Our Move Towards Energy Exportation: The U.S. Senate Explores Natural Gas Exports Following the DOE’s Approval for a Second Facility to Export Liquefied Natural Gas (LNG) to Non-FTA Countries

            On May 21, 2013, the U.S. Senate Committee on Energy & Natural Resources held the Full Committee Forum: Domestic Supply and Exports to discuss the U.S. supply and export of natural gas.  The Senate Committee’s natural gas roundtable followed the U.S. Department of Energy’s May 17th approval of the second facility to export liquefied natural gas (“LNG”) to countries that do not have a Free Trade Agreement (“FTA”) with the U.S. (“non-FTA countries”).  This is only the second of more than twenty such pending applications to be approved by the DOE.  The first application was approved two years ago.  You can read our previous post for more about the DOE’s LNG export approval.  The energy industry predicts a spike in global LNG demand over available supply in the foreseeable future, and this area of the industry is likely awaiting the most policy development.  During the May 21st Senate Committee on Energy & Natural Resources natural gas roundtable, discussions highlighted the tensions presented by the possibility of the U.S. entering the LNG export market, as well as the urgency to do so if the U.S. is going to compete.

            The opening statement by Chairman Wyden noted that the potential exporting of U.S. energy resources is “a subject of great interest in our country,” but it is one with conflicting views regarding whether it is in the best interests of the country:

Some will assert that this is unquestionably a good thing, that the energy trade could reduce our trade deficits, improve relationships with our allies and provide a further boost to a recovering economy. Others are going to assert that unfettered exports, with little to no consideration of broader economic and regional concerns, could lead to the United States “exporting its advantage.”

My own view is that our country should not be wedded to this either/or choice between no exports and no limits on exports. Done right, there ought to be a way to get the trade benefits to exporters and our trading partners while maintaining the domestic economic and energy security benefits to our country.

The shale boom has come at an extremely fortuitous time for America. It is providing many of our manufacturers an opportunity to re-import jobs that had moved away. This is a once-in-a-lifetime opportunity for our nation’s economy at a time when millions of our people are hurting economically. It is also producing a growing, thriving domestic oil and gas industry, creating jobs across the country and reducing our nation’s dependence on imported energy. In short, we are now in a position of strength.

           Ranking Member Murkowski followed with insight into the exigencies that must be considered if the U.S. will move into the LNG export market:

I’m pleased the Department of Energy is moving forward under its existing authorities to approve LNG export license applications. It’s my hope that last week’s decision on Freeport is the first of many projects that will be approved in the coming weeks and months – not years. The decision clearly shows that the Department’s review process is deliberative, impartial and thorough – though greater certainty should be provided so we can press our advantage in world markets.

The vast majority of independent analyses conducted over the past year have found that exports overwhelmingly benefit the economy. And, ultimately, market forces will serve to limit the number of export facilities that actually get built. We simply cannot afford to needlessly drag our feet on exports, or we’re going to let real economic development opportunities, and the chance to provide our allies access to an abundant, affordable and clean source of energy, slip through our fingers.

The forum also was attended by several government and industry witnesses who provided their perspectives on these issues.  You can see the full webcast of the roundtable here.

            With the current opportunity to capture a percentage of the global LNG market, we may see pressure for the DOE and legislators to act more expeditiously with respect to LNG export approval and policy.  There are approximately twenty additional applications pending the DOE’s approval to export LNG to non-FTA countries.  You can see a summary of all LNG export applications submitted to the DOE here.