America's Natural Gas Alliance (ANGA) believes more lawmakers in Congress support liquefied natural gas (LNG) exports than oppose them and supports changes at the U.S. Department of Energy (DOE) in approving such export facilities. But ANGA cautioned that environmental groups opposed to oil and gas drilling have made inroads at the local government level.
The oil and gas trade association also said several producers, including Southwestern Energy Co. and Cabot Oil & Gas Corp., are making investments on their own to ensure timely development of pipeline infrastructure to get their supplies to market.
On Monday, U.S. Sen. Edward Markey (D-MA), a longtime foe of LNG exports (see Daily GPI, Aug. 14, 2013; Feb. 15, 2012), wrote a six-page letter to Commerce Secretary Penny Pritzker, arguing that LNG exports violate the Energy Policy and Conservation Act of 1975, which also bars crude oil and natural gas exports.
"I don't understand all of his legal arguments," ANGA CEO Marty Durbin told attendees at the LDC Gas Forum Northeast in Boston on Tuesday. "Sen. Markey and others have been very clear about their position on exporting LNG. I'm not overly concerned about this particular line of questioning. I think there is an appetite in Washington for seeing exports.
Separately, Center for LNG President Bill Cooper, a lawyer, told NGI on Tuesday that the Energy Policy and Conservation Act gives the president the authority to direct the commerce secretary to promulgate regulations prohibiting exports -- not the obligation to do so, as Markey argues. Further, the Act was created in a time of resource scarcity. There is no scarcity of natural gas now.
“That authority [to prohibit exports]...is couched in the premise of scarcity of the resource,” Cooper said. “Well, if the premise fails, all that follows from it fails, too.”
And times have changed since 1975 around the globe, too, not just in the United States.
"I think the situation in Eastern Europe and Ukraine greatly raises the visibility of the [export] issue,” Durbin said at the conference. “Many more in Congress understand the opportunity we have. Even if it's not a matter of getting gas to Ukraine tomorrow, which we can't do, the sooner we can send a very clear message as a nation that we are going to allow for exports of LNG, that the projects are on their way, even if that gas ends up going to where the higher prices are going to be had (Japan, India and Asia), that still helps takes some pressure off of the global markets."
Durbin said he recently spoke with officials from Poland, who are preparing to renegotiate their nation's gas contract with Russia's Gazprom. "They feel they would have more leverage in those contract negotiations if the U.S. already said we are going to be exporting LNG and that there are projects on the board and under construction," he said.
Last month, DOE proposed modifying its review process for applications to export domestically-produced natural gas as LNG to countries that do not have a free trade agreement with the United States (see Daily GPI, May 29). Durbin said he has been calling for a change to the DOE process for years.
"I refer to the [current] DOE process as a 'deli counter process,' [where you serve] who pulled the first ticket and just go in order, not taking into consideration which of these projects were actually further along in the process either at FERC [Federal Energy Regulatory Commission] or were lining up customers and financing," Durbin said. "I look at the DOE process and say they're getting rid of 'first come, first serve.'
"If the DOE process results, as they say they hope it will, in an accelerated and more consistent process for approving LNG export facilities, we think it's a great idea. My only hesitation in fully embracing it is looking at the example of the Keystone XL pipeline. You can always find a reason to delay final decisions on these things. But the folks at DOE have been very up-front with us; they've been very open, and I think they are trying to find a way to do this. But the decisions aren't all being made at DOE; there's another 'house' down the street that seems to be having a stronger role in this."
Durbin said that although ANGA members are all producers and the trade association is focused primarily on demand and market development issues, it cannot ignore issues on the production side.
"We're past the discussion of will we or won't we develop our natural gas," Durbin said. "But we need to continue improving how we're dealing with local communities. We are seeing some challenges. Colorado is a perfect example. You have to separate the issues on the production side.
"There are some [environmental] groups out there whose stated agenda is that natural gas should stay in the ground. I don't agree with them, but I respect their opinion. They haven't been able to make any changes at the federal level, and they've had very little success at the state level, with a few exceptions. But you've got local communities that do have some concerns."
Durbin said concerns about water contamination and air pollution have receded, but they are being replaced with a host of new concerns, such as truck traffic, dust and damage to local roads.
"Oil and gas production can be a short-term disruptive operation," Durbin said. "It is incumbent on us as the industry and as individual companies to work closely with them, be very clear about what it is we will be doing. These are real issues that you have to deal with. These are issues that as the industry and the production evolves will be worked out both at the state and local governments and among the industry."
Durbin added that another trend ANGA is seeing is producers investing in pipelines.
"One very simple example is that we have both Southwestern and Cabot in Pennsylvania investing in the Constitution pipeline," Durbin said (see Shale Daily, March 19). "Our members have a great interest in getting their supply to the market where it needs to be. We've got individual companies that are actually buying into the infrastructure on the pipeline side, but they're also, through us and individually, working directly with the pipeline companies and regulators."