Bipartisan Bill to Expedite LNG Export Decisions

on January 21, 2015 at 10:00 AM

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The LNG Permitting Certainty and Transparency Act would require DOE to make non-FTA LNG export decisions no later than 45 days after environmental review conclusion.

On January 6, 2015, Sens. John Barrasso (R-WY) and Martin Heinrich (D-NM) introduced the LNG Permitting Certainty and Transparency Act to expedite the Department of Energy (DOE) decisions on liquefied natural gas (LNG) export applications involving non-Free Trade Agreement (FTA) countries. The legislation would set a 45-day deadline for DOE to approve or deny applications after publication of the National Environmental Policy Act (NEPA) review.

The plummeting price of U.S. natural gas from 2005 to early-2012 coincided with a boom in U.S. shale gas production. The production boom and low prices raised LNG export interest, as international LNG prices remained high ($10-$15/MMbtu). Although domestic LNG prices have trended up since 2012 lows, disparities with international prices ($8-$12/MMBtu) still exist. Further streamlining the non-FTA LNG export application process will enable the domestic natural gas industry to more rapidly pursue international markets.

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In August 2014, DOE revised its LNG export decision procedure and now acts on non-FTA applications only after completion of the NEPA review. Previously, DOE issued conditional authorizations prior to final review and considered non-FTA applications based on the order of precedence published on its website in December 2012. Promoting FERC reviews will enable commercially viable projects, which might have been buried in the order of precedence for years, to jump to the head of the line.

As of December 15, 2014 the DOE has issued five final and four conditional approvals for LNG export to non-FTA countries. The final approvals amount to 5.74 Bcf/d of LNG export capacity; the conditional approvals amount to 4.82 bcf/d export capacity. All final terminal approvals are located in Texas and Louisiana; the conditionally-approved terminals are located in Maryland, Oregon, and Louisiana. More than 20 applications are currently under DOE review.

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The legislation would provide LNG export applicants with expedited judicial review in the U.S. Court of Appeals for the District of Columbia Circuit or the circuit pertaining to the proposed export facility location if DOE fails to act within the 45-day deadline or if the proposal is subject to legal challenges. In case of any export authorization, the legislation would require LNG exporters to report to DOE the countries to which LNG has been delivered; DOE would make the information publicly available.

In its existing form, the bipartisan bill could garner enough votes to gain a filibuster-proof majority in the Senate. However, the open amendment process pledged by Majority Leader Mitch McConnell (R-KY) could complicate the bill’s passage with the potential addition of policy riders and messaging provisions that could impact both the debate and partisan votes. Environmental groups are lobbying the Obama Administration to veto the bill.

Originally published by EnerKnol.

EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.