US decision on LNG exports will not be "outsourced" -Energy Dept

Wed Nov 14, 2012 6:13pm EST

* LNG report only one factor in decision - official

* Government will consider environment, trade impacts

* Industry group complains of "de facto moratorium"

By Ayesha Rascoe

WASHINGTON, Nov 14 (Reuters) - The Obama administration will not base its decision on whether to expand natural gas exports solely on a long-awaited external study on the economic effects of sending gas abroad, an Energy Department official said Wednesday.

Chris Smith, Deputy Assistant Secretary for Oil and Natural Gas at the Energy Department, said the government-commissioned report, expected by the end of the year, will be only one factor the department will consider as it weighs allowing additional gas exports.

The department has declined to identify the contractor conducting its study, but Smith said the decision would not rest solely on that document.

"This is not a policy decision that we've outsourced," Smith said at the North America Gas Summit.

Smith said the department's decision on exports would also weigh environmental, trade and possible job creation implications.

Rising U.S. shale gas production has sparked debate on whether the United States should authorize the sale of surplus gas to foreign countries. Critics say exports could raise domestic prices, hurting U.S. consumers and manufacturers.

Industry groups say current gas prices are too low to be sustained, and exports are needed to support robust gas development.

Liquefied natural gas exports to all but a handful of countries with free trade agreements require approval from the Energy Department.

After approving exports from Cheniere Energy Inc's Sabine Pass terminal, the department said it would hold off on making any decisions on further applications until a comprehensive study of the impacts of exports was completed.

The natural gas industry has been awaiting the findings of this study, delayed twice in the past year.

Smith said the department was committed to releasing the report by the end of 2012 and that the study would then be opened up to public comment.

The length of that comment period and the path forward for the department's review process would be mapped out before the end of the year, he said.

With about a dozen project applications on hold for most of the year, the LNG industry has launched an initiative to promote the benefits of gas exports.

Speaking at the gas summit, Bill Cooper, the president of the Center for Liquefied Natural Gas, called the delays from the department a "de facto moratorium."

Smith defended the department's process, however.

"This is a critical energy policy decision for the United States," Smith said. "When it comes to a policy decision that important, we're going to take the time to make sure we're doing it in way that can be defended and withstand scrutiny."

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