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More shale gas production good, but not for export

For the past several years, the focus on natural gas has been about science — geology, biology and chemistry. Pennsylvanians have learned how hydraulic fracturing, or fracking, releases natural gas trapped in tight layers of shale about a mile underground. The public has also learned that proper well construction is necessary to minimize the environmental risks of fracking. It’s also become clear that proper disposal or recycling of waste fracking fluid must be done in line with best practices.

But the focus on natural gas should now extend from science to economics, as shale-gas producers push to export liquified natural gas to Europe and Japan, where prices are much higher than in the United States.

The dramatic increase in the supply of natural gas, due mostly to fracking, has brought the price of natural gas down close to historic lows. Low prices for natural gas are good for homeowners with gas furnaces and for industries that use natural gas, such as utilities and large energy-intensive manufacturers.

But low gas prices are not good for gas producers and drillers. Low prices reduce the incentives of natural gas producers to continue development and drilling.

To boost prices and profits, gas producers are asking for an end to federal export limits on natural gas.

The emerging debate pits large corporate interests against each other, with gas producers like ExxonMobil Corp. on one side, and big industrial companies, such as Dow Chemical, Alcoa and steelmaker Nucor Corp., on the other side.

Expanding exports of liquified natural gas would keep the drilling boom going, but it could also lead to higher gas prices. Higher gas prices would make it more expensive to heat homes and offices. Higher gas prices would also lead to higher electricity prices by raising production costs for electric utilities operating gas-fired generators. Higher gas prices would increase costs for energy-intensive companies like Alcoa and Nucor, possibly reducing both demand and employment. Some argue that higher gas prices could reverse the emerging rebirth of manufacturing in the United States.

When shale gas development was getting started in Pennsylvania, the gas industry and its supporters, including Gov. Tom Corbett, promoted fracking as a path to energy independence and job creation.

While exporting shale gas would help gas producers and drillers, it could hurt manufacturers — and possibly threaten the $5 billion “cracker” plant proposed by Shell Oil for a site in Beaver County that could launch many spin-off jobs in the region.

Another argument against expanded gas exports, at least from Pennsylvania shale gas, is that Corbett and the state Legislature, by not passing an extraction tax, decided that taxpayers should partially subsidize shale-gas production in the state. While an impact fee was passed, gas production in this state operates in what most view as a favorable environment for the industry.

By not authorizing a rapid expansion of natural gas, it’s possible that the slower rate of gas development would allow time for development of new and safer drilling techniques and better regulations for handling waste fracking water. There are benefits to a more moderate pace of gas extraction and fracking by letting science and regulation catch up to drillers.

Looked at from all angles, the federal government should proceed carefully — and slowly — if there is to be any increase in natural gas exports.

Exporting liquified natural gas might be good for gas producers, but it does not look like a good deal for most of the rest of America. There is no need to rush to expand gas exports.

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