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WASHINGTON, Mar 26 2013 (IPS) - Environmentalists and others here are reacting with concern to a surprise announcement on Monday of a major deal that would see U.S. natural gas exported to the United Kingdom, marking the first time that such sales have been permitted.
The agreement, between the UK energy company Centrica and the U.S.-based Cheniere Energy Partners, would see more than 1.7 million metric tonnes of liquefied natural gas (LNG) per year shipped to the United Kingdom, starting in 2018. The U.K.’s gas supply has been extremely tight this winter, and the new sales would satisfy requirements for around 1.8 million British homes.
The deal would mark the first time that the U.S. government has allowed any of the country’s booming natural gas production to be sold to state that does not have a free trade agreement with Washington. While 19 other permits have been allowed to countries with such agreements, only one, South Korea, has engaged in any significant U.S. gas imports.
Critics warn that the industry in the U.S. remains too unregulated and that exports will cause a spike in domestic gas prices. In recent months, the debate over exports has become highly divisive.
“We cannot guarantee that drilling occurs safely in the United States, because there is neither the science to justify nor do states enforce what regulations do exist,” Alan Septoff, the Washington-based director of communications for Earthworks, an advocacy group, told IPS. “Increasing demand via exports for a dirty, dangerous process is not something we think is a good idea.”
The Centrica deal comes after the U.S. Department of Energy published a commissioned study that found, among other things, that the negative economic impact of LNG exports on the United States would be negligible. Yet critics say the study failed to look at either environmental or health impacts, while downplaying the effect on poor and middle-class communities.
“We have problems with this study and have called on the Department of Energy to conduct another study that incorporates environmental and health assessments,” Jenny Chang, a campaigner with the Sierra Club, an advocacy group, told IPS.
She notes that some 200,000 people wrote the Department of Energy to criticise the report (the Sierra Club has published an exhaustive study here).
“But now that the department has finished its part of the bargain, there’s nothing stopping them from issuing more permits,” she continues, “even though doing so may not be in the public’s interest.”
Centrica is cautioning that the contract still hinges on Cheniere receiving “necessary regulatory approvals”. But according to a statement put out by the company on Monday, British Prime Minister David Cameron is already extending his “warm welcome” to the new deal, stating, “Future gas supplies from the U.S. will help diversify our energy mix and provide British consumers with a new long-term, secure and affordable source of fuel.”
Indeed, although the Centrica deal would be the largest agreement of its kind so far, it is also almost certainly only the beginning of a massive exports push. The Department of Energy reportedly has 21 pending LNG-export permit requests, constituting around 45 percent of the country’s gas production.
Of course, all of this is taking place in the context of a massively altered energy landscape in the United States, which is thought to have more extensive gas resources than any other country. Over the past five years, powered by new extraction techniques known as hydraulic fracturing (or “fracking”), U.S. engineers have been able to extricate previously unreachable natural gas, much of it trapped in shale and other geologic formations.
From 2007 to 2012, gas production in the U.S. increased by 25 percent, with dramatic domestic effects. The cost of energy in the country has fallen, with some experts suggesting this helped stabilise the country’s economy following the 2008 international economic crisis.
More controversially, natural gas – which burns cleaner than coal and other petroleum products – has been touted as a “greener” energy solution, helping in part to bring U.S. greenhouse gas emissions down to 1990s-era levels.
Yet critics point to mounting evidence of environmental and public health issues cropping up in local communities near the thousands of wells that have gone into production over the past half-decade. In addition, the methane that tends to seep out of these wells during production is particularly potent in causing climate change.
As the United States has thus far refused to allow any major sales of its new gas reserves, however, the international ramifications of this sea change are only now starting to be understood.
Opponents of the push for exports highlight two main concerns: economics and environmental impact. First, if significant U.S. gas reserves were to enter the international market, the domestic price would almost certainly increase in response.
Second, the hydraulic fracturing industry here remains unusually unregulated, largely because politicians have yet to agree on how to deal with what remains a new – but extremely lucrative – technology. Critics say that politicians still don’t have a handle on either the impact of hydraulic fracturing on groundwater or on the extent that the technique is resulting in increased methane emissions.
In an open letter sent in mid-March to President Barack Obama, Earthworks and the Sierra Club joined with other groups to call for an “open and informed national conversation to test whether [gas exports] are actually in the public interest.” They also stated that, “Deciding whether and how to move forward with LNG exports is among the most pressing environmental and energy policy decisions facing the nation.”
In recent days, both regulatory and political processes on this issue have progressed.
On Monday, the Environmental Protection Agency announced the formation of a new advisory council, made up of 31 external experts, that will now formally look into the effects of fracking on drinking water. And on Friday, Senator Ron Wyden announced he was starting work on a new legislative bill that would aim to find common ground on natural gas exports and hydraulic fracturing.
Finally, in a major but polarising new initiative, last week also saw the opening of a new institute that has brought together some environmental groups and some major oil producers, including Chevron and Shell.
The Center for Sustainable Shale Development says it has already established “15 initial performance standards designed to ensure safe and environmentally responsible development” of shale gas, which will be used to offer “independent, third-party certification” of gas wells, including ensuring the use of certain methane-trapping technologies and techniques.
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