US senators seek to slow LNG export approvals

OREANDA-NEWS. September 27, 2016. Twelve Democratic US senators have asked US energy secretary Ernest Moniz to slow Department of Energy (DOE) authorizations for LNG exports until the impacts of approved exports are evaluated.

"The DOE has approved a substantial volume of LNG exports and continues to do so at an alarming rate," said the letter from senators, who represent states that are not major gas producers. Signatories include Al Franken of Minnesota, Elizabeth Warren of Massachusetts and Barbara Boxer of California.

The letter asks the DOE to slow its approval process, but added it would be prudent to halt additional approvals altogether until the impacts of approved projects are evaluated.

The DOE has authorized LNG exports equivalent to as much as 49.7 Bcf/d (1.41bn m?/d) of gas to countries that have free trade agreements (FTAs) with the US and up to a gas equivalent of 14.4 Bcf/d to nations that do not have such agreements.

Contiguous US gross gas production in June averaged 80 Bcf/d. Global LNG trade totaled 245.2mn t in 2015, equivalent to about 31.4 Bcf/d of gas.

The senators said high levels of US LNG exports could raise domestic gas prices, which would hurt consumers and industries that rely on gas and electricity, as well as disproportionately harm states that are not major gas producers.

It is highly unlikely that the US will export anywhere near the volumes with FTA authorizations. Investment in US LNG projects has significantly slowed because of falling oil prices, as the economics of US exports are based on a wide differential between global oil prices and domestic gas prices.

The DOE did not reply today to an Argus request for comment. The agency has repeatedly said that the global market should decide which US LNG export facilities are built, adding that federal law prohibits the agency from picking winners and losers.

Major US LNG export facilities likely will not be built without non-FTA authorization, as most of the world's largest LNG-consuming nations by volume, including Japan, do not have FTAs with the US. The DOE must quickly approve without modification applications to export to FTA countries, as such trade is presumed to be in the national interest.

But the agency must determine if non-FTA exports will hurt the country before approving them, and it does not consider a project's non-FTA application until that project gets environmental clearance from the US Federal Energy Regulatory Commission, a process that can cost \\$100mn-\\$150mn.

The DOE completed a study in December saying that LNG exports of up to 20 Bcf/d or higher would benefit the country and not significantly raise gas prices. The current US energy bill has provisions to expedite, rather than slow down, the approval process for LNG exports.

"Given that the Senate energy bill would expedite LNG regulatory approvals and that it passed the Senate by vote of 85–12, it is clear that there is bipartisan support for LNG exports," said Charlie Riedl, executive director of the Washington, DC-based industry group Center for Liquefied Natural Gas.

Cheniere Energy's Sabine Pass terminal in late February became the first LNG export facility to come online in the contiguous US. Four other terminals being built are scheduled to start operating in 2018-19.