With its fourth global liquefied natural gas (LNG) export authorization last Wednesday, the U.S. Department of Energy has approved a volume of exports that is beginning to make some nervous. Approvals have gathered pace, but a pause might be coming.

The latest authorization, for Dominion Cove Point LNG LP, came 35 days after the previous, for Lake Charles Exports LLC. The department waited 80 days between the second and third approvals and two years between the first and second. Analysts at ClearView Energy Partners LLC wrote that the 35-day interval between the last two approvals is shorter than the 45 days they had been assuming would be the case.

DOE has now approved up to 6.37 Bcf/d of exports to non-free trade agreement (FTA) countries, modestly surpassing the 6 Bcf/d volume used in modeling by NERA Economic Consulting for the “low” case in its exports study (see NGI, Dec. 10, 2012), ClearView said.

In its Cove Point announcement, DOE referenced the Energy Information Administration’s (EIA) upcoming “Annual Energy Outlook,” (AEO) which should be released in early December. The report is expected to provide more current data with which to evaluate the potential market impact of exports.

“Even if EIA’s supply and price projections don’t change significantly, a new AEO presents new information, potentially justifying a pause,” ClearView said. “Early evidence of any changes in EIA’s underlying model could become available when the agency releases its ‘Winter Fuels Outlook’ on Oct. 8, 2013…

“…[E]ach successive approval is likely to draw greater attention from stakeholders and Capitol Hill, especially now that total volumes have crossed the 6 Bcf/d…[W]e would suggest that as many as three additional projects could win conditional approval before any year-end pause: an extension to the FLEX project (0.4 Bcf/d); Sempra’s Cameron project (1.7 Bcf/d) and Jordan Cove (1.2 Bcf/d) for total approved or conditionally approved volumes of 9.67 Bcf/d.”

U.S. Senate Energy and Natural Resources Committee Chairman Ron Wyden was also watching the export volume tally.

“…[T]he United States is now squarely in the range that experts are saying is the most likely level of U.S. natural gas exports,” he said. “If DOE approves exports above that range, the agency has an obligation to use most recent data about U.S. natural gas demand and production and prove to American families and manufacturers that these exports will not have a significant impact on domestic prices, and in turn on energy security, growth and employment.”

Predictably, a pause in approvals would be welcomed by some and jeered by others. “…[W]e urge DOE to continue the momentum and move forward with the 20 applications that remain pending,” said Center for Liquefied Natural Gas President Bill Cooper. “With a robust regulatory process in place and thorough review conducted, LNG exports will clearly be a win-win for our economy, industries and consumers.”

America’s Energy Advantage Chair Jennifer Diggins, a spokeswoman for steel maker and gas consumer Nucor Corp., said the current volume of authorized exports is a threat to U.S. gas-consuming industries. “We are now approaching a volume of LNG exports that many experts project will impact price and volatility for natural gas,” she said. “We’re increasingly concerned with the process and data DOE is using to justify more exports of American natural gas to our global competitors…DOE should immediately undertake a review of the cumulative impacts of its decisions up to this point, and clearly articulate in advance its criteria for determining the public interest under the law.”

In the opinion of some analysts who have studied the global LNG market, the volume of exports ultimately approved by DOE is moot because it will be the market that ultimately governs how much LNG leaves U.S. terminals.

Last summer, Ken Medlock, a Baker Institute energy fellow at Rice University in Houston, told NGIthe United States will be “lucky to see more than 1 Bcf/d” of exports 10 years from now. “I don’t think it’s going to be a huge number” (see NGI, Aug. 13, 2012). Last fall, LCI Energy Insight and Energy Ventures Analysis said exports from North America (Canada, Alaska and the Lower 48) will be about 10 Bcf/d in 10 years if 60% of the Asian market’s uncontracted LNG demand was captured by North American terminals (see NGI, Oct. 15, 2012).

Analysts at Goldman Sachs Commodities Research said some export terminal projects could have trouble attracting financing for fear of a capacity overbuild. Besides the financing hurdle, there also is the necessary Federal Energy Regulatory Commission approval. When tallying up global LNG, Goldman only counts the 5.9 Bcf/d of U.S. export proposals that have announced offtake agreements, analysts said Thursday. These include Cove Point, Sabine Pass, Freeport LNG and Cameron LNG.

“We continue to see LNG exports as one of the four major drivers of the 21 Bcf/d of U.S. gas demand growth we expect in the next seven years, with the other three main drivers being pipeline exports to Mexico [see NGI, Feb. 11], Industrial demand for gas and regulation-induced coal-to-gas switching as coal-fired power generators are retired,” Goldman said.

How much of a demand driver LNG exports become, of course, depends upon the global market. Last week ConocoPhillips Vice President Mike Nazroo said at an industry conference in Australia LNG supply could outstrip demand, The Australian reported. “In the longer term, capacity additions look set to catch up with, and even overtake demand,” the newspaper quoted Nazroo saying. “Much of this supply growth is set to come from the Australian project wave, but there will be competing projects from North America, East Africa, Nigeria and Russia.”

As for Cove Point, subject to environmental review and final regulatory approval, it is conditionallyauthorized to export at a rate of up to 0.77 Bcf/d for 20 years. Dominion Cove Point previously received approval to export LNG from the facility to FTA countries in October 2011 (see NGI, Oct 17, 2011). Environmentalists are fighting the project, which still needs approval from FERC.

“The United States has a narrowing window of opportunity to join the global gas trade,” said U.S. Sen. Lisa Murkowski (R-AK) of the latest export approval. “In order for us to take advantage of the geopolitical and economic benefits offered by selling American gas to our friends and allies overseas, projects like Dominion’s Cove Point must be approved without unnecessary delay…

“I must point out that Cove Point filed its application in October 2011 and is just now seeing a decision. On average, each of the four projects approved so far had to wait 22 months for a decision. I’m encouraged that DOE seems to have picked up the pace of its reviews. It’s important that DOE now move with timely purpose onto the next.”

The export project is expected to cost $3.4-3.8 billion, according to the company, which filed its facilities application in March with the Federal Energy Regulatory Commission. Pending receipt of regulatory approval and permits, construction is scheduled to begin in 2014, with an in-service date of 2017. Capacity is fully subscribed with 20-year terminal service agreements (see NGI, April 8). Pacific Summit Energy LLC, a U.S. affiliate of Japanese trading company Sumitomo Corp., and GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Ltd., each have contracted for half of the marketed capacity.

The existing regasification terminal has connections to the pipeline grid, LNG storage capacity and an updated pier. Construction will chiefly entail adding liquefaction capability. According to Dominion Cove point, the facility will have access to Appalachian gas, including from the Marcellus Shale, as well as gas from the Gulf of Mexico, Midcontinent, Rockies and Canada. Affiliate Dominion Transmission Inc. is said to operate the largest underground gas storage system in the country as well as the Dominion South Point trading hub (see related story).