Updated from our Feb. 1, 2016 Post:
Section 3 of the Natural Gas Act prohibits the export of natural gas — including liquefied natural gas (LNG)—to a foreign country without prior approval from the U.S. Department of Energy (DOE):
Applications to export U.S. LNG to nations with Free Trade Agreements with the United States that “include the national treatment of natural gas” must be granted “without modification or delay.”
However, applications to export U.S. LNG to nations without FTAs are subject to a “public interest” review and are approved by DOE if judged “not to be inconsistent with the public interest.”
Under a policy change adopted in August 2014, DOE now waits to complete the non-FTA public interest review until after the lead agency responsible for facility licensing — usually the Federal Energy Regulatory Commission (FERC) — has rendered its final “order” and after any “requests for rehearing” of that order have been substantively addressed.
While DOE has been approving non-FTA applications reasonably quickly after the requests for rehearing have been resolved, in almost all cases DOE has sufficient data to complete its non-FTA public interest review at an earlier date, such as when the environmental studies pursuant to the National Environmental Policy Act of 1969 (NEPA) have been finalized.
Legislation which passed the House of Representatives in 2015 (H.R. 8) and the Senate in 2016 (S. 2012) would expedite DOE action on non-FTA permit applications by setting a new statutory time limit. The House bill would set a 60-day and the Senate bill a 45-day deadline.
In Jan. 2015, at a Senate Energy and Natural Resources Committee hearing on an earlier bill (S. 33), Christopher A. Smith, DOE’s Assistant Secretary for Fossil Energy, indicated that DOE could and would comply with a statutory deadline if Congress passed one.
Why enact such a deadline? If a 45-day deadline had been in force at the time, all of the major non-FTA applications could have been approved five to eleven months faster:
- Cheniere Energy’s Corpus Christi LNG project could have received its non-FTA license on/about Nov. 22, 2014, instead of May 12, 2015, 171 days faster.
- Dominion’s Cove Point project could have had its non-FTA license on/about June 29, 2014, instead of May 7, 2015, 332 days faster.
- Cheniere Energy’s Sabine Pass (Trains 5 and 6) project could have received its non-FTA license on/about Jan. 26, 2015, instead of June 26, 2015, 151 days faster.
- Energy Transfer’s Lake Charles LNG project could have had its non-FTA license on/about Sept. 28, 2015, instead of July 12, 2016, 288 days faster.
While 151 to 332 days (five to eleven months) may not seem so long, setting a deadline on DOE non-FTA decisions could make a difference for many U.S. LNG export projects that are completing the regulatory review process while trying to secure customers, finalize engineering, and arrange project financing.
As I noted in a recent post (Legislative Endgame Near): American LNG export projects compete in an increasingly fierce global natural gas market and our regulatory regime should—as much as possible—support and enhance the competitive position of U. S. LNG export companies and the thousands of jobs they create/support.