US DOE eyes change to approval process for LNG export permits

Washington (Platts)--29May2014/402 pm EDT/2002 GMT


The US Department of Energy would no longer issue conditional commitments granting the export of liquefied natural gas to non-free trade agreement countries ahead of the completion of an environmental review, under a procedural change proposed by DOE on Thursday.

"The proposed changes to the manner in which LNG applications are ordered and processed will ensure our process is efficient by prioritizing resources on the more commercially advanced projects, while also providing the department with more complete information when applications are considered and public interest determinations are made," Christopher Smith, DOE's principal deputy assistant secretary for fossil energy, said in a blog posted to the department's website Thursday.

Smith said the proposal will be subject to a 45-day public comment period.

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DOE has issued conditional approvals for LNG exports since May 2011. The proposed change would mean that public interest determinations on non-FTA export authorizations would not be made until the Federal Energy Regulatory Commission has completed the environmental review of a proposed export terminal required by the National Environmental Policy Act.

Smith said the change will streamline the approval process, give DOE a more complete picture of project impacts and "ensure that applications that have completed NEPA review will not be delayed by their position in the current order of precedence."

DOE will continue to evaluate projects and "act on requests for conditional authorization currently under review during the period in which the proposed changes are under consideration," Smith said.

Kevin Book, managing director of Clearview Energy Partners, said in an email Thursday that he expects the procedural change to take effect after DOE wraps up its pending review of the non-FTA authorization for the Oregon LNG project.

"Today's action would also effectively reset the way DOE tallies approved export capacity because only final projects will count towards the total," Book said. "In our view, this reset down from 9.27 Bcf/d of final or conditionally approved capacity to 2.2 Bcf/d of approved capacity hews more closely to economic reality."

Jason Bordoff, former energy adviser to the White House for the Obama administration, said in a statement Thursday that the proposed change would be an "improvement that should expedite the department's review process" as it will allow the department to hone "scarce time and resources only on the most commercially viable projects."

Bordoff, who is now founding director of Columbia University's Center on Global Energy Policy, added that "reviewing projects that have received their final FERC approval will also allow DOE to consider the impact of future applications with a more accurate understanding of the total volumes of LNG capacity likely to actually be built."

DOE said it will also conduct an economic study on the potential impacts 12-20 Bcf/d of LNG exports would have on the gas market, public interest and the economy. The department also released two reports Thursday that "address the environmental footprint of unconventional natural gas production and the lifecycle greenhouse gas impacts of US LNG exports," it said.

Senator Mary Landrieu, chair of the Senate Committee on Energy and Natural Resources, pressed DOE in March to streamline the approval process for LNG export permits.

"The studies show and I believe that we can [increase gas exports] while still maintaining a cheap, abundant supply of natural gas at home necessary to fuel America's manufacturing renaissance," the Louisiana Democrat said in a statement Thursday. "However, I am also encouraged that DOE will initiate an updated economic study to ensure the domestic price of natural gas stays affordable for consumers."

--Jasmin Melvin, jasmin.melvin@platts.com
--Edited by Katharine Fraser, katharine.fraser@platts.com

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