Obama administration grants approval for more US natural gas exports

WASHINGTON — As pressure builds on the Obama administration to speed up approvals to sell U.S. natural gas overseas, the Energy Department on Monday authorized exports from a proposed Oregon terminal.

Although the Jordan Cove LNG Terminal in Coos Bay, Ore., is the sixth project to win a coveted license to export liquefied natural gas to countries that don’t have free-trade agreements with the United States, it would be the first new export project on the West Coast.

That would give Jordan Cove a major advantage supplying Asian countries eager for natural gas, but the Energy Department’s conditional approval is only the first step in a long process of financing and constructing the multibillion-dollar terminal.

Opposition building: Environmentalists challenge Obama on natural gas exports

The agency gave Jordan Cove permission to export as much as 800 million cubic feet per day of natural gas over the next two decades, marking the seventh such permit (spanning six projects).

‘We have crossed a line’

Cumulatively, the licenses now mean as much as 9.3 billion cubic feet of American natural gas could be sent each day to non-free-trade partners. That’s near the upper bounds of potential natural gas export levels analyzed in a 2012 study conducted for the Energy Department that forms the basis for deciding whether each pending application is “consistent with the public interest.”

Kevin Book, managing director of the Washington, D.C.-based analysis firm ClearView Energy, said the level of LNG export approvals so far moves the United States into “superpower” territory, nudging close to Qatar’s 10.3 billion cubic feet of daily natural gas export capacity.

With cumulative approvals now in a “high-export scenario” examined by the 2012 study, manufacturers and other big users of natural gas are pressing the Energy Department to halt reviews and conduct a fresh examination of how large-scale exports could affect domestic prices for the fossil fuel.

Related story: Moniz signals more export studies could be on horizon

Sen. Ed Markey, D-Mass., a critic of natural gas exports, noted that the 2012 report predicted natural gas prices would climb by more than 50 percent under a “high-export scenario.” Markey said the potential price tag is $62 billion in higher energy costs for Americans who rely on natural gas for power and heat.

“There can be no doubt that we have crossed a line into an era when we could be massively exporting America’s natural gas, sending the jobs and consumer benefits abroad along with the fuel,” Markey said in a statement. “The level of exports approved is now more than every single American home consumes, and it could impose up to a $62 billion de facto tax on American households and businesses.”

More applications pending

Export advocates insist the Energy Department is moving too slowly in vetting applications, since U.S. law generally requires the government to authorize natural gas sales to non-free-trade partners unless they are not “consistent with the public interest.”

Roughly two dozen other applications to broadly export natural gas are pending Energy Department review.

Jordan Cove’s approval comes ahead of three congressional hearings this week — including two on Tuesday — on sending more U.S. natural gas overseas.

Lawmakers and energy producers also have seized on the Ukraine crisis as evidence America should be moving more aggressively to export the fossil fuel.

Margo Thorning, senior vice president of the American Council for Capital Formation, called the timing of Jordan Cove’s aproval “highly political,” ahead of the congressional scrutiny.

The approval “is meant to show that the Department of Energy is moving swiftly on LNG exports when, in fact, the opposite is true,” said Thorning, noting that Jordan Cove’s application had been languishing for 730 days at the Energy Department.

Sen. Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, said the approval “sends a positive signal to our allies and to energy markets that the United States is ready to join the growing global gas trade.”

Pausing to further study the issue is the wrong approach, added Murkowski, R-Alaska.

The Energy Department stressed in a statement Monday that it will “continue to monitor any market developments and assess their impact in subsequent” case-by-case reviews of pending export applications.

Greenfield project

Even with an export license in hand, companies must also secure approval from the Federal Energy Regulatory Commission, clear environmental reviews and obtain other permits. They also need to attract capital for the expensive projects and line up customers willing to ink 20-year-contracts for super-chilled, liquefied natural gas carried on tankers around the globe.

Unlike other LNG terminals that would be built at existing import facilities, Jordan Cove would be a newly built, greenfield project, sited on an undeveloped stretch inside the Port of Coos Bay, designed to take advantage of gas from the Rockies.

High stakes: LNG export plan draws fire as ‘next Keystone XL’

In February, Canadian officials gave Jordan Cove’s parent company, Veresen Inc., permission to process natural gas from that country.

The project would involve construction of a 230-mile pipeline, as well as the cryogenic equipment to transform natural gas into a liquid.


Also on FuelFix:

Houston hosts major gas conference amid debate over exports