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U.S. shale gas boom requires rethink of natgas export policy: Senator

By Ayesha Rascoe and Roberta Rampton

WASHINGTON (Reuters) - The United States needs to reconsider its rules on exporting natural gas - even to countries with which it has free trade agreements - now that a surge in drilling has made the nation one of the world's fastest-growing producers, U.S. Senator Ron Wyden said on Thursday.

Advanced drilling techniques have allowed energy companies to tap vast shale gas reserves, opening the door to U.S. exports after years of projections that the United States would have to rely on foreign gas to meet its energy needs.

The government should rethink a decades-old law that automatically allows companies to send U.S. natural gas to the country's free trade partners, argued Wyden, who is in line to be the top Democrat on the Senate energy committee next year.

"This policy needs reconsideration," Wyden said in a statement. "It could harm the nation's ability to achieve energy independence, combat pollution and preserve the environment, and improve the economic competitiveness of American manufacturers."

Wyden has repeatedly raised concerns about natural gas exports, saying the government must assess whether sending gas abroad will raise prices on consumers and industries.

Wyden's comments come as the United States engages in negotiations with nearly a dozen countries to forge an Asia-Pacific trade deal.

Companies have been pushing for the Energy Department to expand exports to other countries, because the nations that currently have free trade agreements with the United States would not provide enough demand to support multibillion dollar investments in liquefied natural gas export terminals.

The department approved exports from Cheniere's Sabine Pass terminal in Louisiana, but has held off on approving any more pending a study of the effects of exports.

The Trans-Pacific Partnership could dramatically change the prospects for automatic exports, however, with Japan expressing interest in joining the talks.

Japan is one of the world's top LNG consumers, and counts on LNG imports for almost half of its energy requirements after it took its nuclear reactors offline following the Fukushima disaster.

Its LNG prices are about five times U.S. prices, and the Japanese government has said it would like to see more imports from the United States.

"Any final agreement on a Trans-Pacific Partnership must not constrain the U.S. from reshaping its energy policy, which may include new treatment of natural gas exports," Wyden said.

The 11 countries participating in the Trans-Pacific talks will hold their 14th round of negotiations in December, with Canada and Mexico participating for the first time.

A final deal in the talks could still be one year or longer away, with many tough issues left to resolve.

(Additional reporting by Doug Palmer; Editing by Lisa Shumaker)

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