A third proposal to export U.S. natural gas won a government green light Wednesday, signaling the approval process is on a faster track despite some concerns that greater exports will raise natural-gas prices at home.
A third proposal to export U.S. natural gas won a government green light
Wednesday, signaling the approval process is on a faster track despite some
concerns that greater exports will raise natural-gas prices at home.
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.
The latest approval was awarded to Lake Charles Exports LLC, a venture between
U.K.-based BG Group PLC and Texas-based Energy Transfer Equity LP that plans to
ship up to two billion cubic feet a day from
Lake
Charles
,
La.
The approval lasts for 20 years and permits sales
to countries that lack free-trade agreements with the
U.S.
,
including major European nations and
Japan
.
Energy companies are seeking to take advantage of increased
U.S.
natural-gas production and robust demand around the world. More than a dozen
export proposals are still pending before the Department of Energy.
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. Sen. Lisa Murkowski (R., Alaska) said 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 down
most of its nuclear power plants, has asked
U.S.
officials 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
Lake Charles
project still needs permits from another federal agency, the Federal Energy
Regulatory Commission. FERC approval requires a review of detailed plans, but
it is considered less political.
The Department of Energy has received requests to ship about 30 billion cubic
feet of natural gas a 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 price tag to build an export facility, which cools natural
gas to negative 260 degrees Fahrenheit -- turning it into liquefied natural
gas, or LNG -- before shipping it overseas.
After issuing Cheniere Energy Inc. the first export approval to
non-free-trade-agreement nations in 2011, the Obama administration held off for
more than a year as it studied the economic impact of exports. The second green
light came in May for a
Texas
project, and it took less than three months to get to the third approval
Wednesday.
Earlier this year, Moody's Investors Service predicted only four of the
proposed export projects were likely to be built. It said one of the factors
dictating success was a company's spot in the queue at the Department of
Energy, which has said it would evaluate projects on a first-come, first-served
basis.
The energy company Dominion Resources Inc. is next in line with its Cove Point
project in
Maryland
,
which is seeking approval to ship out 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 may be higher prices at home and
less competitiveness for
U.S.
industrial companies that use natural gas as a feedstock. Several large
manufacturers -- including Dow Chemical Co., Alcoa Inc. and Nucor Corp. --
formed a coalition earlier this year to resist the wave of export proposals.
Sen. Ron Wyden (D., Ore.), the chairman of the Senate Energy and Natural
Resources Committee, said Wednesday that each new permit raises the bar for the
Obama administration "to prove these exports are in the best interests of
American consumers and employers."
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