The Energy Department's final approval yesterday of two high-profile liquefied natural gas export projects in Louisiana and Florida using a new review process triggered cautious optimism -- and calls for more action -- among Republicans eager to export the country's domestic oil and gas.
Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, welcomed the agency's use of a streamlined review process, changes the agency made in May, saying she hopes the approvals will be "repeated soon and often."
The senator's optimistic tone arrives on the heels of DOE scrapping its process of doling out "conditional" approvals for LNG export projects. Today, the department only grants final approval to terminals -- those exporting LNG to countries that don't have a free-trade agreement with the United States -- after they successfully maneuver multi-agency environmental reviews at the Federal Energy Regulatory Commission.
"She was cautious and wary, but it looks like they've followed through so far," said Robert Dillon, a spokesman for the senator. "Murkowski is hopeful the decision is a harbinger of a better review system that will hasten the approval or the decisions of these licenses."
Yesterday's decision on the two projects -- Sempra Energy's Cameron LNG export terminal in Hackberry, La., and Carib Energy LLC's project in Martin County, Fla. -- brings the government's total approved lot of exports to 3.94 billion cubic feet per day of domestic natural gas (E&ENews PM, Sept. 10).
But other Republicans said DOE's new process does little to ease uncertainty in the market -- and vowed to take action.
Sen. John Hoeven (R-N.D.) said his home state's oil producers flare about $1.5 million worth of gas every day because it is not economical to capture and sell it. He welcomed yesterday's announcement from DOE but said it was not enough.
"It's a step in the right direction, but we still need LNG export legislation," Hoeven said during a brief interview yesterday.
H.R. 6, the LNG export bill that passed the House earlier this year, would set a 30-day deadline for DOE to issue its national interest decision once FERC signs off on an export license. Yesterday's decisions came less than a month after DOE finalized its new review process, meaning such a legislative deadline would have affected the Cameron and Carib decisions.
Hoeven said he is preparing a bill that would go further toward delivering the oil and gas industry the certainty it needs to proceed with investments in LNG terminals as well as the necessary equipment to capture gas currently being flared in places like North Dakota -- and the pipelines to get it to market.
While he declined to offer many details of the new legislation, Hoeven said it was inappropriate for DOE to wait until after FERC's decision, which requires a full National Environmental Policy Act (NEPA) review, before providing at least some indication of whether exports would be in the national interest.
"Those are two different things, and so you've got potentially a situation where a company could go through the full-blown NEPA process, spend all the money that is necessary to do that, meet the environmental requirements and then DOE could still say, 'Yeah, but it's not in the national interest,'" Hoeven said.
Before implementing its reform process last month, DOE granted "conditional" approval to a few projects while they were still undergoing FERC review. Hoeven did not say exactly what his bill would do because he did not want to get ahead of the Democratic co-sponsor -- whom he did not name -- that he is working with.
"I think when you get through all the back and forth, we're going to end up with a bill that creates a more certain process to stimulate that investment," he said.
The bill could be introduced as soon as next week, but Hoeven said it likely would not see action until next year, at which point he said he is "convinced" Congress would be able to send an LNG bill to the president. The issue of LNG exports is likely to remain high on lawmakers' agenda, although it could become wrapped up in the separate conversation developing around whether to lift the ban on exporting U.S. crude oil.
Hoeven said the issues should be kept separate because lawmakers and the public had to better understand the need for crude exports, namely that the recent U.S. oil boom has brought a glut of light, sweet oil from shale formations like the Bakken that domestic refineries are not well-positioned to process. He also said export supporters need to make a convincing case that selling U.S. crude abroad would not increase gasoline prices here, a conclusion reached yesterday in a new report from the Brookings Institution and in several other industry-backed studies (E&E Daily, Sept. 10).
"The crude export is getting to be a bigger issue, and we are going to have to work on export legislation," he said. "But the key I think is we've got to work with the public to make sure they understand what we're doing and why, that it's open and transparent, and that it's not going to increase prices at the pump."
For LNG, on the other hand, the export case already has been well-made, Hoeven argued, that "we're flaring it off because we can't sell it."
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