New Export Terminals Won't Ease International Crises in Short Term -- DOE

Any liquefied natural gas terminals now approved by the Energy Department would not start exporting until 2016 at the earliest and so may not have any impact on current international conflicts, an agency official said today.

"These are multibillion-dollar investments ... that last tens of decades," Christopher Smith, DOE's acting assistant secretary of fossil energy, told the House Energy and Water Appropriations Subcommittee.

Cries for expediting federal approval for LNG exports have been the subject of numerous hearings and bills since the Ukraine-Russia conflict began about a month ago.

There is only one operational LNG export terminal in the United States, Smith noted, and it is in Alaska, which does not connect to the Lower 48, where the shale gas boom has dramatically increased natural gas supply.

The supply boom and lower gas prices have already had a significant effect on domestic energy markets, especially on nuclear energy -- something members of the panel also voiced concerns about.

DOE must analyze the long-term public interest of exporting LNG, including the impact on domestic prices, balance of trade and international issues, which requires a "case-by-case" review, Smith said. The Office of Fossil Energy is in charge of reviewing the export of the gas "molecule," while the Federal Energy Regulatory Commission has authority over the safety and operation of the physical terminal, along with other federal agencies such as the Department of Transportation.

DOE approved its seventh LNG terminal yesterday (Greenwire, March 24).

Ranking member Marcy Kaptur (D-Ohio) and other members of the subcommittee asked Smith about the reality of helping the current crisis with LNG exports -- including their effect on domestic prices -- in Ukraine and Northern Europe because of the international political conflict with Russia, a key energy supplier.

The subcommittee was considering President Obama's fiscal 2015 budget request of $4.2 billion for DOE's applied energy programs (E&E Daily, March 24).

Given the current situation both home and abroad, and last year's approved spending levels, Chairman Mike Simpson (R-Idaho) said he was disappointed in a proposed decrease in funding levels for nuclear and fossil energy.

If Obama is "serious about an all-of-the-above energy strategy, I hope this is the last year we see this imbalance in the request," said Simpson, chairing his first hearing as head of the subcommittee. He was formerly the chairman of the Interior and Environment Appropriations Subcommittee.

Rep. Alan Nunnelee (R-Miss.) questioned the Obama administration's decision to cut Fossil Energy's proposed fiscal 2015 budget by $68 million with only a small increase to the export and import office, which faces a queue of 20 pending applications for LNG export terminals.

"Is that budget request enough to address the backlog?" he asked.

Smith reiterated the careful long-term analysis each application requires on an individual basis but said DOE is acting "expeditiously," a phrase that has been repeated often by Energy Secretary Ernest Moniz.

Moniz is scheduled to testify before the subcommittee next week, Simpson said.

The Appropriations Committee is on an "accelerated process" for budget hearings this year with all subcommittee markups to be finished by April 10, Simpson told reporters after the hearing. They are still waiting on budget allocations from full committee Chairman Hal Rogers (R-Ky.).

Troubling times for nuclear

Energy security was also the key point of another line of questioning regarding the U.S. nuclear industry. The recent closures of U.S. nuclear energy plants raised flags for Kaptur and Simpson. Simpson said he was particularly concerned about the small modular reactor program.

Assistant Secretary for Nuclear Energy Peter Lyons said the four nuclear power plants closed for a variety of economic reasons, including the price of natural gas and expensive repairs. Another nuclear plant is slated to close next year in Vermont.

Kaptur noted that all the plant closures were in competitive electricity markets, like her own state, and she said closing these large energy suppliers had a significant impact on jobs, local economics and fuel diversity.

Kaptur asked DOE to provide greater support and focus on looking at the economies of these local communities both in the boom -- such as those prospering under shale gas drilling -- and bust cycles of the energy industry.

Simpson asked about recent actions by energy engineering firm Babcock & Wilcox signaling a change in its support for a joint venture on the small modular reactor Generation mPower. The company is trying to reduce its 90 percent ownership stake to no more than 20 percent. Westinghouse also announced at the beginning of February that it would scale back its efforts on small nuclear reactors, noting a lack of customers and market to hit the economies of scale needed to keep prices manageable.

DOE provided an undisclosed amount of funding to help develop mPower in 2012 and announced $226 million in financing to Oregon-based NuScale Power at the end of last year.

Lyons said Babcock & Wilcox had not submitted any changes in its proposal to DOE and added that the agency does not know of the company's plans.

DOE remains "committed and enthusiastic about the future of SMR," he said.

Katherine Ling, E&E reporter

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