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WPC '13: Exxon makes plea for US exports of LNG

03.20.2013  |  Ben DuBose,  Hydrocarbon Processing, 

Stephen D. Pryor, president of ExxonMobil Chemical, continued Exxon’s war against rivals such as Dow Chemical that say the US should export manufactured goods rather than raw materials.

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By Ben DuBose
Online Editor

HOUSTON -- The president of ExxonMobil Chemical made a strong stand Wednesday in support of US natural gas exports, decrying opposition efforts as “protectionist” and “defying logic”.

Speaking at the IHS World Petrochemical Conference, Stephen D. Pryor continued Exxon’s war against industry rivals such as Dow Chemical that say the US would be better served by exporting manufactured goods rather than raw materials.

“Protectionist pleas are often wrapped in pious appeals to nationalism,” the ExxonMobil Chemical president said. “The real agenda is to unlevel the playing field and stifle competition.

“As an industry, we must vigorously oppose protectionist measures that limit access to markets around the world.”

ExxonMobil is one of several companies seeking permission from the Obama administration to build a natural-gas export terminal in Texas.

Mr. Pryor cited the US-EU free trade agreement and the Trans-Pacific Economic Partnership as examples of positive free-trade initiatives, noting that the American Chemistry Council (ACC) trade group supports both.

On the other hand, he contends that blocking LNG exports would undermine efforts to build closer trading ties.

“These proposals to block LNG investments justified by artificial price gaps represent a selective and harmful departure from free market and free trade principles,” Mr. Pryor said, leading into a series of rhetorical questions.

“For example, why should the EU drop tariffs on American chemicals made from US natural gas if the US blocks exports of that gas in liquefied form?

“Likewise, how can US secure sanctions against China for restricting exports of rare earth minerals without inviting sanctions on the US for restricting exports of natural gas?

“How can the US ask Japan, a close ally still suffering from energy shortages, to stop importing oil from Iran, if we prevent Japan from importing gas from the US?”

Mr. Pryor said he also believed that opposing LNG exports would be harmful to domestic policy.

“It would return the US to the era of price controls in 1970s and 1980s,” he said. “Those price controls then on natural gas produced a tremendous drop in production, as well as supply shortages. That caused price spikes and overall diminished economic activity.

“The eventual deregulation of natural gas in 1980s created free market conditions that spawned the age of unconventional oil and gas,” he continued. “The voices back then that opposed deregulation are wrong, just as they are wrong today for advocating new controls on natural gas.”

Mr. Pryor said that studies he has seen project no significant increase in the price of US natural gas if LNG exports are approved.

“That’s because LNG exports would prompt increased supply and production from America’s ample resources,” he said.

Critics allege that Dow and other similar companies are seeking to retain the advantage of cheap gas-derived ethane feedstock, which has been cited as the foundation for new US petrochemical proposals.

“The point is this,” Mr. Pryor concluded. “Protectionism and price controls defy economic logic, defy historical experience and undermine prosperity and progress, both here and abroad.

“Free markets and free trade are extraordinary engines that are proven to stimulate investment, create jobs and build closer ties among nations.”

The conference continues through Thursday at the Hilton Americas in downtown Houston.



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JAC
03.26.2013

This plays perfectly with ExxonMobil's outdated and misplayed domestic energy development plan. A number of years ago one of Exxon's senior management officers made the statement that there were no more commercial finds of gas and oil left in the continental US. They then started a big sell off of US assets and concentrated on investeing billions searching for oil and gas all over the rest of the world outside of the US. Smaller companies eventually figured out a way to go after tight formations and the result is huge amounts of oil and gas (mostly natural gas) suddenly in the marketplace here in the US at reasonable prices. Exxon, with its vast overseas oil production, sees this as a threat to the enormous sums of money it had invested developing these remote and expensive fields which produce the oil that it is importing to feed its US refineries. Hence, they bought up vast quantities of US gas reserves in an effort to reduce the domestic gas supply which it sees as a threat to the expensive foreign oil it is importing. Exxon's goal is to prop up its expensive imports and reduce the domestic energy supply to make up for their gross miscalculation of US oil and gas reserves made years ago. All of this at the expense of the domestic oil and gas and chemical industry, not to mention the American consumer. Sending raw materials, in this case natural gas, overseas so we can "trade with our partners" and later import finished products from them is Exxon's way of fair trade. America loses both ways. No country outside of the US cares about us at all except for our dollars as consumers. We do not need to give up our raw materials for someone else to use to make products that increase our imports. We need the manufacturing done here - NOT overseas. Mr. Pryor is as wrong today as his company was many years ago when it gave up on the US.

Bernard Legrand
03.25.2013

Not very wise and not in the best interest of the American population. Exxon like some others have invested big money in gas liquefaction import shipping installations. So what would you do with these? Nothing. So we modify for export to get our money back.

Walt O'Brien
03.23.2013

The good folks at ExxonMobil should not even bother addressing US authorities and instead file a formal complaint with the World Trade Organisation. What the Feds are doing violates international law. Period. It is not right that a president of an international firm who de facto signs the pay cheques of thousands of people weekly should have to beg for the opportunity to trade so that America's tax coffers remain filled and Americans keep working. Providing family-size wages for thousands is "giving back" in its most pure form. I wish dueling were still legal LOL

Mr. Bandhu Sonar is the voice of moderation and peace, though, and I agree with him that a middle ground is the most pragmatic and honourable way to proceed. There is no need to fight if a pleasant solution that pleases all can be achieved.

Jagat Bandhu Sonar
03.22.2013

The decision would be wise to dual use of US natural gas in the domestic market and export it as well looking into the global gas production scenerio.
Regards,
J B Sonar

Chris Keilberg
03.21.2013

The United States should be making significant strides towards building more domestic pipelines, increasing numbers of CNG vehicles and fueling stations, utilizing as much our natural gas resources domestically as possible, before considering export of any potential overages. To do anything else would be a treasonous disservice to the citizenry.

Kirby Mohr
03.21.2013

We have been talking about working toward energy self sufficiency since the unfortunate Carter administration, and now that we have it in natural gas they want to send the gas out of the country to make a few extra dollars. Instead, we should convert more vehicles to use the natural gas and reduce our dependence on foreign oil for fuels. it is time that people like Mr. Pryor thought more about what is good for the US than just what is good for their bottom line.

Malcolm Brown
03.21.2013

"Free Trade", like "Free Speech" can have its common-sense limits. Exporting natural gas, regardless of the "studies" Mr. Pryor vaguely quotes, will tend to increase the price of natural gas for us. More importantly it will more rapidly deplete this limited resource: we have seen natural gas bubbles before, and this one will not last forever either.
But, Mr. Pryor is obviously correct that limiting exports will make trade more difficult.
Most importantly, though, this must be part of our national Energy Policy, which we tragically do not have.

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