LNG – Center of Trump’s Energy Plan

It is entirely fitting that the Trump administration’s current policy focus, “energy week,” is largely centered on American energy exports, particularly liquefied natural gas (LNG). After all, the U.S. LNG story is one of the most significant global energy developments of 2017.

The United States now has one major operational LNG export terminal, five others under construction and four more that are fully permitted.

According to a study released Tues. (June 27) by the American Petroleum Institute, these first six LNG export terminals will support up to 170,000 (direct, indirect, induced) jobs during construction, about 50,000 jobs on a permanent basis, and up to $20 billion per year (2015 USD) in “value-added” economic activity over the next decade.

But, this is just for the first “wave” of projects. If the second, equal-sized wave (approx. 70 million tons per year of LNG capacity) of projects/expansions comes to fruition—the number of jobs and value-added economic activity could literally double in magnitude.

And, 12 more major projects—ten in the third wave and two in the fourth wave—are under regulatory review, awaiting authorizations from the Federal Energy Regulatory Commission and the Department of Energy.

There is no doubt that U.S. LNG exports and related upstream production and midstream gas processing and shipping activities can be a “monster tug” that pulls the U.S. economic ship forward in the years ahead.

However, the good news doesn’t stop at the U.S. coastline.

Low-priced U.S. natural gas, spurred by the shale energy revolution, has led to massive domestic fuel-switching and thus big reductions in conventional air pollutants and greenhouse gas emissions. As a result, carbon dioxide emissions in the U.S. electric power sector are at their lowest levels since the early 1990s. Through LNG exports, these benefits can accrue to other nations—such as China, India, and Korea—all of which now rely heavily on coal for power and industrial uses.

Moreover, U.S. LNG can help to bring fuel source diversity to nations—such as those in Central and Eastern Europe—that need alternatives to an incumbent, state-controlled supplier that is not afraid to use its monopolistic power for political leverage.

There is still some skepticism that nations in that region will ever buy substantial volumes of U.S. LNG. However, that doubt does not extend to Poland—where nearly every leader of the Polish government turned out to meet the first cargo of U.S. LNG from Cheniere’s Sabine Pass facility to the Świnoujście LNG terminal on June 8. Nor can it be found in the Baltic states where Lithuanian energy minister Žygimantas Vaičiūnas heralded the announcement Mon. (June 26) that U.S. LNG (also from Cheniere Sabine Pass) would soon reach his nation, saying: “I can boldly call this a historic moment. It proves that Lithuania [can] import gas from all over the world and offer a competitive price for it to the entire region. It is also historical that it is the first time when LNG brought through [the Klaipėda terminal will] be stored in Inčukalns natural gas storage facility in Latvia, where the gas market was liberalized just a few months ago.”

U.S. LNG is already a remarkable success story. LNG cargoes from Sabine Pass have been delivered to some two dozen nations in Asia, Latin America, Europe, and the Middle East. And, as a result, U.S. LNG traffic through the Panama Canal has been greater than initially projected.

But remember: We’re still at the beginning of the beginning.

As U.S. LNG exports ramp up over the coming decades, the American economy will be stimulated, and economic, environmental, and geostrategic benefits will flow to many other nations. And, according to the U.S. Energy Information Administration, this can all be accomplished without raising domestic gas prices unduly for U.S. residential, industrial, or electric power consumers.

There is no doubt that the Trump administration is “all in” when it comes to LNG exports. Energy Secretary Rick Perry acted promptly to approve the first two LNG export licenses that appeared on his desk and President Trump raised U.S. LNG in his meeting Mon. (June 26) with Indian Prime Minister Narendra Modi and is expected to do so when he meets Korean President Moon Jae-in on Thurs., June 29. Plus, there is the 100-day U.S.-China trade action plan that includes LNG.

Of course, U.S. LNG exports will only grow as fast as the global demand for gas. Nonetheless, there are many actions that the federal government can take to support this nascent industry—from speeding up the pace of the U.S. regulatory process to providing unconventional financing support for certain LNG contracts and projects. We are optimistic that the Trump administration is headed in the right direction.

This piece first appeared in The Hill on June 27 and is reprinted with permission.

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