Natural gas is benefiting both consumers and the environment: Fracking has sparked an American natural gas renaissance and driven down domestic energy prices. Fracking’s success, based on affordable and abundant clean energy, should serve as the model for future emission reductions.

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Natural Gas 101
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My 2¢ To Energy Secretary Rick Perry
Jay & Rich’s Take
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1. Export natural gas

Proposed Policy Reforms

Add more countries to the LNG free trade list
Each contract to export liquid natural gas is individually reviewed by the federal government. The review process adds unnecessary time and imposes extra costs on American exports.

Shorten LNG export approval times
A single natural gas contract can take years to receive final government approval if the destination country lacks a natural gas free trade agreement. Bureaucrats must be held to reasonable and business-oriented deadlines.




America is in the midst of an energy renaissance. Fracking has made America the world’s top producer of natural gas.1 Estimates show enough natural gas to power us through the end of the century.2

Our windfall is driving down domestic natural gas prices. They have dropped so low that some companies are scaling back or even shutting down production.3Exports to energy-thirsty, international markets is one promising way to stimulate production. A study commissioned by the Department of Energy found that unconstrained natural gas exports would add thousands of new jobs and billions to the American economy.4,5


In many parts of the world, natural gas rates are more than twice those in the US. This creates a sizeable arbitrage opportunity for American exporters.
Source: FERC6

Unlike oil prices, natural gas prices vary widely across the world: Natural gas cannot be neatly packed into barrels and barges. Instead, it is often landlocked because pipelines are the standard transportation process and shipping natural gas overseas is complicated. The gas must be condensed into a liquid called liquid natural gas (LNG) at temperatures below -250ºF in highly specialized ships. These transportation constraints have created isolated natural gas markets around the world.


Iran and Russia are the second and third largest producers of natural gas. If America doesn’t step up, it opens the door for our adversaries to exert a larger geopolitical influence.
Source: CIA Factbook7

Although natural gas liquefaction is an expensive process, prices in the United States are so low that international arbitrage opportunities still exist. In 2015, Taiwan and Japan paid about two and a half times the average U.S. price for liquid natural gas exports.8

Government bureaucracy is one barrier that is blocking America from satisfying the international appetite for natural gas. Liquid natural gas export agreements must undergo tedious federal review. When a company attempts to export natural gas to a country without a natural gas free trade agreement, the Department of Energy reviews each case and subjectively determines if it is in the best interests of America.

Add more countries to the LNG free trade list

Natural gas free trade agreements are made with select countries to circumvent this process. But only 18 countries had a natural gas free trade agreement with the United States as of 2014.9 Artificially increasing costs on America’s exported goods through over-regulation is not in the best interests of our country. One proposal would allow all World Trade Organization members to qualify for the exemption.10

Shorten LNG export approval times

Ironically, the Department of Energy itself is a roadblock to free trade. Processing LNG contracts can take the government years, which increases uncertainty and costs on businesses. From 2010 to 2014, the Department of Energy had only approved 9 of 35 applications to non-free trade agreement countries.

Regional natural gas differences create a sizeable arbitrage opportunity for American exporters. Since the price of natural gas changes quickly, however, delays can significantly impact project economics.11

Furthermore, government reviews of export applications are not standardized. According to the Government Accountability Office, “it is a case-by-case deliberation, where each application is considered separately from the others”.12 Standardizing the process and setting deadlines on reviews would facilitate U.S. natural gas exports. American gas exports would also lower pollution in other countries by displacing higher emitting coal power.

Fellow Conservative Voices

U.S. Natural Gas Exports: Lift Restrictions and Empower the States

Nicolas Loris, Fellow at The Heritage Foundation


Natural Gas can be the Energy Policy that Works

Mark J. Perry, Scholar at the American Enterprise Institute


Liquefied Natural Gas Exports: America’s Opportunity and Advantage

American Petroleum Institute



2. Build Infrastructure

Proposed Policy Reforms

Establish deadlines for pipeline permit decisions
A single natural gas pipeline permit can take years to be approved by the federal government. Establishing regular and enforceable deadlines would reduce the regulatory burden and uncertainty on prospective pipeline developers.

Default pipeline approvals
If government agencies do not take action on a pipeline permit by specified deadlines, the project should be automatically approved. Project developers should not be penalized for bureaucratic inefficiencies.

Create pipeline corridors
The federal government can establish pre-permitted corridors to expedite the environmental review process for future pipeline developers.




Over 300,000 miles of natural gas pipelines crisscross America, bringing energy to our homes and factories.13 Still, the immense network is proving insufficient in moving our vast shale gas reserves to where they’re needed.

Source: Energy Information Administration14

Nowhere is this more clear than North Dakota. Just a few years ago, more than a third of the natural gas the state produced was wasted and went unused.15Unused natural gas is usually burned on-site in a process called “flaring” because it converts the gas to a more stable form that improves worksite safety and air quality.


North Dakota’s flared natural gas can be seen from NASA’s satellites in space, rivaling the brightness of America’s largest urban centers.
Source: NASA16

Why is natural gas wasted? Natural gas is often a byproduct of oil extraction, but capturing and shipping the gas can be expensive without the proper equipment. Unlike Texas and other traditional energy producing states, North Dakota lacked the pipelines and infrastructure to economically move natural gas from its fields to customers.


In 2014, over a third of all the natural gas produced in North Dakota was wasted.
Source: Energy Information Administration17

A recent buildout of pipelines in North Dakota has helped cut gas waste to about 20%.18 Yet, significant progress can still be made: Texas wastes less than 1%.19When the gas is wasted, the economy loses. Locals forgo royalties, consumers miss out on lower energy bills and precious domestic energy reserves are wasted. Throwing our gas away makes even less sense because many parts of the country pay high prices.20 Sometimes there is not even enough supply. When natural gas demand exceeds supply in winter storms, blackouts may occur because home heating takes precedent over power generation.

Wasting gas is also a missed opportunity. The benefits are only reaped, however, if it’s used. Needlessly burning gas increases air pollution and wastes a valuable resource. More pipelines are needed to fully leverage all of America’s energy resources and reap the environmental benefits of natural gas. Our natural gas fleet has ample excess capacity, with the national natural gas plant fleet running only about half the time.21

Establish deadlines for pipeline permit decisions

The federal permitting process can take years and be delayed by any number of government agencies or environmental groups. In 2005, Congress attempted to streamline the federal government’s review of interstate natural gas pipeline permits.

The Federal Energy Regulatory Commission (FERC) was given the authority to set deadlines for other agencies to conduct their reviews.22 Despite new deadlines, delays continue to plague the process. In fact, a 2012 study found that delays actually increased by 20% since the bill’s passage.23

One reason is that agencies face little consequences for not complying with the deadlines. Codifying FERC’s deadlines or adding new enforcement mechanisms would facilitate the development of America’s natural gas reserves and improve certainty for prospective developers.

Default approvals

If government agencies do not take action on a pipeline permit by the deadline date, permits should be automatically approved. Under Former Rep. Mike Pompeo’s proposed Natural Gas Pipeline Permitting Act, agencies would still have months to conduct their reviews. These deadlines could be extended if an agency could justify their need for more time.24

Create pipeline corridors

The Obama administration identified tracts of federal land suitable for large solar power projects and “pre-permitted” them to lower the costs of development. The government land can emulate the strategy for pipeline development.25 Replicating the concept would encourage the buildout of new American pipelines and infrastructure.

A proposal by Rep. MacArthur (R-NJ-3) would identify and establish suitable natural gas pipeline corridors.26 The state of Wyoming is also working on a similar process to establish carbon dioxide pipeline corridors that could be used to connect fossil power plants with enhanced oil recovery plays.27