Sen. Lugar shakes up gas-export battle

Retiring Sen. Dick Lugar (R-Ind.) is floating legislation to ensure that federal regulators approve natural-gas exports to NATO countries, arguing the access to U.S. supplies would help allies curb their reliance on Russia and Iran.

“Now is the time to dramatically shift gas markets to blunt the temptation for political manipulation of supplies by Russia and Iran,” said Lugar, the top Republican on the Senate Foreign Relations Committee.

The bill, while facing long odds of passage in the lame-duck Congress, adds a new wrinkle to battles over efforts to greatly expand U.S. natural-gas exports.

The Energy Department (DOE) is weighing 15 applications to export more than 21 billion cubic feet of liquefied natural gas (LNG) per day to nations that don't have free-trade agreements with the U.S.

Federal law, according to DOE, generally requires approval of exports to nations that have the deals with the U.S., but other applications face more scrutiny.

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Lugar’s bill aims to allow NATO members access to growing U.S. gas supplies by placing them in the automatic approval basket.

“My legislation would place NATO allies on equal footing with free trade partners under U.S. law in providing for automatic licenses for U.S. LNG exports,” he said in a letter to colleagues.

“Unlike in past years, U.S. domestic shale natural gas production affords us the opportunity to directly alleviate the dependency of our NATO allies in the Baltics, Central and Southeastern Europe, and Turkey on Russian supplies, and further isolate Iran, while benefiting the U.S. economy by opening new markets,” Lugar wrote.

The bill is among the recommendations in a broader report by the Foreign Relations Committee’s GOP staff titled “Energy and Security from the Caspian to Europe.” Check out the whole thing here.

The bill arrives a week after a DOE-commissioned analysis found that expanded gas exports would be a net economic benefit to the U.S., despite some domestic price increases.

But some lawmakers, including the incoming Democratic chairman of the Senate’s Energy Committee, are highly skeptical of exports, arguing they will hurt consumers and manufacturers that benefit from abundant, low-cost U.S. supplies.

The consulting firm ClearView Energy Partners, in a research note Wednesday, said the bill adds a new dimension to the export debate.

“[T]he bill and associated report broaden the LNG export debate beyond current commercial and economic considerations by thoughtfully examining how new-found U.S. resource adequacy could be used for geopolitical leverage,” ClearView states.

ClearView argues that Lugar’s effort could force the Obama administration’s hand on gas-export policy.

“[T]he report could provoke responses from the White House, State Department and DOE that elucidate the political and policy underpinnings of the still-opaque DOE review process,” the consultants said.

Lugar is departing the Senate after losing his Republican primary to Indiana State Treasurer Richard Mourdock, who ran to Lugar’s right and then lost in the general election to Rep. Joe Donnelly (D-Ind.).

Lugar is joining the University of Indianapolis as a distinguished professor in the university's Department of History and Political Science.