DOE Changes LNG Review Process

The Department of Energy (DOE) at noon today announced that it will dramatically alter the way it has been considering applications for licenses to export liquefied natural gas (LNG) to nations with which the United States does not have a free trade agreement (FTA).  Key excerpts from the announcement:

  • “Today, in order to reflect changing market dynamics, the [DOE] is proposing to review applications and make final public interest determinations only after completion of the review required by environmental laws and regulations that are included in the National Environmental Policy Act review (NEPA review), suspending its practice of issuing conditional commitments.
  • “The proposed changes to the manner in which LNG applications are ordered and processed will ensure our process is efficient by prioritizing resources on the more commercially advanced projects, while also providing the Department with more complete information when applications are considered and public interest determinations are made.
  • “[M]arket participants have increasingly shown a willingness to dedicate the resources needed for their NEPA review prior to receiving conditional authorizations from [DOE]. In response to these and other developments, the Department intends to make final public interest determinations only after a project has completed the NEPA process, instead of issuing conditional authorizations. By removing the intermediate step of conditional decisions and setting the order of DOE decision-making based on readiness for final action, DOE will prioritize resources on the more commercially advanced projects.
  • “DOE plans to undertake an economic study to gain a better understanding of how potential U.S. LNG exports between 12 and 20 billion cubic feet per day (Bcf/d) could affect the public interest. Using more recent data from sources like the Annual Energy Outlook 2014, the [EIA] will update its 2012 LNG Export Study, which only looked at export cases of 6 and 12 Bcf/d. Following the EIA update, DOE will again contract for an external analysis of the economic impact of this increased range of LNG exports and other effects that LNG exports might have on the U.S. natural gas market. While these studies are underway, the Department will continue to act on applications as stated above.
  • “To date, the Department has issued final authorization for export to non-FTA countries at a rate of 2.2 Bcf/d. If at any future time the cumulative export authorizations approach the high end of export cases examined, the Department will conduct additional studies as needed to understand the impact of higher export ranges. At all levels, the cumulative impacts will remain a key criterion in assessing the public interest.
  • “In keeping with [our] commitment to an open and transparent process, [DOE] will make the proposed procedural change and environmental reports available for a 45 day public review and comment period.”