Where Does the Marginal Methane Molecule Come From? Implications of LNG Exports for US Natural Gas Supply and Methane Emissions

Brian Prest

No 25-05, RFF Working Paper Series from Resources for the Future

Abstract: US exports of liquefied natural gas have surged over the past decade and are projected to more than double again by 2030 as more capacity is built. This has raised concerns about upward pressure on domestic energy prices as well as increased methane emissions from expanded oil and gas production. The magnitude of potential increases in natural gas prices depends on the how much US supply is anticipated to respond, and impacts on methane emissions will depend on which oil and gas basins will come from because methane leaks from vary dramatically across basins. Using a dataset on more than 1 million US oil and gas wells, I model the spatially heterogeneous supply responses to US export demand for both US natural gas and crude oil to estimate the impacts on domestic energy prices and the effective methane leak rates of marginal supply. Gas export demand mostly spurs marginal gas supply from Appalachia where methane leak rates are low (1.7% versus 3.1% nationwide average). Oil export demand mostly spurs production from the Permian Basin with high effective leak rates (9.1%). Gas export demand drives larger gas price effects (+2.5% per billion cubic feet/day) than estimated in other studies, while oil export demand has smaller impacts on oil prices (+0.8% per 100k barrels/day). Keywords: liquefied natural gas, crude oil, methane emissions, energy prices

Date: 2025-03-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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