ExxonMobil wants changes to US LNG export policy

OREANDA-NEWS. April 21, 2015. The US Congress should repeal the statute that requires a public interest determination for export of LNG to non-free trade countries, an ExxonMobil official said in Washington today.

Rob Franklin, president of the company's gas and power marketing arm, said the 1938 Natural Gas Act contains a de facto export ban on LNG that prevents the US from the enjoying the benefits of free trade.

Meanwhile, he said that countries which build LNG terminals first are taking advantage of immediate commercial opportunities, and that other countries could walk away from free trade if the US violates its treaty obligations in the World Trade Organization.

Franklin refuted the arguments of a "small coterie" that insists on the existing "slow-walk" policy, noting that all economic studies find that LNG exports result in more benefit to the US.

Like other experts, Franklin said that LNG exports can provide a further spurt to US gas production.

"The marginal cost curve to add 30 Bcf/d of production is so flat that increased exports raise US prices only slightly," he said.

Most LNG markets are in countries that do not have a free trade agreement with the US, so the Department of Energy (DOE)is required to investigate if the permit application is in the public interest. More than 30 LNG liquefaction projects await the determination from DOE, including Golden Pass, a venture of Qatar Petroleum International and ExxonMobil to convert an existing LNG import plant in Port Arthur, Texas, for export.

Franklin said Golden Pass sought a non-free trade agreement determination three years ago, but in 2014 DOE changed its procedure and it now only considers non-fre trade applications after they receive environmental approval from the Federal Energy Regulatory Commission (FERC).

Golden Pass has requested FERC authorization by July 2015 to meet its proposed start-up date of September 2019.

Only three projects have been granted complete for export to non-free trade countries, Franklin said.

A total of seven projects have that approval, but for half of them, it is conditional upon environmental clearance from the commission.

Franklin called the commission's approval process "reasonable." He termed DOE's modified approval process, in which applicants first have to spend up to \\$100mn for the commission to give environmental approval of a project design "a very strange situation."

However, the modified procedure was widely perceived as helping ExxonMobil because it eliminated a queue that DOE had previously used to consider non-free trade applications. ExxonMobil was 14th in that queue.