Subcommittee passes LNG exports bill

April 9, 2014

A US Subcommittee on Energy and Power approved new legislation aimed at speeding up the approvals process for US liquefied natural gas (LNG) export applications, the committee announced on 9 April 2014.

Bill H.R. 6, also called the Domestic Prosperity and Global Freedom Act, was approved by a vote of 15 to 11. The legislation grants immediate approval of complete export applications currently filed with the US Department of Energy and modifies the process in the future to ensure exports to (free trade agreement) FTA countries are not subject to delays.

API President and CEO Jack Gerard voiced his support for the bill, saying: “Today’s vote is just the latest signal that momentum for action on natural gas exports is stronger than ever. In the last few weeks, new proposals have won bipartisan support in both the (US) House and Senate, and we are optimistic that members will come together on efforts to harness the full economic and strategic power of America’s energy exports. The US is the world’s top producer of natural gas, and allies around the globe are looking to America for leadership on energy issues. Now is the time to tear down our own bureaucratic hurdles to trade, create thousands of new American jobs, and strengthen our position as an energy superpower.” 

API said the bill would approve a backlog of over 20 export permits at the DOE and expedite future permits for export to World Trade Organization (WTO) members.

Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) backed the bill, saying: “ H.R. 6 sends a clear message that America is going to be a participant in natural gas markets. And that would be very good news for the American economy and for our energy-importing friends around the world.”

The vote comes on the heels of a new report by research and consulting firm GlobalData that says the lack of approved US LNG export terminals has prevented energy companies from competing in the growing global LNG market, which is expected to increase at an average of 10%/yr from 2013-2017. GlobalData forecasts that the US liquefaction will only have a 5% share of the global LNG capacity in 2017, while Australia and Qatar will have 20% and 16%, respectively. Asia will remain the key market for LNG, but other areas, such as Europe, will increase their LNG imports as they seek to reduce their dependence on gas supplies from Russia, the report said.

A key disadvantage, GlobalData says, within the approval process is that exports from US facilities can only be sold to countries with FTAs with the US. Special approval is necessary from the Department of Energy to export to non-FTA countries.

“To date, over 30 applications have been filed with the DOE to sell LNG," said Carmine Rositano, GlobalData's managing analyst for downstream oil and gas. "However, only seven terminals have been approved to export LNG to non-FTA countries and only one facility, the Sabine Pass LNG Terminal, has received all necessary approvals. Being able to sell LNG to non-FTA countries, such as China, Japan, Taiwan and India, is critical to success since these are key markets in the growing LNG trade. Without this approval, commercial risks would be increased and projects would be deemed commercially unviable.”

GlobalData lists advantages of US LNG exports includes more employment opportunities, increased local revenues and lowered trade deficit.

US Rep. Cory Gardner (R-CO), who authored the bill agrees, saying: "This bill will help many of our allies and trading partners all over the world, while providing jobs and economic growth here at home. LNG exports can truly be both a foreign policy success story and an economic policy success story, and comes at a time we can use a heck of a lot more of both.”

Image: Sabine Pass



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