Moniz: Feds ‘working hard’ on LNG export proposals

Energy Secretary Ernest Moniz insisted Thursday that the Obama administration is “working hard” to evaluate companies’ bids to broadly export U.S. natural gas, amid criticism  the process is taking so long it could prevent America from competing globally.

“We are working hard on evaluating the next-in-line (application),” Moniz told reporters at an event organized by The Christian Science Monitor. “We’ve committed to trying to do expeditious review — case-by-case — in the order as declared by the Department of Energy in 2012.”

The Energy Department gave conditional approval to Freeport LNG’s plans to widely export liquefied natural gas from a Quintana Island, Texas facility in May. Now it is vetting an application by Southern Union Company subsidiaries, which asked for permission to export 2 billion cubic feet per day of natural gas liquefied at a plant proposed for Lake Charles, La.

Before exporting LNG to countries that don’t have free trade agreements with the U.S., companies must win approval from the Energy Department, which is tasked with determining whether those exports are in the public interest. Separately, the Federal Energy Regulatory Commission is charged with vetting proposed natural gas liquefaction facilities.

With more than a dozen other companies in the queue behind the Lake Charles project, export advocates say the process is taking too long. Lengthy reviews could limit the ability of U.S. companies to ink deals to supply liquefied natural gas to customers in Asia and Europe for the next two decades, 34 senators told Moniz in a letter last month.

“The current LNG market is uniquely primed to benefit the United States,” noted the Center for Liquefied Natural Gas. “We have a wealth of natural gas resources, and a number of established energy producers vying to move forward with the process of exporting LNG. Continued delay will mean passing up the ability to create thousands of jobs and millions of dollars of revenue for state and local governments.”

Moniz pledged that the Energy Department would continue case-by-case reviews of export license applications, with an eye on the cumulative impacts of the permitting decisions. That could include eventually pausing the review of specific applications to study the issue, he said.

“It’s possible, but right now, we are pursuing the case-by-case (reviews,” he said. “We just have to watch what is going on. Obviously, a big issue is how do exports drive additional production.”

“The cumulative criterion means we have to keep looking at what’s happening in the market,” he added.

Moniz also rejected calls to change the order in which the Energy Department is considering those natural gas export applications. Under an order established in December, the Energy Department gave priority to companies that had already filed related applications with the Federal Energy Regulatory Commission.

Reshuffling the order now would cause more problems than it would solve, Moniz suggested.

“Reopening the order and putting in new criteria at this stage would just create more entropy,” he said.

In his wide-ranging discussion with reporters, Moniz also stressed the importance of government oversight of surging domestic oil and gas drilling, given the risks of contaminating ground water and leaking heat-trapping methane into the atmosphere.

And he underscored the Obama administration’s view that despite the carbon emissions associated with natural gas, the fossil fuel is essential to fighting climate change while greener energy alternatives are still being developed.

Methane emissions associated with the production and transportation of natural gas doesn’t “eliminate the significant advantage” the fossil fuel has over coal, when it comes to carbon pollution, Moniz said. And while natural gas still produces greenhouse gas emissions, Moniz said it is “part of the solution” to climate change while zero-carbon options are being developed.

“Eventually, if we are going to get down to really low emissions, natural gas — just like coal — would have to have carbon capture to be part of that,” Moniz said. In the meantime, “natural gas is a bridge to a low-carbon future.”

President Barack Obama’s blueprint for combating climate change includes paring methane emissions tied to natural gas, both at the wellhead and when the fossil fuel is transported and processed. Although methane does not remain in the atmosphere as long as other greenhouse gases, it is 21 times more potent than carbon dioxide when it comes to warming the atmosphere. Obama directed executive agencies to develop a comprehensive strategy for tackling methane emissions.

Moniz said the federal government needs to take a holistic view, assessing methane emissions “end-to-end,” across the supply chain. “It’s not just production, and, frankly, it’s not just natural gas production,” he said. “We need to get a better handle on it.”

At the same time, Moniz said, the government has a role overseeing oil and gas drilling, including the hydraulic fracturing process that is key to pulling hydrocarbons from dense rock formations across the United States.

“I still have not seen any evidence of fracking, per se, contaminating groundwater,” Moniz said, responding to one of the biggest environmental concerns surrounding the practice. But, he said, there are environmental risks and methane contamination associated with wells that have been hydraulically fractured.

For instance, he noted problems with “poor well completion” and “errors” in the handling of water that flows back to the surface from fractured wells.

“All of these are manageable,” he said. “We know what to do about completing a well, et cetera, but manageable still has a requirement of being managed, being managed all the time.

“That’s where regulation and enforcement — I include self enforcement as well as regulatory enforcement — is critical,” Moniz added. “I think there’s been a lot of progress, but as the production continues to grow that also raises the stakes to make sure we have best practices applied all the time.”