The U.S. does not plan to cap liquefied natural gas exports to countries with which it has not entered a free trade agreement, Secretary of Energy Ernest Moniz said in a June 30th interview. “We have no ceiling on the amount of export,” he told Kyodo News, suggesting that LNG exports will be allowed to continue while domestic market prices remain stable. He asserted that a sharp increase in domestic natural gas prices is unlikely as long as exports remain modest, and explained that more exports will lead to even more production.
Section 3(a) of the Natural Gas Act requires DOE to grant applications for LNG export to non-FTA partners as long as the proposed exports are consistent with the public interest. DOE’s public interest analysis considers the domestic need for the natural gas that is proposed for export, potential threats to domestic energy supply, and any economic, energy security, and environmental impacts, to the extent that they are relevant to the public interest. Japan has been requesting U.S. LNG exports since it suspended most of its nuclear reactors in the wake of the 2011 Fukushima nuclear disaster, and faced a crisis from rising energy import costs. Japan has agreed to tentative contracts for the U.S. to export LNG to the utilities Chubu Electric Power Co. and Osaka Gas Co. as early as 2017. These contracts are the result of only the second permit granted by DOE to allow LNG exports to a non-FTA partner, the last such permit having been issued to Cheniere Energy for its Sabine Pass facility in May 2011. There is currently a backlog of twenty applications to build and operate LNG export terminals, some of which have been under review by DOE for as long as two years.
However, the administration just yesterday approved an application to export natural gas from a third facility, the export terminal in Lake Charles, Louisiana. The conditional license will allow BG Group PLC and Energy Transfer LP’s Southern Union Co. to ship two billion cubic feet of LNG daily for twenty years to non-free trade agreement countries. The strong desire for U.S. LNG exports underscores the manner in which hydraulic fracturing and the resulting abundance of natural gas supplies have changed the American energy dynamic.
With assistance from Andrew McNamee