Macroeconomic Impacts of LNG Exports from the United States

Tue Apr 23 16:24:38 EDT 2013
By Dr. W. David Montgomery and Dr. Sugandha Tuladhar

At the request of the US Department of Energy, Office of Fossil Energy, a NERA team led by Senior Vice President Dr. W. David Montgomery and Vice President Dr. Sugandha Tuladhar has conducted an objective and independent study to assess the potential macroeconomic impacts on the US economy of liquefied natural gas (LNG) exports. The US has witnessed a significant shift in natural gas production in the past five years, as optimism about shale gas potential and accelerated recovery has created a shale gas boom. US shale gas production has increased rapidly due to advances in hydraulic fracturing and horizontal drilling techniques that have reduced production costs. As a result, the outlook for natural gas production is more optimistic now than ever before. According to the latest Annual Energy Outlook 2013, the Energy Information Administration (EIA) projects that US natural gas production will increase by about 40% by 2040, and that shale gas will account for more than 50% of total US natural gas production by 2040. The primary objective of NERA's study was to evaluate the macroeconomic impacts of different levels of LNG exports based on the EIA's study. Using NERA's proprietary NewERA model and the Global Natural Gas Model, the NERA team found that increase in natural gas prices will be moderate and LNG exports will have net benefits to the US economy.

This paper was also published as an article on the Italian website AGI Energia.