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Lawmaker questions merits of natural gas exports

By Roberta Rampton

WASHINGTON (Reuters) - Another Democratic lawmaker is raising questions about whether the government should approve pending applications for expanded exports of natural gas, a decision that some worry could lead to higher prices for businesses and utilities.

Edward Markey wants Energy Secretary Steven Chu to explain the impact on prices for consumers and manufacturers if Chu finds the export applications are in the "public interest" and allows them to proceed.

The Energy Department is studying the impact of exports of bountiful U.S. natural gas on energy prices and jobs in two reports slated for completion in the first quarter of this year.

"I am worried that exporting America's natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy, and slow our transition away from dirtier fuels," said Markey, the top Democrat on the House of Representatives' Natural Resources Committee, in a letter to Chu on Wednesday.

The Energy Department last year approved the first application by Cheniere Energy, which inked a $8 billion, 20-year deal to sell liquefied natural gas to Britain's BG Group.

Other companies want to follow suit, hoping to tap Asian markets with prices four times what they are in the United States, where prices have been depressed by a newfound bounty of natural gas released through advanced drilling techniques such as hydraulic fracturing, or fracking.

Exports from Cheniere's Sabine Pass facility combined with another seven planned facilities would total about 18 percent of current U.S. natural gas consumption, Markey said, quoting data provided by the department to his staff.

CONDITIONS ON EXPORTS?

Natural gas production has been a bright spot for the troubled U.S. economy, helping to create jobs associated with drilling and reduce costs for consumers. That has spurred political support for the industry.

Some lawmakers have questioned the environmental impacts of fracking, where drillers blast gas from shale rock using sand, water and chemicals.

Environmental groups have said fracking pollutes water, a charge that industry refutes. There is also mounting evidence linking small earthquakes to the disposal of waste water from fracking.

The Senate Energy committee examined the issue of natural gas exports in November, when Democratic Senator Ron Wyden said he is concerned about where the Energy Department will "draw the line" on allowing domestic prices to rise as a result of exports.

Markey asked Chu whether the Energy Department plans to phase in export approvals to allow time to evaluate the market impact, and whether the department would deny export applications if prices spike.

"Could DOE attach terms or conditions to orders that would require companies to halt or slow exports if DOE determines domestic prices are being adversely affected?" Markey asked, requesting a response by January 31.

Under U.S. law, the Energy Department cannot deny export permits to 15 countries that have bilateral free trade agreements with the United States -- a list that will soon expand with recently signed agreements with South Korea, Colombia and Panama. South Korea is a major LNG importer.

In his letter to Chu, Markey asked whether the department has concerns about the impact of exports to the countries with trade deals.

(This story corrects an earlier item to show Markey is a congressman, not a senator.)

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