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DOE Nominee Dodges Questions on 'Pause' in LNG Permits

Reading from the same playbook that Energy Secretary Ernest Moniz used at his confirmation hearing in April, President Obama's nominee for assistant secretary of the Department of Energy's (DOE) Fossil Energy Office dodged direct questions on whether the department plans to place a pause in approving liquefied natural gas (LNG) export permits later this year (see Daily GPI, April 10).

Both Ron Wyden (D-OR), chairman of the Senate Energy and Natural Resources Committee, and Sen. Lisa Murkowski of Alaska, the ranking Republican member of the committee, asked Christopher Smith, who currently is assistant secretary for oil and natural gas at DOE, to clarify the administration's approach on gas exports during his confirmation hearing Thursday.

Smith was one of three nominees who appeared before the committee -- the other two being Steven P. Croley, who has been tapped to be general counsel at DOE and Esther P. Kia'aina, who Obama has picked for assistant secretary for Insular Areas at the Interior Department. Of the trio, Smith came under the heaviest questioning.

"Our process is that we want to move forward expeditiously on a case-by-case basis to make sure that each one of these applications gets the appropriate consideration," Smith told the panel.  DOE has said in the past that it will give priority to those whose projects that are in pre-filing stage with the Federal Energy Regulatory Commission (see Daily GPI, Dec. 7, 2012).

"Mr. Smith was helpful today on the 'pause' issue because there's been a lot of discussion where people on all sides of the issue have been trying to figure out what the administration's position was," Wyden said. "Mr. Smith clarified that essentially we were going to stay on the case-by-case approach," although admittedly he did not dismiss the possibility of a "pause" at some point.

DOE has slow-walked permits for LNG exports to countries without U.S. free trade agreements (non-FTA), approving only four in the past couple of years to non-FTA countries, said Sen. John Barrasso (R-WY) during the confirmation hearing. Meanwhile, he noted that the department is sitting on 20 non-FTA applications.

Before granting export permits, "we're constantly looking at all the market signals, all the data we have at our disposal to ensure that we're making good real-time determinations," Smith said.

When pressed by Murkowski, Smith did not dismiss the possibility of DOE commissioning another study on the macro-economic impacts of gas exports.  "We don't have currently a set plan" to commission a study, but "we're evaluating that." Another study could further delay the DOE approval of gas exports to foreign nations.

A study by NERA Economic Consulting, which was released in December, found that exporting domestically sourced LNG would generate a net benefit to the economy, with greater exports bringing greater gains. It further noted that the impact on domestic gas prices would be relatively modest (see Daily GPI, Dec. 6). DOE approval of export licenses was delayed for a year while the study was conducted.

Both Wyden and Barrasso indicated their support for the Jordan Cove LNG project on the West Coast. "One of the advantages of Jordan Cove [is that] the company said it will primarily export Canadian LNG,"  and won't displace gas from U.S. markets, Wyden noted. And it will provide certain communities, such as the Rocky Mountains, with access to international markets for their natural gas, Barrasso said.

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