The Grassroots Report - ACTION ALERT - DEPT. OF ENERGY

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Here's mine...

Dear Secretary Chu:

I am responding to your ‘request for comments’ in this matter, per the Federal Register Notice of December 11, 2012. The following comments apply specifically to ‘Part 2’ of the 2012 LNG Export Study, performed by NERA Economic Consulting (NERA).
For the reasons detailed below, I respectfully request that you reject the NERA report and its conclusions. Further, I suggest that the DOE’s obligation to assess the ‘public interest’ of LNG export has not been satisfied and that the docketed applications for LNG export authorization should be denied.

Thank you for your consideration.

Sincerely,

John S. Detwiler, Ph.D., P.E.
5723 Solway Street
Pittsburgh, PA 15217

SUMMARY

1. The NERA report is incomplete (as stipulated in the report itself)
2. The NERA report is not credible (because the contractor has a demonstrated bias in the subject)
3. The ‘Key Findings’ offered in the NERA report are not supported by the content of the report itself

DETAILED COMMENTS

1. The NERA report is incomplete

The purpose of the NERA report (the “Report”) was to “… evaluate the impact that LNG exports could have on multiple economic factors, but primarily on U. S. Gross Domestic Product, employment and real income.[1]” The Report, in ‘Appendix E – Factors that we did not include in the Analysis’ lists the following exclusions:

A. How Will Overbuilding of Export Capacity Affect the Market
B. Engineering or Infrastructure Limits on How Fast U.S. Liquefaction Capacity Could Be Built
C. Where Production or Export Terminals Will Be Located
D. Regional Economic Impacts
E. Effects on Different Socioeconomic Groups
F. Implication of Foreign Direct Investment in Facilities or Gas Production

Each and every one of these excluded factors has significant implications for the ‘economic impact’ of LNG exports, and on the ‘public interest’ of approving such exports. Therefore, the NERA report – by excluding these factors – is an inadequate basis on which the DOE could approve the LNG export authorizations. In brief:

A. ‘Overbuilding’ is almost certain to occur. Extractive industries in general, and unconventional natural gas in particular, consistently demonstrate a ‘boom and bust’ behavior – driven by greed and ending in negative equity and stranded costs.

B. Not only do the Report’s scenarios ‘strain the capacity of engineering and construction providers’, but the competition for such providers (between gas liquefaction facilities and the capital investments of other industries) will have a negative impact elsewhere in the U. S. economy which the Report does not take into account.

C. The Report acknowledges that ‘basis differentials’ will depend on locations – which it cannot know. But, since this critical variable has not been determined – and cannot be determined – the foundation of the entire analysis crumbles.

D. Any realistic assessment of ‘impact on the U.S. economy’ would necessarily consider ‘Regional Impacts’. It is fatuous to suggest that economic benefits to one region, with numerically equal economic damage to another region, can be taken as a ‘net no change’ to the U.S. economy.

E. Similarly (to ‘D’, above), in an era when growing economic inequality is one of the most worrisome trends in the Nation, it is unreasonable – if not malicious – to ignore the implications of further wealth transfer from wage-earning families and into the hands of investors.

F. ‘Foreign direct investment’ is already occurring to a dangerous extent in the unconventional gas fields. There is no reason to assume that such investment will not continue through the midfield and processing sectors, and into the export facilities – especially when the analysis is predicated on the strategic importance of imported gas (i.e., our exports, being their imports) to foreign actors. When such investment happens, then the purported benefits will flow (at least partially) to the foreign investors rather than to the U.S. economy.

Then, in addition to the Report’s self-acknowledged omissions, the following factors are at least as significant for the U.S. economy – and are also omitted from consideration in the Report.

G. The impact of expanded ‘fracking’ on public health, food production and infrastructure.

Export of natural gas requires implies increased extraction of natural gas from U.S. sources. (Indeed, the only rationale being offered for construction of export facilities is that such facilities will restore the profitability of unconventional gas extraction, which today is destroying shareholder value across the industry.) But that extraction, through ‘fracking,’ is already ruining farmland (and removing good farmland from cultivation), destroying forests and watersheds, escalating medical costs, and driving other productive industries out of the areas where gas extraction is happening. None of those effects have been considered in the Report.

H. The impact of additional gas processing and transportation infrastructure.

Investments in gas processing and transportation are not neutral. More productive land will be pre-empted from other economic uses, people and industries will be displaced.

I. The catastrophic impact of climate change upon all economic activity.

The evidence implicating fossil fuel consumption in climate change is irrefutable. LNG export will have a major effect in increasing the world’s use of fossil fuels. (As noted above, that is the very reason behind the applications to DOE for export authorizations.) Therefore, DOE’s concurrence in LNG export can be predicted to cause immeasurable negative economic impacts through drought, extreme weather, and rising sea levels. None of these ‘existential threats’ to the U.S. economy are acknowledged in the NERA report.

2. The NERA report is not credible
The concerns about the selection, qualifications and biases of NERA Economic Consulting have been amply documented elsewhere [2]. In summary:

• DOE’s selection of NERA was not transparent.
• NERA has a consistent public record of advocacy against environmental protections and promoting denial of climate change.
• Dr. David Montgomery (the Project Leader of this Report) is on record as opposing:

- efforts to control carbon emissions
- DOE’s programs for green energy investment
- improved fuel efficiency standards

• (Quoting [2]) "In short, Dr. Montgomery and NERA share intellectual commitments which have made them the favorite advocates of business interests seeking to oppose President Obama’s public health and environmental efforts, as well as DOE’s own efforts to increase the use of cleaner energy in this country. Many of those same interests have much to gain from LNG exports.” [emphasis added]

The Report itself reinforces those concerns in its Executive Summary, where it states:

[B]enefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices. This is exactly the outcome that economic theory describes when barriers to trade are removed."[3]

That is, NERA asserts that ‘net economic benefit’ will be achieved because losses ‘to U.S. consumers’ are able to be ‘outweighed’ by increased profit to exporters. In other words, ‘economic benefit’ does not (to NERA) mean benefit to Americans.

3. The ‘Key Findings’ offered in the NERA report are not supported by the content of the report itself

As quoted immediately above, NERA asserts that “This is exactly the outcome that economic theory describes when barriers to trade are removed.” Of course, this gloss is a philosophical statement – indeed, an ideological statement – and not in any way reflective of actual research. More significantly, this gratuitous comment is indicative of NERA’s approach to its entire ‘Key Findings’ section.

Elsewhere in its purported ‘Key Findings’, NERA asserts that

If the promise of shale gas is not fulfilled and costs of producing gas in the U.S. rise substantially, or if there are ample supplies of LNG from other regions to satisfy world demand, the U.S. would not export LNG. Under these conditions, allowing exports of LNG would cause no change in natural gas prices and do no harm to the overall economy.
There is nothing in the body of the Report to establish those sweeping generalizations as ‘findings’. In fact, they are simply reassertions of NERA’s unshakeable confidence in the simplistic ‘economic theory’ (quoting NERA’s earlier remarks) of Adam Smith. The paragraph is composed of the following ideological axioms:

(a) The possibility of combining ‘large quantities of gas from shale at low cost’, ‘world demand for natural gas increase[ing] rapidly’, and limited ‘supplies from other regions’ would be the fulfillment of a promise (and not, say, of a curse);

(b) If simple-minded ‘supply and demand’ conditions weren’t favorable, then unquestionably ‘the U.S. would not export LNG’. This statement ignores many other financial, geopolitical, and irrational factors which are already demonstrably at work in the natural gas industry.

(c) ‘Allowing exports of LNG would cause no change in natural gas prices and do no harm to the overall economy’. Neither of the two negations in this statement is demonstrable. The first (‘no change in natural gas prices’) ignores the effect of sunk costs for export facilities when they are not exporting gas. The second (‘do no harm to the overall economy’) ignores the impact, described above, of aggressive extraction of unconventional natural gas which will be undertaken in anticipation of exports, even if those exports are not achieved.

Although the Report compares a range of scenarios, they are all static scenarios – none of them take a realistic view of the swings in gas supply, demand and pricing in the real world.

CONCLUSION

DOE should reject the NERA report and its conclusions, and applications for export authorization should be denied.
References
[1] NERA report, p. 212.
[2] See, for example, http://www.sierraclub.org/pressroom/downloads/LNG-...
[3] NERA report, p. 1.
[4] NERA report, pp. 1-2.

Dear DOE,

I am writing to ask that the proposed permits for the LNG pipelines for export be denied. The study as reported will economically benefit the gas industry and the few that own the most stock in these companies. But what will it do for the majority of tax paying citizens of the United States of America?

Exporting natural gas means new pipelines and LNG terminals need to be built. The DOE study failed to consider the environmental costs of this new infrastructure, and the social cost to the hundreds of families that would have their land condemned by multinational corporations under the pretense that it is in the public good, instead of just for corporate profits.
Increased drilling for natural gas will increase the rate of global warming and climate change. The cost of damages from increased storm intensity, flooding, and droughts that are exasperated by global warming, were not considered in the report. A recent study found that up to 9% of the natural gas drilled from wells escapes into the atmosphere. This massive increase in methane, a greenhouse gas 20 times the CO2 equivalent of carbon, was not considered in the study done by a company that has obvious interests in the progression of natural gas extraction.

NASA Climate Scientist James Hansen has said that if we have any chance of avoiding the civilization threatening effects of climate change that are heading our way, the fossil fuels that are still in the ground must stay there. We should be encouraging the development of renewable energy, not the use of every last drop of fossil fuel.

We now have enough science and evidence that Fracking is bad for everyone and everything except the industry. It is time to address the truth about climate change and for America to be leading the world in a new direction. By granting these permits, we will be doing the exact opposite. Please do not allow this to happen. Remember, these decisions will determine not only what is happening today, but what we will be contributing to the future for the generations that will come after us.

I want to believe that there are still people in these positions that are considering more than the economic benefits for few, and are concerned about the legacy we will be leaving for many.

Sincerely,
Briget Shields
2329 Tilbury Ave.
Pittsburgh, PA 15217

As a private citizen, I am deeply concerned about the explosion of extracting natural gas through the method known as hydraulic fracturing, commonly referred to as fracking. Hundreds of chemicals are mixed in with sand and tons of water taken from our rivers and forced into shale to break it up releasing the gas for removal. Fracking is done in areas near farms, schools, and homes and has directly impacted the lives of people living near these fracking areas. Water to homes has been contaminated by the practice and people near fracking areas are getting sick. Cows in pastures near fracking sites have died due to drinking contaminated water. Other adversities have been encountered. It is widely known about these cases yet no one really seems to care in state or federal government.
Now, the Department has permits to export liquified natural gas (LNG) from 19 terminals here in the US that are currently for import only. DOE consultants recently completed a study in regards to this matter. First of all, the consultants have ties to the gas industry making these study biased. The consultants focused on short-term positive economic benefits to the U.S. economy, the U.S. trade balance, the industry and the natural gas leaseholders, if the export permits were to be approved. They left out the economic cost of all cumulative damages to air, water, public health, farms, forests, communities and climate. They left out all the impacts to the environment including impact on rivers and their tributaries, ground and well water, and loss of vital animal habitat. They left out the health and safety impacts upon people and animals, including the unhealthiness of the air surrounding fracking areas and the pollution from the hundreds of trucks used to bring fracking fluids in and out. There have been blowouts at fracking sites impacting upon air quality and across land into rivers and streams nearby. Where the people living near these areas who have suffered numerous problems, including health issues, ever included and consulted in this study? The pipelines that were built to take the gas from the current IMPORT terminals to the end users in the U.S. were built where ever the gas companies wanted them irrespective of property rights - with the use of eminent domain. Eminent domain is only granted for the purpose of the public good - not for the financial benefit of private industry. Therefore, it should be illegal to use those pipelines to transmit gas from the fields to the terminal for EXPORT - which benefits only the industry.
Liquifying, transporting, regassifying and then transporting gas to users in other countries makes no sense whatsover when we should be moving away from climate changing methods to more sustainable, green forms of energy. Exporting LNG uses even more energy, not less. There is no rhyme and reason to this except for the natural gas industry who will reap the economic benefits. The negative long-term economic effects of a boom - bust cycle on communities by extractive industries is well documented throughout history. Ultimately the community ends up less healthy and wealthy after the resource is depleted and the industry leaves. There has actually been little impact on job creation in communities where there is fracking. The industry has been bringing in largely their own people.

The negative impacts on other industries such as agriculture, tourism, outdoor recreation, etc. also must be taken into consideration in an economic analysis.

I only just skimmed the surface of the negative impacts of LNG exportation. There are many more and I could have gone into much more detail as to why I strongly reject fracking and subsequent LNG exportation of fracked gas. These LNG exportation permits should be denied. They benefit no one really, except for the gas industry. As NASA Climate Scientist James Hansen has said, if we have any chance of avoiding the civilization threatening effects of climate change that are heading our way, the fossil fuels that are still in the ground must stay there. We should be encouraging the development of renewable energy, not the use of every last drop of fossil fuel. Thank for considering my comments.

Fracking is a toxic threat to American communities and the climate. Allowing fracked gas exports would dramatically increase the scale of and demand for fracking in the United States by giving the fossil fuel industry access to huge foreign markets. Stand up to the fossil fuel industry and deny all applications to export natural gas.

I think one of my most basic feelings is that with wind, solar and geothermal energy, we don't have nearly these same issues. We are not debating the lesser evil of injecting benzene, tolulene, arsenic, lead mercury and other carcinogens and endocrine disruptors or treating it in waste water plants; if these chemicals contaminate groundwater during any of the drilling process; what to do with substantial 1-5 millions of gallons) freshwater withdrawals per frack; if there are air quality issues do to voc emissions; what to do when the drilling boom is over (we still will need energy and now we will have towns with infrastructure to support drilling and no drillers left to occupy it)
We should be building the infrastructure to support renewables. The University of Delaware has shown that the US can be powered 90-99% of the time with a combination of solar and wind and storage options, at costs comparable with fossil fuel and nuclear mix used today.

http://wwwp.dailyclimate.org/tdc-newsroom/2013/01/...

Put an end to this debate and focus on a real green energy solution.

Click here for Sierra Club's Press Release. It has talking points galore for disputing the DOE's contracted 'economic report'. REMINDER: The deadline for comments is Thursday, January 24, 2013, at 4:30pm (EST).

WASHINGTON, DC - The Sierra Club today filed a formal information request calling on the Department of Energy (DOE) to explain how it hired a notoriously anti-environmental contractor to determine whether massive increases in natural gas production for export are in the public interest. Exporting natural gas would require increased fracking in America. Fracking is a violent process that dislodges gas deposits from shale rock formations and is known to contaminate drinking water, pollute the air, and cause earthquakes.

After a secret contracting process, DOE hired NERA Economic Consulting, which regularly consults for the American Petroleum Institute and the coal industry, to study the economics of exporting domestic natural gas. DOE’s own experts have even found that regulatory reforms are urgently needed for the fracking process, which lacks adequate protections in place at the state and federal level. Exporting natural gas would accelerate fracking before any of those much-needed protections are put in place.

According to NERA’s own figures, export would also lower wages for ordinary Americans, especially those in manufacturing jobs. It is because of these threats that some major American corporations are opposing indiscriminate exporting of natural gas. NERA nonetheless concluded that gas exports would benefit the country.

“NERA consultants have spent years testifying against public health safeguards and green jobs. They even opposed DOE’s own clean energy programs. Is it any surprise that they endorse more exports of fracked gas?” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign.

Sierra Club is filing a formal Freedom of Information Act Request in order to determine how NERA was picked, and to gain an understanding of the private economic model NERA used to reach its conclusions.

“Deciding to export the U.S. gas supply is a major public decision,” Nardone said. “We deserve a full and fair conversation about it. That’s why we deserve to know how and why DOE picked this anti-environmental, pro-corporate consultant for this crucial report.”

To learn more about why policymakers and the public need fair disclosure of the nation’s natural gas export policy, read this Sierra Club report.

For background information on DOE’s liquified natural gas study contractor, go here.

Please no fracking!

A few of the comments which DOE has received, and a link to the complete up-to-date list, is available at http://www.marcellusprotest.org/sample_LNG_comments

Save our Earth