US House debates LNG export bill

June 20, 2014

Updated 26 June

The US House of Representatives passed bill HR6, the Domestic Prosperity and Global Freedom Act on 24 June, after debates held this week. The House Energy & Commerce (E&C) committee approved HR 6, authored and sponsored by Rep. Cory Gardner (R-CO) on 9 April.

According to Congress.gov, the bill amends the current Natural Gas Act of 1938 to require expedited approval by the Federal Power Commission for natural gas exports from the US to a World Trade Organization (WTO) member nation.

“By allowing more US gas on the world market, we can provide our allies with access to a safe and secure energy source while boosting American energy production and job creation,” Gardner said.

Co-authored with Rep. Gene Green (D-TX), the Republican-led US House Energy & Commerce Committee said that the bill was drafted “in response to Russia’s recent aggression and the DOE’s slow export approval process.”

As of 11 June, the DOE has approved more than 35 free applications of the 42 applications listed on its website to export domestically-produced LNG.  

Gardner also announced an amendment to bill in response to recent changes announces in the DOE’s approval process, announced 4 June. The DOE‘s proposed amended procedures allow the agency to act on applications in the order that they become ready for final action, which follows a required review under the National Environmental Policy Act. Currently, the agency reviews applications according to the published order of precedence.

Under HR 6, the agency would limit the DOE’s decision period to 30 days after the conclusion of the environmental review.

Beyond Capitol Hill

While governmental red tape is a persistent, pressing issue, the bill’s clear intent is to neutralize Russia’s perceived stranglehold over the Europe and Asia’s LNG supply.

On 10 October 2013, the Subcommittee on Energy and Power held a forum entitled “The Geopolitical implications and mutual benefits of US LNG exports,” with bipartisan diplomats and energy advisors from the Czech Republic, Hungary, Haiti, India, Lithuania, Singapore, South Korea, Japan, Thailand, and Puerto Rico present. One purpose of the forum was to call for and discuss US LNG exportation to “shift reliance away from unstable sources.”

According to the transcript, during the hearing for the bill, Full Conference Committee Chair Fred Upton (R-MI) recalled some of the forum’s discussion, saying: “At that forum, we heard directly from three Eastern European governments dependent upon Russia for natural gas, and they told us that the very signal that America is serious about entering natural gas markets would immediately reduce Russia's negotiating leverage and pricing power.”

This week has seen a lot of activity related to the Ukrainian crisis and the global LNG market. On 20 June, the US expanded its list of sanctions, for the first time since 28 April.

This comes days after Russian national Gazprom announced that Prime Minister of the Russian Federation Dmitry Medvedev held a meeting with Alexander Novak, Russian minister of energy, and Alexey Miller, CEO of Gazprom, to discuss Ukranian state-owned Naftogaz’ “persistent non-payment.” Gazprom filed a lawsuit in Stockholm Arbitration to recover US$4.5 billion from Naftogaz.

Gazprom reported Medvedev as saying that the Russian party could resume gas-related talks with Ukrainian colleagues only provided that gas debt was fully settled.

The Ukraine – along with members of the European Union – is a WTO member country. Current rules dictate that LNG export facilities shipping gas to countries that do not have free trade agreements with the US require an additional level of approval by the Department of Energym a process fraught with delays. To date, the Obama administration has approved only seven export applications to non-FTA countries and 26 applications are pending.

On 19 June, Sempra Energy received final US approval from the Federal Energy Regulatory Commission (FERC) for its Cameron LNG export terminal in Louisiana, with construction to start in 2014. It was the second application approved, after Cheniere/Sabine Pass LNG (pictured).

“Cameron LNG will create thousands of high-paying jobs in Southwest Louisiana and will position America as an energy superpower,” US Senator Mary L. Landrieu (D-La), chair of the Senate Committee on Energy and Natural Resources, said.

The American Petroleum Institute announced its support of the FERC's approval while urging Congress to "accelerate" its processes.

“This is great news for the workers of Louisiana and for the US economy, but it shows how slowly the current process is working to unlock the economic opportunities created by the US energy revolution," API Upstream Group Director Erik Milito said. "Members of both the House and Senate are working to expedite the process, and the sooner we act, the sooner that America can cut its trade debt, create thousands of new jobs, and harness its international power as the world’s top producer of natural gas.”

Click here to see Rep. Gardner speak on HR 6, the Domestic Prosperity and Freedom Act

Click here to read the text of HR 6, the Domestic Prosperity and Freedom Act

Click here for more information on HR 6, including a video of proceedings.

Click here to see the DOE's LNG export applications in order of precendence

Read more:

Subcommittee passes LNG exports bill

US sanctions Rosneft president

Magnolia LNG advances

Third US LNG terminal approved for exports



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