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LNG Approval Delays Costing Billions, Think Tank Says

July 22, 2013
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Pro-business Washington, DC, think tank American Council for Capital Formation (ACCF) has a new paper extolling the benefits of exporting liquefied natural gas (LNG) that it hopes will light a fire under the U.S. Department of Energy (DOE) and its export approval process.

According to the paper "Liquefied Natural Gas: Why Rapid Approval of the Backlog of Export Applications is Important for U.S. Prosperity," dawdling by DOE on export approvals is costing the U.S. economy "thousands of jobs and billions of dollars" in economic activity.

"We fear that this protracted bureaucratic delay significantly undermines the vast potential that LNG exports can bring to our nation's economy," said Margo Thorning, ACCF chief economist. "This inaction endangers the state, local, national, and global benefits of producing and exporting LNG. America is racing against international competitors for LNG sales abroad, with at least 63 LNG export projects planned or under construction around the globe. So time is of the essence."

LNG exports have the potential to spur positive increases in nationwide employment (73,100-452,300 jobs between 2016 and 2035) and gross domestic product ($15.6-73.6 billion annually between 2016 and 2035), according to a recent study by ICF International (see NGI, May 20) and cited by ACCF.

Earlier this month, a bipartisan coalition of 34 senators called up DOE to accelerate its processing of permit requests to export LNG to countries with which the United States does not have have a free trade agreement. At the current rate, the senators estimated that it could take DOE up to two years to approve all such pending permits (see NGI, July 15). Twenty applications to build and operate Liquefied Natural Gas (LNG) export terminals are currently under review by DOE staff, some for as long as two years, ACCF said.

The paper provides a compilation of the status of LNG export applications, the current length of application review, the estimated economic benefits listed in each application, and total estimated capacity. ACCF asserts that the multi-year federal approval process is creating significant opportunity for delay, which could derail the overall investment if foreign competition is realized.

To date, the administration has approved two permits to export LNG. "Considering that each project can take five years or more to move from approval to export flow and cost billions of dollars to permit and build, the paper highlights the importance of the Energy Department and the Federal Energy Regulatory Commission approving all applications so that the market can best determine appropriate supply and demand and which projects are best positioned to move forward," ACCF said.

ACCF has also launched the "Act on LNG" campaign to promote LNG exports. "The free market, not bureaucrats, must decide which U.S. export facilities ultimately get financed and built," Thorning said. "Let's not let this golden opportunity for increased production and positive trade balance slip through our hands."

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