Several years ago, the Hess Corporation’s plan to build a liquefied natural gas (LNG) import terminal in Fall River, Massachusetts was the subject of heated controversy and fierce community opposition. But Hess was undeterred, amending its original design and proposing an “offshore berth” that would send the LNG to the shore through an underwater “cryogenic pipeline.”

In 2011, however, Hess suddenly announced it was abandoning the project, known as Weaver’s Cove. What killed the terminal? It was none of the myriad legislative and regulatory hurdles or the PR efforts against it. Instead, Weaver’s Cove was killed by shale gas. Shale gas extraction, made possible through advances in hydraulic fracturing and horizontal drilling technology, had increased domestic supplies and reduced prices to such an extent that the project no longer made economic sense. Similar battles over the siting of LNG import terminals played out across the United States in the last decade, with as many as 40 terminals proposed from California, to Texas, to Maine — all based on a perceived need, now proven incorrect, for huge quantities of imported natural gas.

Yet this round of battles had barely ended before another one began. This time, the push is not to build terminals to import LNG, but instead to export it. Shale gas production has increased so rapidly that not only is there enough gas — there is too much. Within a couple of years, the market has flipped from impending shortages to a massive glut. As a result, prices have plummeted and storage capacity has nearly been overwhelmed.

The only predictable thing about natural gas markets is their unpredictability.

In April 2012, the U.S. Department of Energy gave the green light to a facility in Louisiana that would be the first to convert natural gas to liquid natural gas and then export it. At least 15 more plants similar to that one have been proposed. For the time being, however, the others are on hold, pending the completion of a Department of Energy economic analysis, expected this year.

Another sign of the move to capitalize on the glut of U.S. natural gas was the announcement last month by the South African energy giant, SASOL, that it planned to construct a $10 billion to $14 billion facility, also in Louisiana, that would convert natural gas to diesel fuel and other liquids, primarily for use in the U.S.

Before rushing to construct these extraordinarily expensive export terminals and gas-to-liquids plants, politicians, investors, and citizens need to pause and consider the impacts of embracing these projects. Two overriding concerns come to the fore: The volatility of natural gas markets, and the prospect that an export boom will further drive increases in shale gas extraction through hydrofracturing, or fracking, whose environmental impacts are only now beginning to be understood.

As demonstrated by previous rounds of on-again, off-again fervor for LNG, the only predictable thing about natural gas markets is their unpredictability. The infrastructure required to export LNG is hugely expensive, and it takes years for new facilities to come online. Given the uncertainty of foreign demand for American LNG and of the continuation of low domestic prices, the construction of new export facilities should proceed, if at all, only in a slow and stepwise fashion.

Although there have been previous ebbs and flows of LNG activity in North America, this time really is different in one significant respect: Large-scale shale gas extraction is unprecedented, controversial, and presents health and environmental risks that are as yet poorly known. Moreover, federal, state, and local regulation is still playing catch-up with the boom, particularly in parts of the country that did not previously have significant gas production. Because LNG exports will stimulate additional shale gas extraction, the environmental consequences of this increase should be comprehensively studied as part of any decision to approve new export terminals. A go-slow approach will also allow time for regulators to put in place necessary environmental protections.

The rush toward export projects is driven by low natural gas prices in the U.S. and higher prices in Europe and Asia.

The only way to export natural gas overseas is to turn it into a liquid. At ordinary temperatures and pressures, natural gas, as its name suggests, exists as a gas. As a result, while it can be transported over land in pipelines, natural gas cannot in its gaseous state be economically shipped over water in tankers. LNG gets around this problem: It is natural gas that has been cooled to a temperature of -260º F to turn it into a liquid. Once the process is complete, the LNG takes up only 1/600th the space of vaporized natural gas.

Natural gas shortages in the U.S. in the 1970s led to the construction of four LNG import facilities, two of which were shuttered by 1980 when natural gas supplies rebounded, and two of which saw limited use in the next two decades. By 2000, however, natural gas shortages were looming again as the economy heated up and North American natural gas production declined. As a result, two inactive LNG import facilities in Georgia and Maryland were reopened in 2001 and 2003, and dozens more were proposed. In 2004, the U.S. Energy Information Administration (EIA) projected that by 2025 LNG would account for 66 percent of all natural gas imports and 15 percent of all domestic consumption.

As it turned out, of course, these predictions were wrong — very wrong. As a result of the shale gas revolution, domestic natural gas supplies are not dwindling — they are booming. Natural gas recently equaled coal in its share of U.S. electricity generation for the first time ever. And those LNG import terminals? The ones that got built are now largely sitting idle as domestic pipelines are awash in domestic gas.

The current rush toward export projects is being driven by a combination of low natural gas prices in North America and higher prices in Europe and Asia. There is an economic basis to export natural gas from the United States to Europe and Asia only so long as this price gap continues to exist.

The construction of LNG export terminals could lead to tens of thousands of new shale gas wells.

Many analysts believe that the current price gap will continue for years to come. Yet the import terminal construction boom was based on similarly confident predictions of long-term U.S. dependence on imports. That prediction proved drastically incorrect and it would be hubris to believe that the same thing could not occur with this one.

In fact, it is easy to imagine several different paths to a dwindling price gap. First, U.S. domestic natural gas consumption could increase significantly. Natural gas is expected to continue to expand its share of electricity production, driven both by its low price and by regulatory impediments to coal use. A more dramatic shift would occur if natural gas achieved widespread use as a fuel for cars and trucks.

Second, domestic gas production may not end up being as large as expected, as domestic shale gas supplies could prove smaller than currently estimated. Given that most shale gas wells have been in production for only a few years, it is impossible to know if current estimates of long-term production rates are realistic. Just last year, the United States Geological Survey estimated that the technically recoverable reserves in the Marcellus Shale region were only 84 trillion cubic feet (tcf), one-fifth the EIA estimate of 410 tcf from a year earlier.

Third, demand for American LNG in Europe and Asia might not end up being as large as expected. Europe and Asia both contain significant shale gas reserves. At the moment, both regions lag far behind North America in the exploitation of this resource. In Western Europe, because of political opposition, this situation is likely to continue for some time, although the UK recently gave the go-ahead to shale gas extraction. China, however, is moving forward rapidly with plans to exploit is shale gas resources. Such increases in foreign shale gas production will reduce demand for American LNG exports. At the same time, other gas-producing countries, such as Australia, have their own LNG export plans, which could reduce demand for U.S. exports, particularly if their gas can be made available at lower cost.

The environmental implications of an LNG export facility construction boom, especially considering the inadequacy of the current regulatory regime for shale gas extraction, also are cause for caution.

Based on current projections, the construction of LNG export terminals could lead to the drilling of tens of thousands of new shale gas wells by the end of the decade. The potential environmental consequences of large-scale shale gas production are significant. Risks exist at every stage in the process, ranging from the mundane to the potentially catastrophic. These risks are well known, including the need for several million gallons of water to frack a single well, which, if scores of wells are drilled in a particular area, could affect streamflows or aquifer levels. Groundwater contamination from inadequate well casing and the disposal of millions of gallons of contaminated wastewater from drilling also pose significant problems.

The past has shown us that resource booms have a way of going bust.

Shale gas extraction can also produce significant air pollution from drill rigs, compressors, separators, and other equipment; the venting, flaring, or leakage of the natural gas itself; and evaporation from wastewater pits. Finally, shale gas extraction affects local quality of life in a variety of other ways, including increases in truck traffic, noise, dust, and visual impacts.

Then there are the concerns about LNG itself. It is energy-intensive to compress, transport, and decompress natural gas. As a result, the life-cycle greenhouse gas impact of gas shipped as LNG can be 20 percent greater than that of gas shipped through pipelines.

MORE FROM YALE e360 Natural Gas and Its Role In the U.S. Energy Endgame The boom in natural gas production has undeniable benefits for the United States. But two policy analysts argue that embracing a monolithic energy future dominated by gas will mean the loss of a golden opportunity: Leveraging cheap, abundant gas to create a sustainable future based on renewable power. READ MORE

No doubt, there are potentially many benefits from exporting natural gas. It could boost the economy and generate jobs and revenues; improve the balance of trade; diversify the global natural gas supply and thereby reduce the ability of individual exporting nations to hold their customers hostage; and even provide environmental benefits if exports to places like China displace coal consumption.

That said, all of the potential environmental and financial impacts should be considered in the process of approving any new LNG export terminals. And the Department of Energy should use the opportunity presented by the current hold on new approvals to conduct a thorough environmental analysis of the potential environmental impacts of all of the currently proposed export terminals.

The past has shown us that resource booms have a way of going bust. The long history of volatility in the natural gas market, coupled with numerous unanswered environmental questions, means it’s time to take a hard look at the promised bonanza of exporting liquid natural gas.