Editorial: Slow pace of federal approval for LNG projects maddening

06 24, 2013 by American Press

There’s ample reason for a growing frustration at the glacier-like pace of federal approval of liquefied natural gas export facilities.

Only two of 20 applicants — the Chenier Energy terminal at Sabine Pass and a Freeport, Texas, operation that is partially owned by ConocoPhillips — have been given the green light to convert their existing import facilities for export. Conversion construction at Chenier is well underway while the Freeport facility received government approval last month.

Meanwhile, companies like Sempra, which plans to build a $6-$7 billion export terminal at its Hackberry site, are left cooling their heels.

The process includes application approvals from the Federal Energy Regulatory Commission and the Department of Energy. FERC evaluates the physical facilities. DOE considers the economic and environmental impact of LNG exports and the merits of selling the gas to countries that don’t have free-trade agreements with the United States.

Sempra officials make clear that they have no issue with the review process, other than the pace.

The FERC review is black and white and has a relatively dependable timeline. Sempra officials expect FERC preliminary approval in August or September and final approval at the beginning of the year.

The DOE’s timeline is murky, its review process more subjective. And it is this unknown that’s unsettling to companies like Sempra and potentially its investors.

GDF Suez, Mitsubishi Corp. and Mitsui & Co. — all three respected world-wide companies with deep pockets — have announced plans to invest in the Sempra project. They, in turn, are in the process of lining up customers for the LNG in Japan and Europe.

“There is a narrowing window of opportunity,” said Mark Nelson, Sempra regional vice president for National Government Affairs.

Such is the global economy and competition.

Sempra officials say both Australia and Russia have abundant supplies of natural gas and soon will be major players in providing it around the world. Currently, the United States has a lead because of its unparalleled pipeline network that can move the gas from the wellhead to liquefaction terminals and the abundance of those terminals that can convert the gas for export.

But the slow pace of the approval process could erode that cushion.

Additionally, potential customers, desperate for natural gas to supplant their dependence on nuclear energy and oil, aren’t wedded to any particular nation’s product. They’ll take it from the first reliable source they can find.

If DOE approval would mirror the expected FERC timeline and Sempra received its go-ahead in January, ground could be broken on the export facility in Hackberry next spring. Sempra officials say that the project would require 3,500 construction workers during the peak two-year construction period, with exports beginning in 2017.

And more export facilities like Sempra and customers worldwide would be good news for oil and gas exploration companies that have located fields like the Haynesville Shale in north Louisiana.

All the stars are aligned properly for Sempra right now. The company is chomping at the bit to get started. And even President Obama has said recently that he favors natural gas exports.

It’s time for the Department of Energy Secretary Ernest Moniz to act and approve Sempra’s proposal.
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This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Jim Beam, Crystal Stevenson and Donna Price.