Frank Verrastro, Senior Vice President & James R. Schlesinger, Chair for Energy and Geopolitics, March 2013.

1. Prospects for US LNG Exports
Frank Verrastro
Senior Vice President & James R. Schlesinger Chair
for Energy and Geopolitics
March 2013

2. Unconventional Gas
U.S. Shale Gas Resources

3. Unconventional Gas
U.S. shale gas production from the major plays has increased dramatically

4. Unconventional Gas
Projected Contribution of Shale Gas to Total US Supply
U.S. dry gas production, trillion cubic feet per year
History 2010 Projections
23% Shale gas
21%
Non-associated onshore
9% Non-associated offshore
26% Tight gas
9% Coalbed methane
2% 10% Associated with oil
Source: EIA, Annual Energy Outlook 2013 Early Release

5. Source: Department of Energy

6. US has been exporting natural gas (in limited
quantities) for years
- Spot cargoes – Alaskan LNG
- Pipeline gas to Mexico and Canada
- Re-exports of imported LNG from the
Freeport terminal in Texas, and the Sabine
Pass & Cameron terminals in Louisiana

7. Unconventional Gas
Increased Production Could Allow U.S. to Become a
Net Exporter of Natural Gas by 2020
Source: U.S. Energy Information Administration, Annual Energy Outlook 2012, June 25, 2012

8. Unconventional Gas
Potential Gas Pathways
Non-Associated gas Gas to Power/ Residential &
Gas Pipeline
Commercial
Associated gas
LNG for Export
Liquefaction
LNG for Transport
Gas to Chemicals
Chemical
Reaction
Gas To Liquids (GTL)
Syngas
Refined
Crude Oil
Oil Products
Source: Royal Dutch Shell

9. US Export Application Process
• Federal law requires that the Department of Energy approve
natural gas exports to countries that have a free trade agreement
(FTA) with the US
• For all other countries, the Department of Energy is required to
grant applications for export authorizations unless the
Department finds that the proposed exports are inconsistent with
the public interest. “Public interest” determination considers
economic, energy security, and environmental impacts
• FERC must also approve export facilities
• Open issues: WTO compliance? Applicability of other trade
agreements/preferences relative to FTA equivalent status?

10. Proponents and Opponents of LNG Exports
• Proponents of LNG exports are drawn from the “free trade” and
gas producer communities, the latter based on concerns over
limited growth domestic markets and depressed prices;
• Opponents are mostly industrial consumers, who want to use the
newfound abundance of natural gas to fuel a domestic
“manufacturing renaissance”…as part of a new industrial policy
• Politicians can be found on both sides of the argument (pro-jobs
growth vs. higher consumer prices); environmental issues
surrounding gas development are also prevalent.
• Economics of liquefaction & export as well as market
opportunities, competition, politics and foreign policy
considerations will likely limit export volumes.

13. So, Where are We?
• At the end of 2012, DOE released a commissioned study on the economic impact
of LNG exports. The report (supportive of exports on economic grounds)
provoked controversy, and was open for public comment
• The public comment period is now over, but when a decision will be made is
uncertain. Probably this year.
• One export facility has already been approved (Sabine Pass, 2.2 bcf/d)
• There are currently 18 LNG export project applications under review (combined
export capacity of 28.02bcf/d) and awaiting permit approval from DOE
• Timing of the DOE approval(s) is uncertain: policy statement or “slow walk?”
• Congressional intervention could impede the export process, but is unlikely in the
short term. However, in the longer term, Congress may look to address broader
questions about energy policy provoked by the LNG debate, reassessing policy in
light of abundance (whereas previous policies were based on the notion of
scarcity) and/or environmental impacts (beyond traditional siting considerations)