Fact Checking Natural Gas Misconceptions and Anti-LNG Noise

The Biden administration’s LNG permit freeze has sparked national and international debate over LNG export facilities and the LNG industry as a whole. President Biden’s election-year decision has been deemed purely political and detrimental to U.S. energy and economic security, garnering bipartisan, industry and even international opposition.

EID has previously debunked the many myths surrounding the industry boosted by activist groups, several of which rely on questionable data sources and are funded by anti-fossil fuel billionaires pushing their own agenda.

But in the aftermath of the export ban, activists are pushing the narrative even further and using it as a way to bolster the divestment campaign, proving that environmentalists won’t settle until the American energy industry writ large is destroyed. As the saying goes, “If you give a mouse a cookie…”

Of course, these many claims overlook the significant contributions of the American LNG industry to achieving climate goals, stimulating economic growth, and supporting U.S. allies. It’s worth diving deeper into what LNG is – and what it is not:

What is LNG?

Liquified natural gas (LNG) is obtained by cooling a natural gas to -260°F to transform it into its liquid state. One of the main advantages of this process is that LNG occupies only 1/600th the volume of gas facilitating its storage and transportation and making it a versatile fuel to help ensure global energy security.

Is LNG safe to humans and the environment?

LNG is an odorless, non-flammable, non-toxic liquid that does not contaminate soil or water. If spilled on land or in water, LNG vaporizes and leaves no residue.

The Department of Energy (DOE) has previously published studies highlighting the significant environmental advantages of U.S. LNG exports by analyzing their life cycle greenhouse gas impacts, demonstrating substantial environmental benefits. The process of obtaining and transporting LNG is also one of the safest in the energy industry.

What are the environmental and regulatory requirements for constructing an LNG facility?

Building a new LNG facility and beginning operations can take several years from start to finish. The construction of an LNG facility begins with a site selection and feasibility study, where a suitable location is chosen based on factors like proximity to natural gas sources, transportation infrastructure, and environmental sensitivity. Then, regulators conduct an Environmental Impact Assessment (EIA) to evaluate potential impacts on local ecosystems and environmental integrity. LNG companies must also seek out the necessary permits and regulatory approvals from both state and federal energy regulators, including the Department of Energy and the Federal Energy Regulatory Commission.

Simultaneously, companies consult the public and engage stakeholders to address concerns and gather input from local communities. With approvals in hand, detailed design and engineering work commences, outlining plans for construction, operation, and safety systems so that companies can secure financing for the project.

If all these steps are successful, a company can then begin construction at the site while carrying out rigorous safety and risk management planning at the same time. Crucially, LNG companies must comply with a variety of building codes and facility standards to ensure adherence to industry safety standards and environmental guidelines.

Following systems testing, a successful LNG project will receive final regulatory approvals, during which the facility is inspected and given the green light by regulators to begin operations. Each step of this process is critical to the successful and safe operations of an LNG facility.

Why is American LNG exported overseas?

In recent years, LNG has played a crucial role in supplying energy to our allies overseas, a capability that has become indispensable since Russia’s invasion of Ukraine.  Last December, more than 87% of U.S. LNG exports went to the European Union, United Kingdom, or Asian markets. Thanks to American LNG, our European allies are quickly building new LNG import facilities to reduce their reliance on Russian natural gas.

The dominant American LNG export industry is a reflection of the growth and health of domestic natural gas markets as our ability to produce and transport natural gas within the U.S. is linked to our competitiveness in the global energy markets. In other words, LNG export increases signify an increase in domestic regional production of natural gas. American LNG exports are only cost competitive overseas as long as we have robust and unconstrained domestic natural gas production.

Is LNG cleaner than coal? Does it increase lifecycle emissions?

Multiple studies, including from the Department of Energy, have shown that American LNG is one of the cleanest fuels in the world. When burned for energy production, natural gas produces about half the carbon dioxide emissions and releases significantly fewer air pollutants than coal, making it a cleaner-burning alternative in terms of carbon emissions. The DOE has even responded to claims that LNG exports increase lifecycle greenhouse gas emissions.

“Both the 2014 and 2019 analysis concluded that that the use of U.S. LNG exports for electricity generation in European and Asian markets will not increase GHG [greenhouse gas] emissions from a life cycle perspective, when compared to regional coal extraction and consumption for electricity generation.”

Displacing dirtier Russian or Chinese coal is one of the many benefits to using U.S. LNG overseas to help achieve emissions reductions while also ensuring American energy dominance, a fact that even the anti-natural-gas-leaning Rocky Mountain Institute has acknowledged.

Natural gas, including LNG, has also contributed to the decrease of methane emissions since 1990. Compared to coal, natural emits far less methane during production and transportation.

While methane gas releases can occur during the process of obtaining natural gas, American producers are taking great care to produce responsibly and deploy innovative technology to identify and eliminate leaks – and it’s working. Methane emissions from natural gas systems decreased year-over-year, continuing a long-term decline trend which EPA explains is “largely due to a decrease in emissions from distribution, transmission and storage, processing, and exploration.”

Where are LNG facilities located? Are export facilities safe to the nearby communities?

Most LNG facilities are built under rigorous construction and environmental regulations ensuring that their facilities and operations adhere to the highest standards of safety and operational excellence to safeguard both nearby communities and the environment.

Technological advancements and actions that most LNG producers and operators are taking include, electrifying operations, investing in methane mitigation and detection technologies, eliminating routine flaring, water and land conservation, and employing Carbon Capture and Storage (CCS) to offset emissions. All of these to ensure the upmost safety of their nearby communities and environment.

Most of the large-scale U.S. LNG export terminals are located around the ports on the Gulf Coast. The Gulf Coast has a geographical advantage for maritime activities, making it a strategic choice for LNG export facilities due to its access to deepwater ports that can accommodate large LNG tankers for international shipping. This location choice is driven by logistical, economic, and infrastructural considerations essential for the global LNG trade.

Are LNG exports affecting the local U.S. economies?

There is bipartisan agreement that exporting LNG can contribute to the diversification of energy supply globally, enhancing energy security and leading to more stable energy markets. Earlier this month, Democrat Representative Marc Veasey of Texas and nine Democratic colleagues from energy-producing states sent a letter to the Biden Administration urging continued support for U.S. LNG exports:

“We write to urge you and your administration to refocus on policies that support U.S. liquified natural gas (LNG) exports. Your continued prioritization of LNG exports ensures a future marked by affordable, accessible, and sustainable energy resources that foster global stability and propel the energy transition. We firmly believe that LNG exports hold significant benefits for the U.S. economy, energy security, and bolstering our alliances with U.S. partners across the world”.

Without adverse market manipulation from regulators, the LNG industry could support up to 452,000 additional American jobs and add up to $73 billion to the U.S economy by 2040. The industry can also create billions of dollars in revenues from federal, state and local governments due to the large-scale investments that the infrastructure requires and the taxes and royalties paid to local economies. Similarly, the construction and operation of these facilities provides both permanent and temporary employment opportunities, benefiting local communities and the broader U.S. economy.

Are increased LNG exports raising domestic energy prices?

The short answer is: no. In 2018, the Department of Energy commissioned a study to evaluate the impact of U.S. LNG exports on domestic natural gas markets and on the country’s economy as a whole. Across each of the 54 scenarios evaluated, higher levels of LNG exports were projected to lead to higher levels of GDP and consumer welfare. And while the United States’ role as an exporter has increased significantly since 2018, the data shows that domestic prices have remained stable:

Why is continued investment in LNG important?

LNG facilities require significant, long-term financial investments to continue meeting the rising global demand for natural gas and ensuring energy security through stable supply chains. The recent pause on LNG export approvals has spurred concerns about market uncertainty, loss of investor confidence, and the potential for long-term damage the U.S.’s position as a leading natural gas exporter. Divestment from LNG projects could undermine economic growth, job creation and energy security in the United States.

Indeed, in the recent Senate hearing examining the effects of the LNG permitting freeze, expert witness Charlie Riedle, Executive Director for the Center for LNG, said:

“The average construction price of one [LNG export] facility is 15 to 20 billion dollars and there are typically six-to-eight thousand employees at a job site for upwards of 10 years building these facilities.”

“What would ultimately happen is those projects that were going to make $20 to $25 billion investments just simply won’t be built…”

Activists are hoping to double down on their victory at the White House by pressuring Wall Street to pull financing for LNG projects. The problem is – if the activists’ goal is to reduce emissions, they have the wrong strategy. First, the GHG-reducing benefits of natural gas and LNG exports are well-established. Second, divestment has a poor track record of achieving the activists’ intended effects.

If big banks and asset managers divest their holdings in LNG companies, other investors will buy the unwanted shares and assets. The new buyers are often privately- or closely-held funds, sovereign wealth funds, hedge funds, or other investors that are cordoned off from the public markets. The Economist described this pattern as a move “from the floodlit world of listed markets to shadier surroundings.”

The activists’ new frontier in the LNG fight is just as misdirected – and dangerous – as their campaign to limit LNG exports.

Bottom Line: Myths and false narratives around the LNG industry are par for the course from environmentalists dead set on destroying the American energy sector. In reality, the growth of the American LNG industry has stimulated economic growth, provided consumer benefits for Americans, and helped the United States and our allies achieve greater energy security – all while helping decarbonization efforts.

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