Expediting US LNG Export Applications: LNG Allies Puts the Case For

US Congress is considering bipartisan energy bills that, among other things, would set a new deadline on the US LNG export licensing process, and I am often asked why LNG export project sponsors and their supporters believe such a deadline would be useful. Let me explain.

Section 3 of the US Natural Gas Act prohibits the export of natural gas—including liquefied natural gas (LNG)—to a foreign country without prior approval from the US Department of Energy (DOE):

• Applications to export US LNG to nations with Free Trade Agreements with the US that “include the national treatment of natural gas” must be granted “without modification or delay.”
• However, applications to export US LNG to nations without FTAs are subject to a “public interest” review and are approved by DOE if judged “not to be inconsistent with the public interest.”

Under a policy change adopted in August 2014, DOE now waits to complete the non-FTA public interest review until after the agency in charge of facility licensing—usually the Federal Energy Regulatory Commission (FERC)—has rendered its final “order” and after any “requests for rehearing” of that order have been substantively addressed.

While DOE has been approving non-FTA applications reasonably quickly after the requests for rehearing have been resolved, in almost all cases DOE has sufficient data to complete its non-FTA public interest review at an earlier date, such as when the environmental studies pursuant to the National Environmental Policy Act of 1969 (NEPA) have been finalized.

Legislation which passed the US House of Representatives in 2015 (H.R. 8) and the bill in the Senate (S. 2012) would expedite DOE action on non-FTA permit applications by setting a new statutory time limit. The House bill would set a 60-day and the Senate bill a 45-day deadline.

In January 2015, at a Senate Energy and Natural Resources Committee hearing on an earlier bill (S. 33), Christopher A Smith, DOE’s Assistant Secretary for Fossil Energy, indicated that DOE could and would comply with a statutory deadline if Congress passed one.

Why enact such a deadline? If a 45-day deadline had been in force a year ago, the last major non-FTA applications might have been approved five to eleven months faster:

• Cheniere Energy’s Corpus Christi LNG project could have received its non-FTA licence on/about November 22, 2014, instead of May 12, 2015, 171 days faster.
• Dominion’s Cove Point project could have had its non-FTA licence on/about June 29, 2014, instead of May 7, 2015, 332 days faster.
• Cheniere Energy’s Sabine Pass (Trains 5 and 6) project could have received its non-FTA licence on/about January 26, 2015, instead of Jun. 26, 2015, 151 days faster.

While 151 to 332 days (five to eleven months) may not seem so long, setting a deadline on DOE non-FTA decisions could make a real difference for many US LNG export projects that are completing the regulatory review process while trying to secure customers, finalize engineering, and arrange project financing.

Fred H Hutchison is executive director of LNG Allies, a US nonprofit organisation committed to creating a more liquid natural gas marketplace, expanding fuel diversity, and enhancing energy security.