Federal energy regulators are poised to carry out reviews of natural gas export terminals as usual following the Biden administration’s decision to pause Department of Energy approvals, observers said.
Environmental advocates, federal policy watchers and a major liquefied natural gas company said they don’t believe DOE’s freeze on pending and future applications for LNG exports will impede the Federal Energy Regulatory Commission and its quasi-judicial role in the energy sector.
“FERC is an independent agency that is supposed to rise above politics,” said Neil Chatterjee, a Republican who chaired FERC chair during the Trump administration.
FERC authorizes the siting and construction of LNG import and export facilities, while DOE approves export licenses so projects can ship supercooled gas overseas to countries that don’t have free-trade agreements with the United States.
Environmental groups and some younger voters have pushed President Joe Biden to take action on U.S. exports of LNG, particularly after administration decisions on the Mountain Valley pipeline — which would move gas from West Virginia to southern Virginia — and the Willow oil drilling project in Alaska.
Four projects have pending applications to FERC, and two others have been pre-filed to the agency, according to its website. It remains to be seen how quickly FERC may act on filed proposals. FERC’s next open meeting is less than two weeks away, although the agency doesn’t have to wait until meetings to issue orders, observers noted.
DOE has said its pause applies to “all current and future pending applications” until the agency’s review is done. The analysis, which top department officials have said could take months, will include “market, economic, national security” and environmental considerations, according to a department news release.
The pause “was a political decision taken by the DOE, and FERC is supposed to be independent and not subject to pressure from the White House or the Department of Energy,” said Chatterjee, now a senior adviser at law firm Hogan Lovells.
DOE didn’t immediately respond Thursday to a request for comment on Chatterjee’s remarks.
Energy Secretary Jennifer Granholm told CNBC last month that the United States is the world’s largest exporter of LNG but added, “we have a responsibility at the Department of Energy to ensure that all of the authorizations are in the public interest, according to the Natural Gas Act.”
In order to fulfill that responsibility, Granholm said, periodic assessments are needed.
On a call with reporters last week, Granholm said the “last full economic analysis of LNG exports was completed in 2018, and that was when U.S. LNG export capacity” was far lower than it is now.
Given the volume of cumulative approved exports, Granholm said, it’s critical to review export applications using “the most comprehensive, up-to-date analysis of the economic, environmental and national security considerations.”
Among the projects with applications pending at FERC is Venture Global LNG’s Calcasieu Pass 2 project — also known as CP2 — that plans to export 20 million metric tons of gas annually from Louisiana’s Cameron Parish. The project’s application was filed with FERC in late 2021. It would be one of the largest U.S. LNG export terminals.
People for and against CP2 have watched for months to see when the proposal may come up on FERC’s agenda. The terminal, which would sit on roughly 550 acres, would be connected to East Texas via a new pipeline.
That project has landed squarely in the crosshairs of climate activists concerned about greenhouse gas emissions. Opponents have said Louisiana doesn’t need any additional LNG export terminals and have criticized planned investments in fossil fuel projects, while proponents have said exporting U.S. gas is important for energy security reasons.
Before the pause was officially announced, Venture Global expressed concern about a potential “moratorium” on the U.S LNG industry and what that would mean for global energy markets. Venture Global did not respond to multiple requests for comment Thursday.
Another project with a pending application at FERC would expand Cheniere’s existing terminal in Corpus Christi, Texas, by two liquefaction units, or “trains.” Each of those trains would add another 1.64 million metric tons per year of capacity, according to a filing with FERC.
Cheniere, which submitted its formal application to FERC last March, said it doesn’t expect DOE’s pause on LNG approvals to affect the commission’s decisions.
“Cheniere supports a clear, fair and robust permitting framework and believes any delay or disruption to it risks injecting uncertainty into the U.S. regulatory environment,” said Bernardo Fallas, a Cheniere spokesperson, in an email Thursday.
“Nonetheless, we are confident we will continue to secure all regulatory approvals for our expansion projects within our expected timelines, as we have for more than a decade under multiple administrations,” Fallas added.
The developers for the other proposed projects — by Venture Global in Louisiana and one by Kinder Morgan in Georgia — did not respond to requests for comment.
‘Where the money is’
FERC spokesperson Celeste Miller said Thursday in an email that the agency is aware of and reviewing the Biden administration’s announcement on LNG exports.
Acting Chair Willie Phillips, a Democrat, said in a statement Friday that FERC “is responsible for the siting [of export terminals] and DOE for the export authorization.” He said FERC “does not coordinate with DOE in making the respective public interest determinations.”
“In line with our standard practice, we are focused on matters properly filed and pending before FERC, and we defer to DOE on issues within DOE’s exclusive jurisdiction,” Phillips added.
FERC members are nominated by presidents and confirmed by senators.
Commissioner Allison Clements, also a Democrat, and Mark Christie, the commission’s lone Republican, declined to comment. The commission currently has two vacant seats.
Roishetta Ozane, founder of the environmental justice group Vessel Project of Louisiana, said FERC’s history of “being the agency that has rubber stamped” LNG projects makes her think the agency will continue as usual.
“I don’t think they’re going to hold off,” Ozane said on a call with reporters last week, adding, “I don’t think that it’s wise” for FERC to continue with approvals, “knowing that they could stall in DOE.”
DOE’s approval authorizes projects to export to countries that don’t have a free-trade agreement with the United States. The United States has comprehensive free-trade agreements in place with 20 countries, none of which is in Europe.
Even if the CP2 project did get a green light from FERC, it’s unlikely that Venture Global would want to move ahead with construction for financial reasons without DOE approval, Gillian Giannetti, a senior attorney with the Natural Resources Defense Council, said during the same call that featured Ozane.
A non-free-trade-agreement (non-FTA) authorization “is where the money is,” Giannetti said.
On Thursday, Chatterjee said project sponsors could have contracts with countries that have a free-trade agreement with the U.S. — and he said those companies might be able to achieve a final investment decision to build a project even without DOE’s approval.
Chatterjee said he thinks DOE will grant more export licenses for non-FTA countries eventually.
“Of course, project sponsors are going to want to be able to go to non-FTA countries, but in the interim, if DOE is going to play games, they still have options available to them to move forward and not be held up,” Chatterjee said.