Fundamentals are in place for the US to become a weighty global LNG supplier, but the federal government could accelerate the process by simplifying, shortening, and changing the existing LNG export approval process, an Atlantic Council issue brief suggested.
“A more flexible global gas market and the availability of LNG exports will help remove political leverage from producers that have supplied traditionally isolated markets,” Bud Coote, a resident senior fellow at the council’s Global Energy Center, wrote in the brief, which was released on June 7.
“Increased LNG availability has already contributed to flattening global gas prices and will continue to reduce gas market isolation. This will boost the United States’ economic influence in international markets and its geopolitical and diplomatic weight in international business and political dealings,” he said.
Changing the US approval process by eliminating the distinction between LNG export sales to customers in countries that do not have a free-trade agreement with the US and countries that do “would increase the agility of US sellers to move LNG cargoes to destinations where they are most needed,” Coote said.
The US Department of Energy’s April approval of all future LNG exports from the Golden Pass project in Texas to non-US FTA countries was a step in the right direction, he said (OGJ Online, Apr. 26, 2017).
The diplomatic and geopolitical presence that would accompany US LNG sales in foreign markets would provide additional US leadership opportunities, including the environmental advantages gas provides over coal and other fuels, Coote said. “The opportunity is especially important in the case of China and India where strong growth in LNG is forecast. Both ranked in the top five customers for US LNG exports in 2016,” he pointed out.
During an Atlantic Council conference on the same day that Coote’s issue brief was released, Melanie Kenderline, a council nonresident senior fellow who was counselor to US Energy Sec. Ernest G. Moniz during the Obama administration, said that enlargement of the Panama Canal will let US suppliers move more of their LNG across the world without the destination restrictions that Russian gas giant Gazprom used to impose.
“Finally, LNG demand will be driven by more countries turning to gas to help them meet requirements under the Paris climate accords,” she said.
US LNG also could also play a positive role in bringing cleaner and more dependable fuel to the Caribbean, where many small countries must burn dirtier, more expensive fuel, Coote said. LNG exports from the US also would support European countries’ efforts to diversify their gas supply sources and establish market links with a strong new supplier, he said in the issue brief.
“Europe’s expansion of its pipelines and other infrastructure in central and southern Europe and a new pipeline link for LNG imports from the Iberian Peninsula to central Europe will help reduce its reliance on imports of Russian gas and enhance market access for US LNG,” said Coote. “Globally, as more countries open their markets to LNG, they will also gain additional energy benefits from the growing availability of LNG and flexibility of LNG trade.”
Contact Nick Snow at [email protected].