UPDATE 1-U.S. should allow LNG exports to go forward -senators

Wed Nov 28, 2012 5:30pm EST

* Murkowski says LNG exports could help balance of trade

* Export debate to be front and center in 2013, Murkowski says

* Incoming energy committee head has expressed concerns

By Ayesha Rascoe

WASHINGTON, Nov 28 (Reuters) - The U.S. government should allow companies to export surplus natural gas, the top Republican on the Senate energy committee said on Wednesday in a high-profile endorsement of the controversial issue.

Senator Lisa Murkowski of Alaska said LNG exports would allow U.S. producers to take advantage of higher prices for gas in places like Japan while spurring more domestic production.

"I just don't think blocking our exports of LNG makes any sense given out country's economic situation," Murkowski said at a policy briefing on natural gas hosted by The Hill, a newspaper that covers Congress.

With its gas unable to easily reach the rest of the country, Alaska is home to the nation's only operating LNG plant, which was first authorized to send LNG to Japan in 1967 but may close down. Future plants will require new export authorization.

"Energy exports offer an opportunity to really help tip the balance of trade in our favor for the first time in decades," Murkowski said.

Senator Mary Landrieu, a Democrat from energy-rich Louisiana, also expressed support for exports.

The comments are in stark contrast to the views of incoming energy committee chairman Ron Wyden, an Oregon Democrat, who has raised concerns that the United States may trade away a competitive advantage and harm manufacturers if it allows more gas exports.

Supporters say that new technology that has allowed producers to unlock decades' worth of natural gas from shale reserves offers a chance to export gas abroad, boosting the economy through more drilling. Opponents worry that allowing more gas exports will raise domestic prices.

Until now, many lawmakers in Washington have avoided taking a vocal stand on the complex issue, which tends to pit manufacturers against energy producers.

But the issue may come to a head next year, when the Obama administration is expected to begin making decisions on whether to allow additional exports after approving one LNG export terminal, Cheniere's Sabine Pass in Louisiana.

Kevin Book, an analyst with Clearview Energy Partners, said it's clear that LNG exports are going to have a much more prominent role in energy policy discussions in Congress in 2013.

"We expect LNG exports to be the leading edge of a broader debate about energy exports in general," Book said. "The debate about exports is part of an even broader question of how the U.S. will recalibrate its scarcity-driven energy policy to address an age of adequacy."

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

The department has said it will not decide on other pending export applications until the release of a government-commissioned report on the economic effects of gas exports due out by the end of the year.

When asked whether she would support a policy that allows gas exports from Alaska, but not from the rest of the country, Murkowski said she had not discussed this with Wyden.

Murkowski said she wants to make sure Alaskan gas can be exported but that "the better policy" would be to allow exports throughout the United States.

Louisiana's Landrieu said it may be necessary for Congress to make a statement that LNG shipments are in the "best long-term interest of our country." Congress could then direct the Energy Department to determine how much gas should be allowed to be exported and under what circumstances.

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