and 76,800 net jobs between 2016 and 2035, including 1,700-11,400 net job gains in the specific manufacturing sectors that include refining, petrochemicals, and chemicals. The net effect on annual U.S. GDP of LNG exports is expected to be positive at about $15.6 to $73.6 billion annually between 2016 and 2035, depending on LNG export case and GDP multiplier effect. This includes the impacts of additional hydrocarbon liquids that would be produced along with the natural gas, greater petrochemical (olefins) production using more abundant natural gas liquids feedstock, and all economic multiplier effects. LNG exports are projected to have moderate impacts on domestic U.S. natural gas prices of about $0.32 to $1.02 per million British Thermal Units (MMBtu) on average between 2016 and 2035. This results in 2016-2035 average Henry Hub natural gas price estimates of between $5.03 and $5.73/MMBtu, depending on LNG export case.

An international comparison of project cost and transportation cost differentials reveals that U.S. LNG exports (if they were not limited by government regulations) would likely fall within the range of 4 to 16 Bcfd through 2035. This indicates that U.S. LNG exports would have 12% to 28% market share of new LNG contract volumes in 2025 and market share of 8% to 25% in 2035. LNG exports are expected to lead to a rebalancing of U.S. natural gas markets in the form of domestic production increases (79%-88%), a reduction in domestic consumption (21% to 27%), and changes in pipeline trade with Canada and Mexico (7%-8%). The sum of the three supply sources exceed actual LNG export volumes by roughly 15% to account for fuel used during processing, transport, and liquefaction. Incremental U.S. dry gas production comes from many sources with varying levels of natural gas liquids content. By 2035, ICF estimates incremental liquids volumes increase between 138,000 barrels per day (bpd) and 555,000 bpd, attributable to LNG exports in the 4 to 16 Bcfd range.