EPA

Pruitt's overseas travel pulls Icahn LNG money into focus

A December trip to Morocco by EPA Administrator Scott Pruitt could benefit Carl Icahn, an activist investor who holds a controlling stake in the largest U.S. natural gas exporter and who helped Pruitt secure his position in President Trump's Cabinet.

Icahn, made famous as a corporate raider in the 1980s, captured Houston-based Cheniere Energy Inc. through aggressive stock buys in 2015, using his holdings to force out Cheniere's founder and CEO, Charif Souki. He quickly remade the company's management, which he had accused of taking outsized risks, and directed Cheniere to get its Gulf Coast liquefied natural gas export terminals up and running.

Cheniere is the first company to ship LNG from the continental U.S. to global markets.

As Pruitt faces intense scrutiny for his expensive travel and close ties to corporate lobbyists, the EPA administrator's trip to Morocco is attracting more questions. At the time, EPA said Pruitt's agenda for the overseas trip included exploring "new and ongoing areas of collaboration" under a U.S.-Morocco free-trade agreement and Morocco's "interest in importing LNG."

Pruitt's advocacy for LNG during the brief trip surprised many at the time because EPA plays no major role in LNG exports. The Department of Energy has authority over exports of the commodity, while the Federal Energy Regulatory Commission oversees the facilities that ship the gas (Greenwire, Dec. 13, 2017).

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Congressional Democrats have demanded more information from EPA on the trip, including on why Pruitt chose not to be briefed by career staff in the agency's Office of International and Tribal Affairs. Instead, Pruitt relied on EPA political advisers.

Pruitt's trip seems in line with the Trump administration's "energy dominance" doctrine, which calls for increased U.S. energy production and a focus on energy exports to bolster U.S. influence abroad.

Yet the role of promoting the interests of American oil and gas companies has fallen to other Cabinet offices in past administrations. Under Trump, an energy-focused trip to a strategic ally in North Africa could have fallen to then-Secretary of State Rex Tillerson, Commerce Secretary Wilbur Ross or Energy Secretary Rick Perry, who has said his main function is to tout U.S. energy interests.

Some observers point to Pruitt's loyalty to natural gas producers in his home state of Oklahoma as a possible explanation for his eagerness to proselytize for LNG exports.

But the Icahn connection to both Pruitt and Cheniere may better explain the Morocco trip, since Cheniere would be the most likely beneficiary of a Moroccan LNG import deal in the near term. Cheniere, with direction from Icahn, has pursued LNG buyers in emerging markets including Morocco.

After Trump won the presidential election, Icahn joined his team of informal advisers at Trump Tower, weighing in on potential Cabinet selections, including for EPA chief. He told CNBC in December 2016 that he interviewed "four or five very good candidates" to lead EPA before concluding that Pruitt should get the job.

Then Icahn got his own job in the administration as Trump's unpaid special adviser on regulatory reform. The New York mogul held the role until August 2017, after coming under fire for pushing for changes to federal renewable fuel standards, administered by EPA, that would benefit a refinery he owns. Advocacy group Public Citizen called for an investigation into whether Icahn's work on RFS reform violated lobbying disclosure laws (E&E Daily, March 8, 2017).

Eben Burnham-Snyder, a spokesman for Cheniere, said he could not comment on issues related to the company board. He confirmed that the company has worked with the departments of Energy and Commerce on LNG exports.

Selling gas abroad

Paul Bledsoe, an Obama-era Energy Department consultant, said Pruitt's Morocco trip and others planned for Japan and Israel, which did not happen, were about burnishing Pruitt's credentials as a political partner to the oil and gas industry.

"Perry is a far more logical face for U.S. energy abroad," said Bledsoe, now with the Progressive Policy Institute.

Sarah Ladislaw, director of the Energy and National Security Program at the Center for Strategic and International Studies, said playing the role of energy diplomat is "only slightly strange" for an EPA administrator, whom Congress charges with protecting the environment and public health.

"I can't speak to the validity of Pruitt's travel and agendas, but the idea that he thought promoting natural gas is good for the global environment and part of his job is not totally outlandish," she said.

Ladislaw noted that his predecessor, Gina McCarthy, often praised renewables at appearances when she was in the job. The former administrator's international travel included conferences, like the 2015 Paris climate summit, and trips like her 2013 foray to China to discuss bilateral engagement on air quality and climate issues.

"If anything, it is by Pruitt's own measures that I would find his activities strange, as an administrator of legislative prerogatives and [as] a conservative talking about shrinking the size, role and reach of government," Ladislaw said. "Those trips seem like an extension of his mandate rather than within his core mandate."

The four-day excursion cost taxpayers a reported $40,000, including a $17,000 plane ticket for Pruitt.

All the while, Trump has fewer diplomats focused on global energy issues than past presidents. Perry disbanded DOE's international office, for example, and his senior deputy for international affairs, Ted Garrish, was just confirmed by the Senate. The new assistant secretary of Energy for international affairs spent last year advising Perry on nuclear issues.

The State Department's Bureau of Energy Resources is the natural ambassador for U.S. energy interests abroad, especially when they collide with geopolitics, but acting special envoy and coordinator for international energy affairs John McCarrick has yet to be confirmed and Frank Fannon, the pick for assistant secretary of State for energy resources, hadn't been nominated when Pruitt headed for North Africa.

Prolific U.S. gas production has made finding new markets abroad an industry priority, but Asia is higher on the list of potential buyers. Morocco has been working to line up financing and support for an LNG import terminal, which would reduce the country's current reliance on Algeria for natural gas pipeline supplies. Morocco is also connected to European gas markets as the Algerian pipeline continues on to Spain, making connecting the North African country to LNG supplies a potentially appealing policy goal for other countries in southern Europe.

Morocco relies heavily on coal for power, and while it is building its solar sector with ambitions to become a significant green energy exporter to Europe, it has called for greater gas use in both the power and industrial sectors. Morocco's nationally determined contribution to the Paris climate accord calls for 3,500 megawatts of combined-cycle gas-fired power by 2025, sourced from LNG.

It's unclear whether Pruitt addressed Morocco's Paris Agreement obligations directly during his meeting with Moroccan Minister of Energy, Mines and Sustainable Development Aziz Rabbah; Minister of Foreign Affairs Mounia Boucetta; and top staff from those agencies.

But a source familiar with the meeting said he touted natural gas as a highly efficient fuel source.

It's an important selling point overseas, said Leslie Palti-Guzman, senior adviser to Rapidan Energy Group and its former global gas director.

"Right now the U.S. is a superpower in terms of gas production, gas exports," she said. "And right now gas is very challenged because of greener renewables or more competitive, cheaper coal, depending on the country. So you need to make the case that gas is a valuable fuel when you're trying to catch your carbon emissions."

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