On December 5, 2012, the Department of Energy’s Office of Fossil Energy (“DOE/FE”) released a much-anticipated study prepared by NERA Economic Consulting (“NERA”) on the potential macroeconomic impacts of liquefied natural gas (“LNG”) exports on the U.S. economy and the feasibility of exporting a range of quantities of LNG to the global market. DOE also announced that it would resume next year processing the 15 applications currently pending before it for authorization to export LNG from the lower-48 states to non-Free Trade Agreement (“Non-FTA”) countries.1 DOE/FE had halted its review of Non-FTA applications in late 2011 to commission studies on the cumulative impact of granting new export authorizations. Together with an earlier study prepared by the U.S. Energy Information Administration (“EIA”) on how specified scenarios of increased LNG exports could affect domestic energy markets, the NERA study will be used by DOE/FE to inform its decision-making on pending and future Non-FTA applications.

The NERA study concludes that the U.S. is projected to gain net economic benefits from allowing LNG exports across all scenarios examined, which included exports of 6 Bcf/day, 12 Bcf/day, and unconstrained LNG exports. According to NERA: “The economic impacts of different limits on LNG exports were examined under each of the market scenarios. Export limits were set at levels that ranged from zero to unlimited in each of the scenarios. Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.”

DOE/FE has made both the NERA study and the EIA study (together called the “2012 LNG Export Study”) part of the administrative record for each of the 15 pending Non-FTA application proceedings, and invites public comment on both studies, with comments received also becoming part of the record for each pending proceeding. The deadline for filing initial comments is January 24, 2013, and reply comments are due February 25, 2013. Commenters are instructed to limit their comments to the factors addressed by the reports, including domestic energy consumption, production and prices, and macroeconomic factors such as gross domestic product, welfare analysis, consumption, U.S. economic sector analysis, and LNG export feasibility analysis. Commenters should be aware that the findings and conclusions of the EIA and NERA studies have not been adopted by DOE/FE, but will be considered by DOE in making its determination about whether a proposed export application satisfies the Natural Gas Act’s public interest standard.2

DOE/FE will resume the processing of the pending applications after conducting its own evaluation of the studies and the public comments received. DOE/FE has confirmed that it will first act upon those applications for which the Federal Energy Regulatory Commission pre-filing environmental review process has commenced, in the order which DOE/FE received the applications. DOE/FE will then act upon the rest of the pending applications and any new applications received. The order of precedence for pending applications is:

  1. Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC
  2. Lake Charles Exports, LLC
  3. Dominion Cove Point LNG, LP
  4. Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC
  5. Cameron LNG, LLC
  6. Jordan Cove Energy Project, L.P.
  7. LNG Development Company, LLC (d/b/a Oregon LNG)
  8. Cheniere Marketing, LLC
  9. Excelerate Liquefaction Solutions I, LLC
  10. Carib Energy (USA) LLC
  11. Gulf Coast LNG Export, LLC
  12. Southern LNG Company, L.L.C.
  13. Gulf LNG Liquefaction Company, LLC
  14. CE FLNG, LLC
  15. Golden Pass Products LLC

To comment on the 2012 LNG Export Study or ask questions, contact the professionals identified on the sidebar.