WASHINGTON (Reuters) - A U.S. government-sponsored report offered a strong endorsement for expanding liquefied natural gas exports on Wednesday, saying that shipping the nation's surplus gas abroad would clearly help the overall economy even though it will cause domestic energy prices to rise.
The report, which offers the Obama administration a basis for possibly approving more gas export projects, examined the impact of LNG exports in 63 scenarios and found exports to be positive for the economy under each of the conditions.
"Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased," said the NERA Economic Consulting study, commissioned by the Energy Department.
The Obama administration has wrestled with how to manage the nation's newfound shale gas for more than a year, putting export project approvals on hold pending the release of the economic report.
During that time, LNG exports have become an increasingly hot-button issue, pitting manufacturers concerned that exports will raise prices against gas drillers, which argue that exports are necessary to keep production going strongly.
Lawmakers and industry leaders had been eagerly awaiting the report, which is expected to help shape the administration's response to more than a dozen proposed export projects.
But the report is still far from the end of the road for the government's review process.
The department is now setting aside more than two months to gather public input on the report.
Following the end of the comment period, the department said it would begin to make decisions on the 15 queued applications on a case-by-case basis.
Despite the high profile nature of the economic report, the administration has stressed it will be only one of the factors the department considers as it moves ahead with its review process. Various groups, for manufacturers to environmentalists, have attempted to make their views heard.
While gas exports would have a positive effect on the economy overall, selling gas to foreign countries will raise prices for consumers, the report said.
"Households will be negatively affected by having to pay higher prices for the natural gas they use for heating and cooking," the study found.
In addition, industries that rely on natural gas heavily will face rises in their business costs, "which will adversely impact their competitive position in a global market."
Teri Viswanath, an analyst at BNP Paribas, said futures prices for 2015 delivery had risen as much as 14 cents per million British thermal units following the release of the report, as the market factored in possible expanded exports.
"There's not going to be a large price impact, but it's another source of demand growth for gas," she said.
Leading U.S. lawmakers challenging gas exports honed in on the report's findings that prices would rise.
Senator Ron Wyden, an Oregon Democrat and the incoming chairman of the Senate energy committee, said the finding confirmed his concerns about allowing more gas exports.
Wyden, along with Congressman Edward Markey in the House of Representatives, has led the charge in Congress calling for a pause in gas exports until the implications of sending gas abroad could be fully studied.
"Regardless of this study's conclusions, Senator Wyden will continue calling on the Energy Department to ensure that unfettered natural gas exports don't harm U.S. consumers and manufacturers," Wyden's office said in a statement.
Although energy costs will rise for some households, the report said the increase in export revenues would offset this and lead to increase real income for U.S. households.
Markey, the top Democrat on the House Natural Resources committee, expressed concerns that the report may be underestimating the negative impacts on American workers and manufacturing because the analysis is based on "old data that may understate industrial demand by 30 percent."
Recent drilling innovations have unlocked vast shale oil and gas reserves, placing the United States in a position to be a major exporter. Several years ago the United States was thought likely to be more and dependent on foreign gas.
Companies such as Dominion (D.N), Sempra (SRE.N) and Exxon Mobil (XOM.N) have now lined up to get permission to sell the country's cheap abundant natural gas overseas, where it can fetch much higher prices.
The Energy Department's authorization is needed to export natural gas to all but a handful of countries with free trade agreements.
Following its first and only approval a gas export terminal, Cheniere's (LNG.A) Sabine Pass, the Energy Department said it would hold off on making any more decisions on projects while it commissioned this study to help guide the review.
U.S. Senator Lisa Murkowski, the top Republican on the Senate energy committee, said it may be time to revisit the department's review process for exports.
"The conclusions in this report on the benefits to the economy should inform the DOE approval process regarding exports," Murkowski said.
Additional reporting by Roberta Rampton, Joe Silha, Edward McAllister; Editing by Bernard Orr, Dale Hudson and Marguerita Choy