DOE proposes changes in its LNG export application review process

An addition was made to this story on June 2.

The US Department of Energy is considering changes in its review process for LNG export applications by limiting final national interest determinations to projects that have completed their National Environmental Policy Act compliance reviews. The move would suspend its practice of issuing conditional approvals.

The proposed changes will ensure the process is efficient by prioritizing resources on the more commercially advanced projects, while also providing the department with more complete information,  DOE’s Fossil Energy Office said on May 29.

DOE also plans to launch an updated economic study, and is releasing two environmental reports addressing unconventional gas production’s environmental footprint and US LNG exports’ lifecycle greenhouse gas impacts, it added. Comments on its proposal will be accepted through July 21, FEO said.

It said that by considering projects that are more likely to be constructed, it will be in a better position to determine a proposed project’s cumulative impacts on the US national interest.

“While it is not assured that all projects for which NEPA review is completed will be financed and constructed, projects that have completed the NEPA review are, generally speaking, more likely to proceed than those that have not,” it said.

Its new economic study aims to better understand how 12-20 bcfd of LNG exports would affect the US gas market. DOE intends to ask the US Energy Information Administration to update its 2012 LNG export study, which looked at a 6-12 bcfd range.

So far, DOE said it has issued final authorization for 2.2 bcfd of US LNG exports to countries not having a free trade agreement with the US. The Natural Gas Act directs DOE to determine whether such exports would be in the national interest. Applicants also must meet US Federal Energy Regulatory Commission requirements along with state and local rules.

Varied reactions

Three US senators immediately welcomed the news. “Today’s decision by [DOE] to streamline the permit approval process is a positive step forward to responsibly export America’s abundant supply of natural gas,” said Mary L. Landrieu (D-La.), who chairs the Energy and Natural Resources Committee.

Her predecessor, Ronald L. Wyden (D-Ore.), who now chairs the Finance Committee, applauded DOE’s announcement that it was conducting fresh studies to reflect current market conditions. “Gas is a strategic American advantage that is already creating jobs and making our industries more competitive in the world market,” he said.

Lisa Murkowski (R-Alas.), the Energy and Natural Resources Committee’s ranking minority member, also considered DOE’s proposal a positive step, adding, “I continue to oppose delays to the build-out of our export capacity, which I firmly believe to be in the national interest, and do not believe additional study is necessary.”

Erik Milito, the American Petroleum Institute’s upstream and industry operations director, also said that growing public and congressional support for more US LNG exports shows quicker action is needed.

“It remains to be seen whether the new guidelines will improve the current process, but there’s no doubt that the system today is too slow,” he said. “The economic and environmental benefits of LNG exports are well-established by numerous studies and reports, and the time for review is past.

Other responses

The Industrial Energy Consumers Association expressed cautious support for DOE’s proposed change and new study. “Approval of an LNG export facility are for periods of 20 years or greater, and a lot can happen over that time frame which cannot be anticipated today that could either significantly increase domestic demand or negatively impact supply,” IECA Pres. Paul N. Cicio said on May 30.

“It is for this reason that great caution is needed,” he continued. “Once an LNG export terminal is approved, there is no putting the genie back in the bottle.”

Environmental organizations were more positive. The Sierra Club applauded DOE for proposing an end to conditionally approving LNG export applications prior to environmental reviews.

“It's never made sense to evaluate LNG exports without knowing the impact they would have on the environment and on our climate, so this announcement is a step in the right direction,” Nathan Matthews, a Sierra Club attorney, said on May 29.

Republican leaders of the US House’s Energy and Commerce Committee were critical. “Rather than working with Congress to fix the problem, the administration announces an abrupt move to introduce new excuses to delay an already broken process,” Fred Upton (Mich.), the committee’s chairman, and Cory Gardner (Colo.), who sponsored a bill to facilitate LNG export approvals at DOE, jointly said on May 29.

“This action will further slow down approvals and could discourage investment in export projects,” they indicated. “Instead of adding more uncertainty to the process, we need a solution that brings an end to the existing queue.”

Contact Nick Snow at nicks@pennwell.com

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