Energy secretary vows to move swiftly on LNG exports

06 14, 2013 by Fuel Fix

Top Obama administration officials on Thursday pledged to lawmakers that they would move quickly but carefully in vetting applications to broadly export domestic natural gas, with more final decisions coming this year.

The assurances — delivered by newly sworn-in Energy Secretary Ernest Moniz during a House committee hearing and by one of his top deputies in a separate meeting with lawmakers — seemed designed to calm concerns that the reviews could drag on too long, potentially jeopardizing U.S. businesses’ ability to compete in a global natural gas market.

Moniz said he “absolutely” expects to have final decisions this calendar year on some of the 16 pending applications to export natural gas to countries that don’t have free-trade agreements with the United States.

While pledging to move forward “expeditiously,” vetting those applications on a case-by-case basis, Moniz stressed the Energy Department also will be methodical, because it faces lawsuits challenging the process and any final decisions.

“The pitfalls of litigation are there, so we have to do it right,” Moniz said. “I want to do it very systematic (and) transparent.”

Moniz made his comments during the energy secretary’s first appearance on Capitol Hill since being sworn in last month. Because Moniz has previously committed to giving a closer look to data used to evaluate the economic effects of broader natural gas exports and some thought could slow down export application reviews, the secretary’s comments Thursday are being viewed as confirmation the process is still on track.

So far, the Energy Department has given two companies — Cheniere Energy and Freeport LNG — licenses to export domestically harvested natural gas. But the Energy Department’s export license is only one step; companies also must win approval from the Federal Energy Regulatory Commission to build the actual facilities that will liquefy natural gas for overseas transport. So far, just Houston-based Cheniere has cleared that hurdle, for its Sabine Pass terminal in southwest Louisiana.

Future export decisions will probably come about every two months, suggested Christopher Smith, the acting assistant secretary for fossil energy, during a meeting Thursday with the House Natural Gas Caucus. About 10 lawmakers and 20 staff members were in the session, which focused heavily on the Energy Department’s process for evaluating the applications. Smith previously suggested a two-month timeline to senators studying the issue last month.

Rep. Gene Green, D-Houston, said he was impressed with Smith’s presentation and walked away with “some certainty” on how the Energy Department is tackling the applications. Under a December order, the Energy Department set up an initial order for evaluating the proposals, with priority given to those that had launched a pre-filing process at the Federal Energy Regulatory Commission. As new applications come in, they go to the bottom of the list.

Each is being reviewed individually, but with an eye on the cumulative effects of ever-increasing volumes of potential natural gas exports.

Green said Smith suggested some proposals may be easier than others to review, particularly those near the Gulf Coast. The next one up for evaluation is Dominion’s Cove Point project in Maryland.

“It sounds like he’s conducting it with a business-like attitude,” Green said of Smith. “He’s not going to cut any corners.”

“They know they may be sued either way, so they are trying to make sure they dot all the Is and cross all the Ts,” Green added.

Some export supporters complain the administration’s methodical process has gone too slowly, especially since the Energy Department took a two-year timeout after approving Cheniere’s license in May 2011 to study the economics of additional exports.

They say further delays jeopardize the ability of United States natural gas producers and liquefaction terminals to ink long-term deals with foreign customers, as Australia, Canada and other countries race to approve their own export facilities.

During Thursday’s House Energy and Power Subcommittee hearing with Moniz on Thursday, a trio of Texans asked Moniz about the issue: Republican Reps. Joe Barton, Ralph Hall and Pete Olson.

Rep. Morgan Griffith, R-Va, also wanted to know if delays were putting the United States at a disadvantage.

But Moniz disputed the notion that there have been “delays.”

Lawmakers in the briefing with Smith said they anticipate another decision could come in the next month.

Critics of expanded natural gas exports — including some large industrial users of the fossil fuel — say more foreign sales could cause the domestic price to climb, hiking energy bills for manufacturing plants as well as households. Manufacturers who use the fossil fuel as a building block for plastics and chemicals also say higher prices could blunt a competitive advantage that has spurred them to move facilities to the United States.