U.S. natural gas production has proved more resilient than anyone imagined in past years and—thanks to the unconventional plays—its role in the nation’s economy will continue to grow. Its place as an export will be of particular importance going forward.
That’s the view of Stefan Selig, undersecretary of commerce for international trade, who opened the North American Gas Forum in Washington, D.C., on Oct. 5 by reminding attendees how things have changed since President George H.W. Bush signed the Natural Gas Wellhead Decontrol Act.
When Congress passed the law in 1989, the nation had 35 years of estimated gas reserves. Today, it enjoys 100 years of gas reserves. And the figure continues to grow, though gas usage is far higher, he pointed out.
“Clearly, this is no ordinary time for natural gas,” Selig said. “The gas business far exceeds what was envisioned 25 years ago.”
He estimated 20% of the nation’s gas production will be exported by 2040 and reminded the forum that the U.S. also will be able to export billions of dollars’ worth of gas-related machinery and technology. Together, that growing volume of foreign sales will have an important impact on the economy. In that context, he called for reauthorization of the recently expired Export-Import Bank.
“It is a critical tool that helped close 3,300 deals last year worth more than $27 billion,” Selig added. “And that was not an anomaly. It helps us compete. More than 80 other countries have export-import banks.”
From the perspective of defense and politics, “strong gas exports will enhance our ability to shape events on the global stage,” he said.
Selig also serves as executive director of President’s Exports Council and leads the Commerce Department’s International Trade Administration, which works to develop global U.S. trade policy. He is a life member of the Council on Foreign Relations. He was vice chairman of global corporate and investment banking at Bank of America Merrill Lynch before his appointment.
Selig also called for “close energy relations between the U.S., Canada and Mexico,” saying cooperation between the North American neighbors is “crucial” for economic development of all three nations.
His speech coincided with the Obama Administration’s announcement of the 12-nation Trans-Pacific Partnership trade deal, which Selig hailed as an important international trade pact that will help of all kinds of businesses in the U.S. He said the pact will create “the most expansive free-trade zone in history and” he added the administration “is committed to making it a reality.”
The undersecretary credited the energy business for the turnaround in gas production and said it occurred “through constructive government engagement” with the private sector. “We have the most-developed gas market in the world today” as a result, he said, adding that “the main drivers were innovation and creativity.”
During a question-and-answer session following his presentation, the topic of the nation’s 40-year-old crude export ban came up. Selig admitted the law “was put in place in a very different world and that policy may need to change.”
He said the current administration is responding to the world’s current, oversupplied energy market. Selig pointed to last year’s decision that processed condensate may be exported legally, and the recent ruling that crude-oil swaps with Mexico are permissible. But the undersecretary added that “there is no change in the Obama Administration’s policy on crude oil exports” at this time.
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