The department’s order gives the Lake Charles terminal permission to export up to 2 billion cubic feet of natural gas a day for 20 years. The approval is contingent on the Lake Charles terminal receiving a permit from the Federal Energy Regulatory Commission (FERC) for construction of the facility.
The decision came nearly three months after Freeport LNG’s terminal in Quintana Island, Texas, got the go-ahead. The United States has given the green light to 5.6 billion cubic feet per day of gas exports from three projects. That represents about 8 percent of daily U.S. gas output.
In 2011, Cheniere’s Sabine Pass terminal in Cameron Parish, La., was the first project to get permission from the Obama administration to export to countries not party to the Free Trade Agreement (FTA).
Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA with the United States, the Natural Gas Act directs the Department of Energy to grant export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.”
Some lawmakers and companies have complained that the government is not moving fast enough to approve LNG exports. Other firms, which have benefited from cheap domestic natural gas prices, have urged caution in approving applications.
The three projects approved by the Department of Energy would have the capacity to ship 5.6 billion cubic feet of gas a day, or about two trillion cubic feet a year. The U.S. produced about 25 trillion cubic feet in 2012.
Senate Republicans have urged the Department of Energy to move quickly to approve more export permits, in part because allies are lining up to buy U.S. natural gas. Foreign governments routinely express their concerns over long delays, as well as the uncertainty surrounding the timeline for review. Asian countries are particularly hungry for U.S. natural gas. Japan, which is seeking alternative fuels to generate electricity after shutting most of its nuclear power plants, has asked the U.S. to expedite approvals.
Although demand is strong, the U.S. is competing with Canada and other nations preparing export plants. Analysts say there is a limited window of opportunity to secure global buyers.
The Department of Energy has received requests to ship about 30 billion cubic feet of natural gas per day, but many analysts say fewer than 10 billion cubic feet of export capacity will actually be built. One major reason is the multibillion-dollar cost of building export facilities, which cools natural gas to negative 260 degrees Fahrenheit—turning it into liquefied natural gas, or LNG—before shipment.
The energy company Dominion Resources Inc. is next in line with its Cove Point project in Maryland, which is seeking approval to ship one billion cubic feet of natural gas a day.
Some U.S. manufacturers and their allies on Capitol Hill have questioned the wisdom of allowing unfettered exports, saying the result could be higher prices at home and less competitiveness for U.S. industrial companies that use gas as a feedstock. Several manufacturers—including Dow Chemical Co., Alcoa Inc. and Nucor Corp. —formed a coalition earlier this year to resist the wave of export proposals. (Reuter, Wash Post, 8/8/2013, WSJ, 8/7/2013, DOE)
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