Steel CEOs Urge Caution on Natural Gas Exports

Article excerpt

The nation's two top steelmakers told a congressional hearing on the health of the industry that exporting natural gas is one of their top concerns.

U.S. Steel Corp. and others in the industry say natural gas cuts costs and addresses environmental concerns over the use of coal to produce steel.

"There is a renaissance under way in the manufacturing sector," said U.S. Steel CEO John Surma. "It is propelled by the availability and competitive pricing of natural gas."

Surma and John Ferriola, CEO of Nucor Corp., said exporting some of America's booming natural gas supply should be approved only after domestic needs are met.

"A cautious approach would be appropriate," Surma said. "I would not like to have to worry about where (natural gas) will come from."

A federally backed study released in December concluded that the more natural gas America exports, the greater the economic benefits for the country. The study could be key in whether the government issues export permits to gas companies.

That conclusion raised concerns among manufacturers and consumers who could pay higher prices for gas as a result.

John Tumazos, a steel analyst with Very Independent Research in Holmdel, N.J., said the U.S. Steel and Nucor comments were self- serving.

"If you own ground in Beaver or Westmoreland counties with shale gas, and got royalties, you'd want the producer to sell for the highest price. ... A natural gas producer in a free-market economy should be able to sell to whomever he wants."

"In the long run I don't think exports will be a big deal," Tumazos said. The process of cooling natural gas to a liquid is complicated, demanding and expensive. "I'll be surprised if 10 (percent) to 20 percent is exported."

The energy sector is a bright spot in the slow-growth economy for U.S. Steel, one of the largest gas consumers, Surma said. …