DOE could meet 45-day LNG export decision deadline, Senate panel told

The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export facilities that a US Senate bill would establish, Christopher A. Smith, assistant US energy secretary for fossil energy, told the Energy and Natural Resources Committee.

“The changes the department has made to its process have been along those same lines,” he said on Jan. 29 in response to Chairwoman Lisa Murkowski’s (R-Alas.) question about S. 33. “We believe we’ve moving in the same direction, and are using the current statute to move ahead. If the legislation is passed in its current form, we can comply with it.”

Smith was less certain about DOE’s meeting a 30-day deadline in a similar bill the US House of Representatives approved a day earlier (OGJ Online, Jan. 28, 2015). He said he had not yet reviewed that measure.

“You said the department is committed to act expeditiously, but I don’t think we’ve got those results,” committee member John A. Barrasso (R-Wyo.), who cosponsored the Senate measure with Martin A. Heinrich (D-NM), told him.

Smith said DOE requires an LNG export facility applicant to satisfy the Federal Energy Regulatory Commission’s siting requirements and a National Environmental Policy Act review before determining the national interest determination process.

“In terms of how the process currently operates, the department believes an applicant needs authorization from FERC to make sure the plant operates safely,” he explained. “Once a project comes out of that pew, the department sometimes has acted the next day. Our intent certainly is to move quickly. But we also have to write these orders carefully and make sure they withstand the necessary scrutiny.”

Life cycle impacts

Smith also told committee member Bill Cassidy (R-La.) that DOE will continue to consider a proposed LNG export project’s potential environmental life cycle impacts in determining whether approving an application is in the US national interest.

Cassidy observed that FERC, in its reviews of proposed LNG export projects, considers such a project’s life cycle impacts imponderable. “That particular determination is full of variables,” he said. “You’re picking a number which is filled with political considerations.”

“We’re looking at two different considerations,” Smith replied. “FERC’s job is to determine whether building the plant is consistent with safety and environmental stability. DOE has to look at all the aspects of a public interest determination.

“When we issue an order, it’s actually a very complex argument that has to consider arguments from all the stakeholders, including the diverse ideas we’ve heard in this hearing,” he continued. “Our goal is to write a concise order that will withstand all the scrutiny.”

Other witnesses said that increasing US LNG exports would stimulate presently shut-in domestic unconventional gas production because it would open new markets while not increasing US gas prices significantly.

“We’re posing this question as an either-or proposition when we could have both,” America’s Natural Gas Alliance Pres. Martin J. Durbin said. “The limit is going to be determined by global markets. They’re going to influence the number of facilities we build.”

No adverse consequences

“I’ve read most of the studies, and they all come out at the same place,” added Ross E. Eisenberg, vice-president for energy and resources policy at the National Association of Manufacturers. “[National Economic Research Associates] recently updated the study it did 2 years ago for DOE and again showed no adverse impacts for manufacturing from LNG imports. No one will be harmed.”

“It already has helped Europe,” said David Koranyi, who directs the Atlantic Council’s Eurasian Energy Future Initiative. “One of the reason Gazprom had to renegotiate long-term contracts was that several countries built import terminals and began receiving supplies from Qatar and elsewhere. There could be further downward pressure on prices if more countries complete infrastructure to integrate markets, particularly in Central and Eastern Europe.”

Industrial Energy Consumers of America President Paul N. Cicio called for a more cautious approach. “My members’ operating costs for gas range from 20 to 80%,” he said. “There’s no specific price point. But natural gas is subsidized and regulated in countries around the world at much lower prices than here. When we come to this issue, we’re looking at the long term. There are uncertainties in the domestic market that potentially affect supplies.”

Other committee members also questioned whether increasing LNG exports dramatically was wise. “There’s no benefit for Minnesotans in sending this energy abroad,” said Al Franken (D-Minn.). “Manufacturing creates 8 times as many jobs. If you export a natural resource, the people who produce it benefit. But it doesn’t do anything to create jobs in Minnesota.”

“I have been to factories and looked at people who have lost their jobs to other countries,” said Angus King (I-Me.). “We have no advantage on environmental regulations or economics. We do have one on natural gas prices. I just don’t get it. I think we’ll look back on this moment and ask what people were thinking.”

Contact Nick Snow at nicks@pennwell.com.

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