There are few, if any, US energy policy decisions that are being more fiercely debated than the fate of liquefied natural gas exports. With a recent, high-profile approval from the Department of Energy, ramped up rhetoric and more decisions looming, it might be a good time to get up to speed on the LNG export issue.
What’s this about?
If you’ve followed the LNG export fight just a little, you’ve probably heard that, thanks to the shale gas revolution, the US has abandoned its plans to import gas from foreign markets and is now looking to aggressively export it. Ample domestic gas supplies and low prices have pushed the US gas industry to seek foreign markets. The problem is that many of the most attractive markets, such as Japan and much of the European Union, do not have free trade agreements with the US. Shipping LNG to non-FTA countries, by law, requires special approval from DOE. So far, DOE has approved just two of the 20 applications to ship to non-FTA markets: Cheniere Energy’s Sabine Pass project in Louisiana and, earlier this month, the Freeport LNG terminal in Texas. It remains unclear what will happen to the other LNG applications, but the long-standing feud over exports has only grown louder since the Freeport decision.
Who’s fighting?
The export fight has largely been divided between proponents of global free trade, who back blanket export approvals, and some manufacturers, who have said giving LNG exporters unfettered access to the world market could undermine the US gas boom, cause prices to spike and end a budding manufacturing renaissance. US lawmakers have fallen in both camps. But, as we saw from DOE’s recent approval of the Freeport facility, the black and white fight has a bit more gray than many expected. Oregon Democratic Senator Ron Wyden, the chairman of the Senate Energy and Natural Resources Committee and an outspoken critic of giving US LNG exporters unlimited access to the world market, hailed DOE’s decision. Similarly, many long-standing energy industry supporters, including Senator John Barrasso, a Wyoming Republican who sits on Wyden’s committee, criticized DOE for approving just one application and not all of them.
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Where do we stand now?
DOE has been rather tight-lipped about when it will make its next decision, which should be the application to ship LNG to non-FTA countries from the Lake Charles Exports facility in Louisiana. Energy Secretary Ernest Moniz, who was sworn in to office just days after the Freeport decision was announced, has given little indication on his plans for LNG exports, telling reporters last week only that he’ll take applications on a case-by-case basis and move quickly.
What’s next?
DOE has announced it will consider applications in order, based on when each applicant joined the queue and whether it has initiated pre-filing with the Federal Energy Regulatory Commission, the agency which will ultimately approve the export facility. But some potential exporters, including Sempra, have said urged DOE to change this process since lengthy delays at the back of the line could hurt their ability to compete. DOE officials have said this review process may change.
