LNG export bills attract support, opposition at US House hearing

Two bills aimed at facilitating US LNG exports drew equally strong support and opposition along party lines at a Jan. 19 House Energy and Commerce subcommittee hearing. Republicans applauded H.R. 4605, which would remove a national interest demonstration requirement for exports to countries not having a free trade agreement with the US, and H.R. 4606, which would authorize small-scale LNG exports to Caribbean nations to replace oil used to generate electricity. Democrats opposed the measures, which Rep. Bill Johnson, R-Ohio, introduced on Dec. 11, 2017.

The measures reflect the country’s recent emergence as the world’s top gas producer and the need to change laws which now act as barriers to exports, Chairman Greg Walden (R-Ore.) said. “These changes would help create more open, transparent, and competitive markets for gas, encouraging more production in the US, creating thousands of jobs, and spurring further economic development,” he said.

Ranking Member Frank Pallone Jr. (D-NJ) disagreed. H.R. 4605 would deny the public an opportunity “to know about, or provide input on, gas exports to any country at any level,” he warned. “I am particularly concerned that the unrestricted export policy included in this bill could significantly impact domestic gas prices and adversely affect American consumers and manufacturers.”

Pallone called H.R. 4606 a comparative model of restraint, but said that it also has problems, notably a provision eliminating a requirement for small-scale LNG export projects to qualify for a categorical exclusion from the 1969 National Environmental Policy Act.

Assistant US Energy Sec. Steven Winberg noted that the Department of Energy’s authority to regulate gas exports arose from Section 3(a) of the 1938 Natural Gas Act, which required that they be in the national interest. The 1992 Energy Policy Act narrowed that requirement to shipments bound for countries not having a free trade agreement with the US, he said.

“Since January 2017, DOE has granted authority to export natural gas to two world-scale LNG projects—Golden Pass Products in Texas and Delfin LNG, which is proposed for offshore Louisiana—as well as Eagle LNG’s small-scale Maxville, Fla., project and additional capacity at the proposed Lake Charles LNG project,” he said. “In total, DOE has authorized 21.35 bcfd of gas under section 3(a) for export to anywhere in the world not prohibited by US law or policy.”

A second witness, Charlie Riedl, executive director of the Center for Liquefied Natural Gas, said legislation is necessary because LNG export projects are multiyear, multibillion-dollar undertakings that should not be held hostage to changing domestic politics. “We are competing with other exporting nations for investment, and if we don’t provide regulatory certainty and streamline our approval process, investment will go to other nations that will,” he warned.

Legislation providing greater regulatory certainty would also allow the US to capture a unique window of opportunity to export LNG internationally and send a strong signal to trading partners that the US is committed to its role as a global energy leader, Riedl said. “Streamlining the approval process for LNG export applications from the US can create tens of thousands of American jobs and reduce global greenhouse gas emissions, while preserving a competitive advantage for American manufacturers and benefiting the US economy,” he said.

But Industrial Energy Consumers of America Pres. Paul N. Cicio said that H.R. 4605 is not necessary because DOE already has approved exports to FTA and non-FTA countries equal to 71.2% of 2016 domestic gas demand, or 53 bcfd. “A reasoned volume of LNG exports is good for the economy, but excessive LNG exports will damage manufacturing competitiveness long-term and threaten capital investment that is now occurring due to low gas prices and trillions of dollars of existing manufacturing assets,” he said.

Contact Nick Snow at nicks@pennwell.com.

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