As the international community deals with the Russia-Ukraine crisis, three congressional hearings are scheduled this week to address the evolving discussion on liquefied natural gas exports and energy security. Is industry's push to rapidly ramp up exports of LNG valid? During today's OnPoint, Marty Durbin, president and CEO of America's Natural Gas Alliance, explains why he believes speeding up the permitting process for LNG export facilities in the United States could provide greater energy security.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Marty Durbin, president and CEO of American's Natural Gas Alliance. Marty, it's nice to have you here again.
Marty Durbin: It's always a pleasure to be here Monica.
Monica Trauzzi: Marty, as the international community deals with the Russia-Ukraine situation there are three congressional hearings happening this week that are focused around liquefied natural gas exports and sort of the broader conversation on energy security. The argument coming from the industry is that the U.S. should move to change its laws and permitting process so that we can rapidly get LNG exported to international markets. It would not have a short-term impact on what we're seeing happening right now in Russia, though, so why the big push on that front?
Marty Durbin: Well I think it clearly won't have an impact tomorrow on Ukraine, but I think the fact that we've got this abundant, affordable resource right here in the United States in our natural gas, it's giving the opportunity for the United States to make a very strong statement about our ability and our willingness to play a strong role in the international, you know, the global energy dynamic, the global energy markets; send a strong signal both to the international community and to the markets that we're going to be there to help our friends and we're going to be able to minimize the ability of other countries to use energy as a weapon.
Monica Trauzzi: And could it send a signal to Russian business interests for example, an immediate signal that would then lead to them taking action?
Marty Durbin: Well I think that it certainly will send signals to the global market to help provide liquidity, that it's going to allow for the facilities that are ready to be built here and then again providing that energy into the global marketplaces going to have a spill-over effect in Europe and elsewhere.
Monica Trauzzi: Your industry is being criticized by some for sort of jumping at this opportunity to make this international issue a focus point on the LNG export debate. Do you think that you're overplaying your hand a bit?
Marty Durbin: Absolutely not. I mean if taking advantage of the fact that more of the public and more policymakers now have a clear understanding about the opportunity we have to use our energy abundance here, to play a stronger role in the global marketplace, then that's a good thing. That's a good thing for everyone, because it's going to mean more jobs here in the U.S., it's going to mean greater environmental benefits both here and around the world, and greater energy security not just for us but for our allies.
Monica Trauzzi: The Department of Energy under Secretary Moniz has been moving fairly quickly on the permitting process for these LNG export facilities. In fact DOE has just approved its seventh facility, the Jordan Cove Facility. There's a regulatory process that needs to be followed here. Do you respect that process and the pace at which these facilities have been approved?
Marty Durbin: A great respect for Secretary Moniz and the Department of Energy, and I do think that they are supportive of being able to export LNG. The question really comes down to, you know, how do we move this process forward? Don't forget just because DOE gives an approval doesn't mean that a facility is going to be built. They still have to go through an existing process at FERC; it's a stable process, there are regulatory processes that are not only thorough, it's not inexpensive either. So it's not the final word.
Our preference would be that DOE look and declare that exporting liquefied natural gas is in the national interest and then allow the FERC process to play out, allow the capital markets and the global LNG marketplace itself to help determine how many of those facilities are going to be built, and I think that's a more efficient process.
Monica Trauzzi: And do you think there's an appetite to finance all of these facilities?
Marty Durbin: I think the general belief is that no, you're not going to see every one of these facilities financed. When each facility is going to $5 billion, $10 billion or more, you know there's a natural constraint out there in the fiscal markets, as there is with just the overall global LNG market capacity.
Monica Trauzzi: So if we were to abruptly and rapidly expand our potentials to export, we don't really know what the impacts on natural gas prices would be here at home. Is it worth the risk to American consumers then?
Marty Durbin: Well you say we don't know, but DOE itself has a study out there, there are many other independent studies that have looked at what would be the impact of exporting liquefied natural gas. All of them have come back and said that the impact on price would be minimal. So I think we do know what the potential impact would be. The good news is that those studies were done at a time when we -- again, we're continuing to find out more about our ability to produce natural gas efficiently, effectively and far more than we ever thought we were going to be able to produce.
Monica Trauzzi: But those studies were also completed assuming the current permitting process.
Marty Durbin: Right, but I don't think that has much of an impact on whether or not -- you know because you're still going to be constrained by the capital markets and the global market for LNG itself on how many of these facilities will actually be built.
Monica Trauzzi: So the other big factor here is the political and regulatory discussion on fracking. Can that keep pace if we do move a little more quickly on the LNG exports?
Marty Durbin: I'm not sure, you know I think the fracking regulation is pretty robust right now both at the state level and at the federal level, and I think so we know we must and we are safely and responsibly producing natural gas. We're going to continue doing that. The good news is that we've now got another opportunity to take even greater advantage of this resource by exporting some of this as LNG.
Monica Trauzzi: Japan has always been considered an attractive market for the U.S. to have export to. They're willing to pay top dollar for the resource. What's the incentive then for U.S. companies to export to other countries who may not be willing to pay quite as much as a market like the Asian market?
Marty Durbin: Well again early on it may be that the Asian market is what's going to get more of the LNG, but again if the United States makes very clear that we're going to play a strong role in the global marketplace for LNG it will have an impact on the overall availability of LNG and for our allies and friends around the world to be able to have access to natural gas.
Monica Trauzzi: There are several Western companies that are highly invested in Russian energy. What do you think the impacts then are on those companies if Russia were to lose a part of its energy market share?
Marty Durbin: Well I think that's something we can't know yet. I mean we're going to have to wait and see what happens here with developments in Ukraine and elsewhere and see what kind of impact that has. We certainly hope that there aren't actions taken that will totally disrupt the energy markets, but we'll have to see.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show.
Marty Durbin: OK, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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