While Vladimir Putin consolidates his control over Crimea and inks a $400 billion gas deal with China, a strange mélange of environmentalists and protectionists here in the United States is urging the Obama administration to further delay its approval of natural gas export facilities. Given the narrowing window of opportunity American businesses have to access customers overseas, a “pause” is in many cases synonymous with de facto denial.
The Department of Energy (DOE) has issued one full license and six conditional licenses to projects seeking to export liquefied natural gas (LNG) to non-Free Trade Agreement countries. Combined, these licenses authorize 9.27 billion cubic feet per day of exports.
This logic should be rejected for four simple reasons.
First, the NERA report did examine volumes beyond 12 billion cubic feet per day. The study assessed 63 cases involving multiple variables and found net economic benefits in every single one. One case even included unconstrained export levels as high as 22.98 billion cubic feet per day. When NERA was commissioned by Cheniere to update its study using EIA data from 2013, the analysis still found net economic benefits for export levels as high as 53.45 billion cubic feet per day.
Second, DOE is perfectly capable of accessing and incorporating the latest EIA data into its license approval orders. The most recent one – for Jordan Cove LNG, published in March – contains multiple references to more recent data, including that 2014 data from EIA “suggest domestic supply and demand conditions that are more favorable, not less favorable, to exports.” Every conditional license has cited the most recent data available at the time, not simply the NERA study or the 2011 data upon which it was based.
Third, there is a much stronger case for accelerating, rather than delaying, the LNG export review process. Greater approved volumes would send a positive signal to the developing global LNG market that American supply was coming online, empowering our friends and allies today in their contract negotiations with countries like Russia.
Ultimately, the real question is how many of these projects will actually get built and how quickly. In the grand scheme of things, a piece of paper from DOE affirming that exports are in the public interest – a fact which we already know – matters far less than shovels in the ground, liquefied gas in production, and seaborne shipments heading to customers around the world. But without that piece of paper, none of that can happen.
Murkowski is the Alaska's senior senator, serving since 2002. She sits on the Appropriations; the Energy and Natural Resources; the Health, Education, Labor and Pensions; and the Indian Affairs committees.