* Industry divided on the amount of LNG exports allowed
* Chairman Wyden says time for a fresh look at policy
* Environmentalists want more regulation of natgas output
By Ayesha Rascoe
WASHINGTON, Feb 12 Booming shale gas production
is reshaping the energy outlook in the United States and
Washington must re-examine how it regulates natural gas
development and exports, lawmakers said on Tuesday.
On a day U.S. President Barack Obama is set to lay out his
agenda in the annual State of the Union address, the Senate
Energy Committee examined the implications of the shale gas
Technological breakthroughs in the drilling technique known
as hydraulic fracturing, or fracking, have unlocked massive
reserves of U.S. shale natural gas in recent years.
The dramatic change in the energy landscape has sparked
debates over the environmental impact of rapidly expanding shale
gas development and how much gas should be shipped abroad.
In his first hearing as chairman of the Senate energy
committee, Democratic Senator Ron Wyden of Oregon lauded the
growth in natural gas production, but stressed the need for
adequate regulation and called for a thorough review of gas
"It is clearly time for a fresh look at our current policies
and to start thinking about how to update those policies to
reflect a very new reality," Wyden said.
Wyden, a prominent Congressional skeptic of unconstrained
exports, repeated that he hopes to find a so called policy
"sweet spot" where gas producers, manufacturers and the
environment can all benefit.
The shale gas bonanza has opened the door to substantial
liquefied natural gas (LNG) exports. More than a dozen companies
are waiting for approval to send gas abroad.
The issue has divided lawmakers and manufacturers, however,
with some raising concerns that copious exports will hurt
certain energy intensive domestic industries that have used low
gas prices to gain a competitive advantage.
Dow, one of the most vocal critics of unfettered exports,
warned against trusting the market to determine the amount of
U.S. gas shipped to foreign countries.
"Why take the risk and let speculators set gas prices like
they did 10 years ago?" Andrew Liveris, chief executive of Dow
Chemical Co, told lawmakers, referring to price spikes a
decade ago that pummeled manufacturers and consumers. "We all
remember the Enrons and what the efficient market did for us."
Dow, which left the National Association of Manufacturers
over the group's opposition to any bans on gas exports, called
for additional studies and a cautious approach to exports.
Liveris said at this point about 5 billion to 8 billion
cubic feet a day of exports would be in national interest.
Still, several Republican lawmakers questioned whether the
government should be setting limits on gas exports and Jack
Gerard, head of the influential oil and gas lobbying group
American Petroleum Institute, echoed these concerns.
"The worst thing we can do is have the government get
involved and try to set a price," Gerard told lawmakers.
The shale gas bonanza has also spurred a backlash from
environmentalists and some communities near drilling sites, who
complain that fracking is a threat to public health.
Fracking, is a drilling technique that involves the
injection of water, sand and chemicals underground at high
pressure to extract fuel.
Frances Beinecke, head of the Natural Resources Defense
Council, said the government should repeal exemptions for the
oil and gas industry in various environmental laws. Currently,
fracking is mostly exempt from federal regulation.
"Now shale gas production is expanding with supersonic speed
without having in place even the basic environmental and public
health requirements that apply to other industries," Beinecke
said in prepared testimony.
The NRDC opposes expanded fracking until "effective
safeguards" are imposed. Oil and gas drillers dispute the notion
that fracking poses a threat to the environment and argue that
states are best placed to regulate drilling.