Washington (Platts)--17Dec2012/1253 pm EST/1753 GMT

A US Department Energy-commissioned study into the economic effects of large-scale US LNG exports relied on outdated data, misinterpreted a previous analysis and made inaccurate assumptions about potential benefits, US Representative Edward Markey, Democrat-Massachusetts, said Monday.

In a Friday letter to Energy Secretary Steven Chu, Markey, the senior Democrat on the House of Representatives' Natural Resources Commission, said study by NERA Economic Consulting used a "deeply flawed methodology" which may have "led to conclusions that severely underestimate the negative impacts of large-scale natural gas exporting."

"The flaws in the NERA study indicate that we still have a long way to go before we can be confident that large-scale LNG exporting is truly in America's interest and can be done in a way that protects American consumers and manufacturers," Markey said in the letter that was made public Monday.

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The study, released by DOE earlier this month, found that LNG exports would be a boon to the US economy. The report is expected to play a role the Obama administration's eventual decision on whether to allow LNG exports to countries that do not have free trade agreements with the US.

By law, DOE must quickly approve exports to countries that have FTAs with the US, but the department can limit or block exports to non-FTA countries if it finds they are not in the public interest.

Markey told Chu that NERA's report used "grossly inaccurate" and "significantly out of date" data from 2010 that does not take into account recent coal-to-gas switching in the electricity sector, new investments by heavy industrial users and the potential growth of natural gas vehicles.

"This data badly underestimates the growth that has already occurred in domestic natural gas demand as well as demand that is expected in the future," Markey wrote.

In addition, the congressman said the NERA report "misinterpreted" the results of 2009 study on energy and climate change legislation Markey co-authored with Representative Henry Waxman, Democrat-California, and ranking member of the House Energy and Commerce Committee.

Using that 2009 study, the NERA report claimed that LNG exports would have less impact on energy costs compared to the greenhouse gas emissions cap-and-trade scheme proposed in the Waxman-Markey bill. But Markey said this ignores allowances proposed in the legislation that would have negated cost increases. Markey said the 2009 study actually shows that the legislation could have had a positive impact on some manufacturers.

Markey also said the study made "inaccurate assumptions" on who would benefit from US LNG exports and did not fully analyze the impact on domestic jobs.

"Even in the case where natural gas exporting leads to increased gas production by American companies, the vast majority of Americans will see no investment income from natural gas exporting," Markey wrote.

Benjamin Seggerson, a NERA spokesman, referred a request for comment to the DOE press office. DOE has declined to comment on the study.

--Brian Scheid, brian_scheid@platts.com
--Edited by Jeff Barber, jeff_barber@platts.com

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