A blanket decision from the U.S. Department of Energy (DOE) affirming that exports of LNG are in the national interest is the shot in the arm the industry needs to seize a golden opportunity, America’s Natural Gas Alliance (ANGA) attests in a newly released white paper.
In “Carpe Diem: LNG Exports Are America’s Once-in-a-Generation Opportunity,” ANGA takes issue with the process that forces companies wishing to export to run the traps of the Federal Energy Regulatory Commission (FERC) guidelines before applying for approval from DOE. The trade group wishes to simplify and turn the process around.
“By some estimates, a company going through that process can plan spending probably upward of 18 months to two years and up to $100 million,” Marty Durbin, president and CEO of ANGA, told journalists during a conference call to discuss the paper’s release. “On one level you can say, if you’re going to go through that process, you’ve made a pretty good commitment that you’re serious about moving this forward.
“The process itself gets into the engineering of the project of the facility itself. It gets into environmental issues,” he said. “It’s a comprehensive process and while it’s extensive and expensive, it is a predictable process─and the industry has generally been comfortable with how that process works. The more unpredictable piece has been the DOE approval.”
In fact, approval is automatic if an exporter wants to ship to a nation engaged in a free-trade agreement (FTA) with the U.S. The issue concerns facilities wishing to ship LNG to non-FTA countries. That’s where ANGA is looking to add certainty and speed to the process, turning the order around and allowing a facility to move through the FERC process knowing that DOE’s approval is already a sure thing.
How much would that kind of change help LNG exporters? Some.
“If there was a blanket rule that said DOE would approve all exports, would that help? Yeah, a little bit,” Patrick Nevins, Washington-based partner with the Hogan Lovells law firm, said. “There is the lingering uncertainty, the sort of nightmare that you go through the FERC process and you spend two years and it costs you $50 million or $100 million and what if DOE doesn’t approve things?
“There’s no current reason to think that’s going to happen, but things could change. The political environment could change,” he said. “If you could avoid that uncertainty, that would be helpful. I think most of the political decisions about whether LNG exports are in the public interest seem to have pretty much been made, so that the political dynamic is less of a worry.”
What is not uncertain is the vast quantity of the country’s recoverable gas reserves, estimated by the Potential Gas Committee as 2,853 Tcf.
“From what is realistically expected to be built here in export facilities, I don’t think there is any question that we have the ability to produce enough natural gas to feed those facilities,” Durbin said.
“We do have plenty of gas,” said Erica Bowman, ANGA’s vice president of research and policy analysis. “In a lot of ways, the real questions are: What will the global market absorb? And how quickly can we get in there to build these facilities to participate in that world market?”
Contact the author, Joseph Markman, at jmarkman@hartenergy.com.
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