Christopher A. Smith, the Obama administration’s point man on liquefied natural gas (LNG) exports, shed little light last Monday at a national regulatory commissioners’ meeting on when the Department of Energy (DOE) will begin acting on pending applications for authorization to export natural gas to countries with which the United States does not have free trade agreements (FTA).
“I’d be able to state more definitively what [the] time line would be after the comment period is over and we know what we [have] received,” said Smith, acting assistant secretary of the DOE’s Office of Oil and Natural Gas, at the winter meeting of the National Association of Utility Regulatory Commissioners (NARUC) in Washington, DC.
Asked if the department would be acting on applications by the end of the year, Smith would only say: “our job is to make sure that we make good, prudent public interest determinations based on the evidence before us.”
So far the department has received 30,000 comments related to the export of LNG to non-FTA nations, and the comment process is ongoing, according to Smith.
The issues raised in the public comments “are all issues that we will consider in making a public determination” on whether exports to non-FTA nations are in the interest of the U.S., Smith said.
In late January comments were due on the DOE-commissioned NERA Economic Consulting study, which found the U.S. would gain “net economic benefits” from allowing LNG exports (see NGI, Dec. 10, 2012). While the energy industry supports LNG exports, consumers groups and lawmakers are split on the issues. of whether to allow unrestricted exports of LNG to the world market.
Smith noted that DOE plans to act on non-FTA LNG export applications on a “first-come-first-serve basis,” and added that “priority [will be given] to those that have already pre-filed” with the Federal Energy Regulatory Commission (FERC). There currently are 11 applications pending at FERC to site export facilities, most of which are in the pre-filing stage, according to the agency’s web page.
Only one project, Cheniere Energy Inc.’s Sabine Pass LNG export facility, has received both DOE authorization to export to the world market and FERC approval of its terminal facilities (see NGI, April 23, 2012).
Diane Leopold, senior vice president at Dominion Transmission, was not optimistic about the outlook for U.S. LNG export projects. “It is likely that many, if not most, of the proposed export projects will not be built. That is typical for these kinds of projects” because of financing and other issues. “U.S. projects are already at a disadvantage because costs to liquefy and transport natural gas from here will be higher than for some other countries,” she said.
“The time to move forward [on LNG exports] is now. Any additional delay…puts our nation at risk for missing out on important economic and national security [benefits],” Leopold said.
“We are not opposed to actual exports, but we are concerned about exports happening too quickly, creating a shock to the U.S. market in prices. It needs to be done in a very deliberative, very, very careful way,” cautioned Paul Cicio, president of the Industrial Energy Consumers of America. He contends that the NERA Economic report is flawed, and should give policymakers “pause” for concern.
According to Cicio, the NERA study calculated that the net benefit to the U.S. in 2015 would be $10 billion in a $14 trillion economy, followed by a net benefit of $20 billion in 2020, which is “trivial…hardly economic growth.”
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