Spurred by tensions between Russia and Ukraine, the U.S. House Energy and Commerce Committee Wednesday approved a modified bill to expedite the review of proposals to export liquefied domestic natural gas to the world. It is thought by backers that injecting U.S. gas into the global market would weaken gas-rich Russia's influence in Europe.
All committee Republicans were joined by five Democrats on the panel to approve the measure on a vote of 33-18. Republicans in particular have criticized the Obama administration and the U.S. Department of Energy (DOE) for perceived slow-walking of applications to export domestic gas to countries that are not parties to free trade agreements with the United States.
Rep. Cory Gardner (R-CO) authored HR 6, the "Domestic Prosperity and Global Freedom Act," to expedite gas exports to U.S. allies. The legislation provides that DOE must issue a decision on any application no later than 90 days of enactment or the end of the application's comment period. It also provides for expedited judicial review for challenges to DOE's decision or inaction on applications. Currently, 24 applications are awaiting action from DOE, and some have been languishing for over two years, according to the committee. In late March the bill was debated in subcommittee (see Daily GPI, March 25).
An earlier version of HR 6 would have approved all of the 24 pending applications to export liquefied natural gas (LNG) to non-free trade agreement (FTA) nations. It also would have broadened the "public interest" standard under the Natural Gas Act to include exports to World Trade Organization countries.
Analysts at ClearView Energy Partners LLC said in a note Wednesday that while it might seem that a bill prescribing a timeline rather than outright export approvals would be an easier sell, it still faces an uphill battle.
"Politically speaking, a bill that requires a decision may represent a lower hurdle than a bill that 'deems' pending applications to be approved, but we nonetheless expect the White House and Senate Democrats to vigorously oppose the bill on grounds that it would result in either the de facto approval -- or the undifferentiated denial -- of another 26.59 Bcf/d of pending volumes 90 days after passage, overriding DOE's case-by-case review protocol," ClearView said.
Legislation to expedite LNG exports has been introduced in the Democrat-controlled Senate, but it has yet to be heard in committee.
The ClearView analysts said they expect the “dramatically modified” bill to clear the House but added that it and similar measures are unlikely to clear the Senate unless tensions between Ukraine and Russia escalate, “and maybe not even then.”
Center for Liquefied Natural Gas President Bill Cooper commended the House committee for its action on the bill Wednesday. "The committee's bipartisan action sends a message to the rest of the world of growing Congressional support for the United States re-emergence as a global energy leader," he said. "In light of bipartisan and bicameral support for accelerated LNG exports, I urge the full House to take action on this bill to accelerate the permitting of LNG export applications."
Large domestic consumers of natural gas have opposed measures that would expedite its export. While proponents of speeding up exports say it would send a "market signal" to Russia, trade association Industrial Energy Consumers of America (IECA) has said that's not so, as proposed export capacity already exceeds global market demand.
"The combination of globally operational, under construction facilities and U.S. and Canadian approved liquefaction plants totaling 556.9 metric tons per annum (mtpa), greatly exceed existing global demand of 237.7 mtpa by 134%. In other words, there already is excess capacity planned for LNG shipments and excess EU capacity to receive LNG that is not being utilized," IECA said. "The 'market signal' already exists."