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LNG exports may hurt manufacturing: execs

Keywords: Tags  natural gas, natural gas exports, liquefied natural gas, LNG, Ukraine, Russia, Europe, shale Nucor

INDIANAPOLIS — While U.S. steelmakers aren’t opposed to exporting the country’s shale gas reserves, especially in the wake of tensions in the Ukraine, they want to make sure any increases in energy exports don’t come at the expense of domestic manufacturing.

Low-cost and abundant energy represents a "once-in-a-generation opportunity" to see domestic manufacturing grow, according to John Farris, vice president and general manager of Nucor Steel Texas. Nonetheless, Charlotte, N.C-based Nucor Corp. supports a "tempered" approach to liquefied natural gas (LNG) exports, he added.

"We don’t want to see us so heavily invested in LNG (exports) that we frustrate the reshoring of manufacturers back in this country because our largest customer base is those manufacturers," Farris said during a town hall forum at the Association for Iron and Steel Technology’s annual AISTech conference in Indianapolis.

The ability of the United States to export natural gas will likely take time, given the years it takes to get permitting and the billions of dollars required to build an LNG export facility, Douglas Matthews, senior vice president of Pittsburgh-based U.S. Steel Corp.’s North American flat-rolled operations, said. "We think economics will come into play with balancing how much (LNG export) capacity will be built."

Supply and demand should also push natural gas drillers, who shut down rigs when prices are low, to produce more gas if additional demand is created by LNG exports, he said. "We think general economics will balance out that (natural gas) price over time."

Whatever the United States might do, Europe needs to rethink its energy policies, according to Dieter Hoeppli, a Deutsche Bank AG managing director and head of the materials and mining Americas wing of its global natural resources group. Following the turmoil in Ukraine, countries—notably Poland—are becoming "very outspoken" about Europe having its own energy policy, he said.

"You already see coal having a revival in Europe. And I think people will look at natural gas from different regions," Hoeppli said. "And I do think that LNG from North America is playing a role."

Such a shift won’t happen quickly, but will likely occur as Europe looks to diversify away from its dependence on energy from Russia, he said.

While much attention might be focused on LNG exports, it’s important not to overlook other domestic energy, such as Calgary, Alberta-based TransCanada Corp.’s proposed Keystone XL pipeline, Michael Rippey, president and chief executive officer of Chicago-based ArcelorMittal USA LLC, said. He pressed the Obama administration to approve the project.

"The studies have been done. It’s very clear that the pipeline can be completed in an environmentally safe and thoughtful way," he said, adding that projects like Keystone XL will help lower energy prices and consumers’ utility bills. "And if you can put money in the consumers’ pockets ... they’ll get out and buy that car and buy that appliance and motivate our economic recovery."

The U.S. State Department has extended the deadline for eight federal agencies to submit their views on the Keystone XL because of ongoing litigation related to the pipeline in the Nebraska Supreme Court (, April 18).

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