US must assess fracking when weighing natgas exports-Sierra Club

Thu Nov 29, 2012 2:31pm EST

* US DOE can model impact of exports on production-report

* Sierra Club has challenged review of LNG projects

* Green groups say more exports mean more fracking

By Ayesha Rascoe

WASHINGTON, Nov 29 (Reuters) - The Obama administration has the tools to carry out a more extensive environmental review of the effects of expanding U.S. natural gas exports, but has so far refused to do so, the Sierra Club said in report released on Thursday.

The environmental group is pushing the administration to assess the impact of drilling as the Energy Department weighs whether to allow more liquefied natural gas exports - a debate that so far has centered mostly on economic arguments.

The department "has refused to prepare an environmental impact statement to help it wrestle with the weighty export decisions," the group said in a report laying out its case for a broader environmental review.

"Worse, it has refused even to acknowledge that it has the tools to do so, even though its own modeling system could go far to help answer the vital questions now before it."

The issue of potential LNG exports has become an increasingly hot-button topic.

Some lawmakers contend that exports would inevitably increase prices for domestic users, while others argue exports are necessary to support strong domestic production.

Seeking to ensure they will not be left out of the debate, groups like the Sierra Club have ratcheted up their attacks on proposed export projects, which they say will lead to expanded use of a controversial drilling practice, hydraulic fracturing.

The Obama administration rejected the Sierra Club's earlier request to intervene in the case of Cheniere's Sabine Pass terminal in Louisiana, the first and so far only LNG export facility to be approved by the current administration.

It argued that the Federal Energy Regulatory Commission's environmental assessment, which focused on the effects of building the terminal, was sufficient.

The department said it cannot reasonably foresee how much drilling would increase, and where, due to permitting of an individual project. But the Sierra Club contends the department's National Energy Modeling System (NEMS) can model the effects of increased exports on gas production.

The same model was used in the report released by the department's Energy Information Administration in January evaluating the potential price impacts of allowing more companies to sell gas abroad.

MORE EXPORTS = MORE FRACKING?

Advances in horizontal drilling and hydraulic fracturing have allowed drillers to tap vast shale gas resources, placing the United States in a position to become a major gas exporter after years of concerns the it would need to rely on imports.

Critics of shale gas production say fracking, which involves injecting a cocktail of water, sand and chemicals underground to release fuel, threatens the safety of drinking water, and that the rise in shale drilling pollutes the air.

Drillers dispute the notion that fracking is unsafe, saying the practice has been carried out for decades without significantly harming the environment.

Gas exports to all but a handful of countries need approval from the Energy Department. After approving Sabine Pass, the department said it would postpone decisions on additional export applications pending the release of a economic study, expected within the next few weeks.

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