Energy Department Accepting Comments Regarding LNG Exports

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The Department of Energy (DOE) has issued a notice regarding the availability of the study that it had commissioned to explore the cumulative impact of liquefied natural gas (LNG) exports. The notice sets a January 24, 2013, deadline for filing initial comments (deadline for reply comments is February 25, 2013). The study is available for viewing.

In general, a natural gas export application to countries that do not have a free trade agreement (FTA) with the United States is approved by DOE unless DOE finds that the application is not consistent with the public interest. Applications for LNG export to countries that have an FTA are deemed consistent with the public interest and are granted without modification or delay.

The study, which was performed by NERA Economic Consulting, is likely to affect DOE’s evaluation of the 15 pending non-FTA export applications. The study concludes that the projected impact of LNG exports is a net economic benefit for the United States in spite of higher domestic natural gas prices. A previous analysis by the Energy Information Administration (EIA) estimated that natural gas prices would increase between 3 percent and 9 percent by 2035 due to LNG exports.

So far, DOE has issued just one authorization to export LNG to non-FTA countries: Sabine Pass Liquefaction (Cheniere Energy) was authorized to export 2.2 Bcf/d from its Sabine Pass, Louisiana, facilities. In December 2011, DOE halted the reviews of all other non-FTA licenses until the study was completed. As mentioned above, DOE has 15 applications pending to export LNG from the lower 48 states to non-FTA nations.

In general, the anti-fossil fuel coalition, environmental groups, Rep. Ed Markey (D-Mass.), Sen. Ron Wyden (D-Ore., expected to chair the Energy and Natural Resources Committee beginning in 2013), manufacturers, the American Public Gas Association, and other resource nationalists are opposed to LNG exports. Producers, marketers and financiers, Gulf Coast state officials, and national security advocates (noting the potential to undermine Russian gas exports to Europe and to support U.S. allies such as Japan and South Korea) support LNG exports.

DOE is inviting comments on the study as well as on EIA’s analysis. Specifically, comments should focus on the impact of LNG exports on domestic energy consumption, production, and prices, with an emphasis on the macroeconomic factors, including Gross Domestic Product (GDP), welfare, and consumption in addition to LNG export feasibility.

If you have any questions or comments, please contact Dena E. Wiggins at wigginsd@ballardspahr.com or 202.661.2225, or Jack Semrani at semranij@ballardspahr.com or 202.661.7640.