On this controversial of LNG exports [See WIMS 3/12/13], DOE indicates that the development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country. This increase in domestic natural gas production is expected to continue, with the Energy Information Administration (EIA) forecasting a record production rate of 69.96 Bcf/d in 2013. Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA with the United States, the Natural Gas Act directs DOE to grant export authorizations unless the Department finds that the proposed exports "will not be consistent with the public interest."
DOE said it conducted an extensive, careful review of the application to export LNG from the Lake Charles LNG Terminal. Among other factors, the Department considered the economic, energy security, and environmental impacts -- as well as public comments for and against the application and nearly 200,000 public comments related to the associated analysis of the cumulative impacts of increased LNG exports -- and determined that exports from the terminal at a rate of up to 2.0 Bcf/d for a period of 20 years was not inconsistent with the public interest.
DOE noted that it will continue to process the applications currently pending on a case-by-case basis, in the order of precedence previously detailed. As further information becomes available at the end of 2013, including the EIA's Annual Energy Outlook Report, the Department will assess the impact of any market developments on subsequent public interest determinations. DOE is currently reviewing proposals for some 20 export facilities.
Senator Ron Wyden (D-OR),Chair of the Senate Energy & Natural Resources (ENR) Committee issued a statement on the approval saying, "While I am pleased to see DOE is continuing to proceed on a case-by-case basis, with each new permit to send natural gas overseas, the Energy Department has a higher bar to prove these exports are in the best interests of American consumers and employers. I will continue to closely monitor DOE's process going forward." Sen. Wyden noted that DOE has now approved export permits totaling 5.6 billion cubic feet per day. That is just below the 6-8 bcf per day that numerous reports and analysts have projected as the likely range for U.S. LNG exports, without impacts on domestic prices.
On August 6, Senator Lisa Murkowski (R-AK), the Ranking Member of the ENR Committee, released a white paper outlining the case for LNG exports and urging swift action on permit approvals before "the nation misses a historic opportunity." The paper, entitled The Narrowing Window: America's Opportunity to Join the Global Gas Trade, includes in-depth analysis that leads to a set of pro-growth policy recommendations. She said, "We've carefully examined the issue of natural gas exports, weighing the evidence and listening to all points of view, but the analytical debate is now over. The United States has a historic opportunity to generate enormous geopolitical and economic benefits by expanding its role in the global gas trade."
In her release, Sen. Murkowski said DOE has received more than 20 applications to export LNG to non-FTA countries. Diplomats from many of these nations, including Japan and India, have urged the Obama administration to approve export licenses as quickly as possible. She indicated that other nations around the world are already building their export capabilities. Qatar, Malaysia, Australia, and many other countries already dominate the LNG trade. Facilities required to liquefy natural gas for transport, however, are expensive, and also require costly infrastructure to import it. She said, "Limits on demand and the availability of financing create a narrowing window for the United States. If we don't move quickly, we may miss that window, and it may be a long time before it opens up again."
Sen. Murkowski commented on the Lake Charles approval saying, "The approval of the Lake Charles export license is great news for the economy. I'm hopeful that it also shows a willingness by the Department of Energy and Secretary Moniz to make the timely review of applications a priority. We must remember that the window for building out our LNG capacity is not open-ended -- it could close if we don't seize this opportunity to have America's natural gas play a major role in the growing global gas market." She indicated in a separate release that Lake Charles Exports submitted its application 27 months ago, in May 2011.
Deb Nardone, director of the Sierra Club's Beyond Natural Gas campaign, issued a statement saying, "It's a bad deal all around: for public health, the environment, and America's working people. The economic study the DOE itself commissioned clearly states that LNG export will transfer wealth from wage earners to fossil fuel executives. LNG export is nothing but a giveaway to the dirty fuel industry, at the expense of every day Americans. Exporting LNG to foreign buyers will lock us into decades-long contracts, which in turn will lead to more drilling -- and that means more fracking, more air and water pollution, and more climate fueled weather disasters like record fires, droughts, and superstorms like last year's Sandy. And all this when we know that the dangers of natural gas will only become more clear as we learn more about its effects on health and the climate. . . The Sierra Club is closely monitoring the FERC proceeding and all permits and approvals that the Lake Charles facility will require, and will take action as necessary."
Erik Milito, the American Petroleum Institute (API) director of upstream and industry operations, called on DOE to move quickly to process a backlog of applications to export LNG to countries that do not have free trade agreements with the United States. He said the Department approved only the third of 19 applications since 2011. He said, "The Lake Charles permit is a welcome signal that Energy Secretary Moniz recognizes the importance of LNG exports to economic growth, but there are still thousands of jobs and billions in investments waiting on the sidelines for federal approval. America is experiencing an energy revolution thanks to our abundant natural gas resources, and LNG exports are critical to unlocking the benefits for U.S. workers and reducing the trade deficit. The law presumes that all exports are in the public interest, and the DOE has every reason to expedite approvals. LNG exports will grow the economy and help bring back millions of U.S. jobs in engineering, manufacturing, construction, and facility operations."
Access a release from DOE and link to the full conditional authorization (click here). Access a notice from DOE and link to the FR notice of availability; the EIA analysis; the NERA analysis; and a summary of LNG export applications (click here). Access the release from Sen. Wyden (click here). Access the Aug. 6 release from Sen. Murkowski (click here). Access the 17-page Murkowski white paper on LNG exports (click here). Access the Aug. 7 release from Sen. Murkowski (click here). Access a release from Sierra Club (click here). Access a release from API with links to related information including a report and list of the pending applications (click here). [#Energy/LNG]