From the Center for Liquified Natural Gas on Monday:
Two Months Later: Action by DOE on LNG Export
Applications Remains Elusive
In May, shortly following the Department of Energy (DOE) approval of the Freeport LNG’s permit to export liquefied natural gas (LNG) to non-free trade agreement (non-FTA) countries, DOE signaled that it could process pending LNG export permits in 60 day intervals. Such a long interval between processing permits is unacceptable and would mean some applicants must wait over two years to have their permit considered, even though their dockets are closed and no new evidence can be considered in the approval decision by DOE. In fact, the comment period for the next application in the DOE queue closed on August 12, 2011. Despite the unnecessarily long timeline which DOE indicated, it is worth noting that over 60 days have now passed since the approval of the Freeport LNG export terminal, and DOE has failed to process any additional applications.
This is concerning for a number of reasons. First and foremost, these regulatory delays do not follow the letter of the law. The law states that after an application is filed with DOE, the department is required to publish a notice in the Federal Register, providing at least 30 days for public comments or interventions. Under the Natural Gas Act, there is a rebuttable presumption that proposed natural gas exports are in the public interest. Unless those who oppose an application can successfully show that a project is not in the public interest, an application must be approved after the close of the comment period. The comment period for public intervention has closed on 16 pending NFTA permits, so these applications can and should be processed immediately.
Moreover, the current LNG market is uniquely primed to benefit the United States. We have a wealth of natural gas resources, and a number of established energy producers vying to move forward with the process of exporting LNG. Continued delay will mean passing up the ability to create thousands of jobs and millions of dollars of revenue for state and local governments. The only way the United States loses is by not acting. So what’s the hold up?
A bipartisan group of 34 Senators voiced these concerns in a recent letterto Energy Secretary Ernest Moniz. The senators aptly warned that the United States will lose out to international competition in the LNG market if the department does not hasten its pace. According to the senators, “[W]e are concerned that the timeline for considering these applications may jeopardize our ability to retain a competitive position against other natural gas exporting nations who are also working diligently to export LNG.”
The senators’ letter also notes that DOE’s current regulatory pace threatens the commercial viability of most LNG export projects by stretching out the approval process for the next two years. In the face of this lengthy delay, the private financing and market opportunities making these projects attractive will have dissipated. Given that each LNG export project would signify a multi-billion dollar investmentand create over 5,000 new jobs, the United States would forego billions of dollarsin private sector investment.
Potential buyers of U.S. LNG are in need of energy supplies, and will not wait years for DOE to make decisions on pending applications. DOE should follow the existing statute, adhere to its own regulations, and continue approving the remaining non-FTA applications. The market is far more efficient and a better arbiter of which applications will succeed or fail than a regulator ever could be. Simply upholding the statutory presumption that these applications should be approved, DOE can provide a timely response that will ensure the United States will profit from these investments and create thousands of jobs. The constant assurancesthat DOE will evaluate all applications “expeditiously” are losing credibility by the day.
With all the mechanisms in place for the United States to harness its resources and access the economic benefits LNG exports stand to bring, it’s time to stop delaying, follow the law and process the pending LNG export applications.
Read more about the benefits of natural gas exports at CLNG’s LNG initiative website: http://lnginitiative.org/
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