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Pennsylvania congressman backs export of shale gas

| Wednesday, April 20, 2011

Pennsylvania Congressman Glenn "GT" Thompson says he favors exporting Marcellus shale natural gas to countries like China that do not have free trade agreements with the United States.

Thompson — whose Fifth District is the state's largest in area and sits squarely atop the massive Marcellus fields in northern and central Pennsylvania, acknowledges in a Tribune-Review interview that this position on exporting might appear to contradict his previous statements favoring Marcellus shale exploration so that America can secure its energy future and wean itself from foreign dependency.

But the congressman says that's only because the situation with exploration has rapidly changed. He said he now believes the United States could eventually find itself with a surplus of gas with no place to go.

"The fact is, we have a bountiful amount of it (natural gas)," he said. "We could probably be in a position to meet our energy needs and, if need be, be able to export."

Thompson and 15 other members of Congress signed a letter late last year encouraging President Barack Obama to allow exporting 16 million metric tons per year of U.S. liquefied natural gas from Sabine Pass in Louisiana to countries who don't have free trade pacts with America.

The amount of liquified natural gas -- natural gas that is condensed into liquid and highly pressurized -- that the Louisiana port wants to export would amount to approximately 2.2 billion cubic feet per day of ordinary natural gas, according to the Public Gas Association.

Thompson said he supports a similar export facility under consideration at Dominion Energy's Cove Point LNG terminal and port in Maryland. That terminal could be used to export Marcellus shale gas.

"We are in a global economy today and exports are a part of that," Thompson said. He noted that "China will obviously be the largest consumer of energy."

Thompson's comments to the Trib appear to differ from what was displayed Tuesday on his congressional Web page. The page includes comments like these from a February press release: "Situations like that in Egypt continue to underscore the need to cease America's reliance on foreign energy. Our prosperity as a nation is dependent upon access to sustainable, low-cost energy and I will continue to push for a comprehensive energy plan that meets these demands, promotes American energy and builds a foundation for long-term economic growth and security."

In another release, he said: "affordable energy is vital to our economy and national security. High energy costs slow job growth, increase the costs to industries and of products and squeezes household budgets."

Not all of Thompson's constituents favor Thompson's support for exporting Marcellus gas.

Les Pearce, a 55-year-old financial planner and pastor from DuBois, said he "would not accept shipping it overseas, especially to China. It should be used here. But if it is to go overseas, it definitely should be taxed."

Pearce said he is not against drilling, but believes it should be deliberately paced, as in New York. "This area was not ready for this onslaught," he said.

John Noel Bartlett, a retired 62-year-old from Oil City, said he "had never thought of exporting" natural gas obtained beneath the state's soil. "I think most residents of Pennsylvania believe this was being done for energy independence and didn't think of it as exporting," he said.

Bartlet said those willing to compromise on environmental issues for America's energy independence might rethink their position if the nation becomes a mass exporter of natural gas. He added that not taxing the gas is "foolish."

There are presently no gas exporting facilities in the lower 48 states. The Department of Energy says its decision to allow or not allow the Sabine Pass port to start operating would set a precedent for the United States.

Anticipating approval, the operator of Sabine Pass, Houston-based Cheniere Energy Inc., has already signed a memorandum of understanding with a Chinese company to send it 1.5 million tons of LNG per year.

"We are excited to participate in supplying natural gas to China," said Chiniere CEO Charif Souki in a news release.

In all, six American companies are considering exporting natural gas, according to a report by Barclays Capital released last week in New York.

Two major industry groups disagree with any decision to export gas. The American Public Gas Association, with over 700 members in 36 states, wrote the Department of Energy that "the export of natural gas is inconsistent with a policy of energy independence."

And the Industrial Energy Consumer of America, which represent manufacturing companies with a combined $800 billion in annual sales word the DOE that exporting gas "has the potential" of increasing manufacturing costs which could "result in loss of manufacturing jobs."

Thompson, however, disagrees. Exports will not increase prices and will only create jobs in the gas fields and help with the balance of trade.

Cheniere agrees with Thompson and argues that a DOE ruling for the manufacturers instead of energy companies "would amount to an effective subsidy of one economic sector at the expense of another."

In their letter to the president, Thompson and the other lawmakers said the exports would "allow gas to be condensed into a liquid and transported via ship to our global trading partners," thereby "providing additional energy security to our allies." It did not mention China.

Thompson also said he would oppose severance taxes on Marcellus shale gas, even if most of the gas produced will be used out of the state or even the nation. Alaska has taken another approach.

In 2007, then-Governor Sarah Palin signed legislation increasing that state's severance tax from 22.5% to 25% of taxable income. In turn, Alaska has no personal income taxes. In fact, the severance tax has produced so much extra revenue that each Alaskan receives an annual share of the fund. In 2008, each Alaskan received a check for $2,069.

At the time, Palin said it was proper to "share the wealth" of Alaska's natural resources.

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