American Oil and Gas Reporter - February 2016 - 28

WASHINGTONWATCH
Time Is Now
For Congress To Act
On LNG Exports
One of the few positive actions affecting the U.S. oil industry last year was Congress lifting the ban on crude oil exports on
Dec. 16. Technically, even before this action, producers could find
international outlets, but there were an array of restrictions such
as requirements to process the crude to qualify as condensate or
some other product considered eligible under less-than-transparent
Department of Commerce rules. Lifting the ban created an open
market.
However, natural gas producers remain subject to a lengthy,
multiagency process that can tie the hands of American producers in their efforts to supply global consumers with abundant, clean
energy. Congress should take action to ensure that American natural gas has access to an open, international market.
The Department of Energy grants permits for exporting liquefied natural gas under a bifurcated process that distinguishes
between free-trade-agreement (FTA) and non-free-trade-agreement countries. Non-FTA applications require DOE to post a notice of application in the Federal Register for comments, protests
and motions to intervene, and to make a public interest consistency determination on the application. FTA applications are
deemed to be in the public interest under the Natural Gas Act and
are authorized without modification or delay.
The Federal Energy Regulatory Commission separately
grants authorization for siting and constructing onshore and nearshore LNG import or export facilities under Section 3 of the NGA.
As required by the National Environmental Policy Act, FERC prepares for proposed LNG facilities.
In August 2014, DOE announced new procedures for LNG export decisions, under which DOE will act on applications to export LNG from the lower-48 states to non-FTA countries "only
after the review required by NEPA has been completed, suspending
its practice of issuing conditional decisions prior to the final authorization decisions."
While this creates an identifiable process for obtaining LNG
export authorization, that path is a long one. Objections to the upstream aspects of an export project are the target of environmental
groups determined that fossil fuels remain in the ground. Congressional interest in LNG exports predates the push to lift the
ban on crude oil exports. Despite committee approval of bills in
the House and Senate, the legislation awaits congressional action.
The health of American natural gas producers certainly could
benefit from expanded markets. But the broader beneficiaries are
U.S. allies and the American manufacturing sector. Allies now purchasing gas from Russia would have access to an energy supply
not used as a tool for political leverage. Expanded markets would
improve producers' ability to remain in business to produce the
gas that has helped fuel a renaissance of sectors such as the fertilizer, chemical, manufacturing and steel industries. Increased exports also would help reduce America's trade deficit.
The Center for LNG, now part of the Natural Gas Supply Association, promotes legislation streamlining the export approval
process. Dena Wiggins, NGSA president and chief executive officer, comments, "LNG exports from the United States can cre28 THE AMERICAN OIL & GAS REPORTER

"Congress should take action to ensure
that American natural gas has access to an

open, international market.

ate tens of thousands of American jobs and reduce global
greenhouse gas emissions while preserving a competitive advantage for American manufacturers."
In the Senate, a bipartisan bill introduced more than a year ago
by Senators John Barrasso, R-Wy., and Martin Heinrich, D-N.M.,
was incorporated into the Senate Energy and Natural Resources
Committee's S 2012, the Energy Policy Modernization Act, reported from the committee by an 18-4 vote in July. The bill has
been placed on the Senate legislative calendar and could be called
up in February.
On a 279-174 vote, the House approved legislation with similar intent in early December in HR 8, the North American Energy Security and Infrastructure Act of 2015.
What is stopping Congress? Many of the same legislators who
opposed lifting the oil export ban oppose LNG exports out of fear
of rising prices. But, as the House Energy Committee noted in
February 2014, "The body of evidence . . . suggests that price impacts will be moderate and unlikely to be driven by the volume
of gas exported. Across all scenarios, including unlimited exports,
U.S. economic welfare consistently increases as the volume of
natural gas exports increases."
While support for both crude oil and LNG exports is justified,
the products are different. The urgency for lifting the crude export ban was demonstrated when a tanker left a U.S. port carrying American crude just two weeks after Congress lifted the ban.
LNG, on the other hand, requires pipelines to take the gas to
a liquefaction facility, ships to transport it, receiving terminals,
regasification facilities, and pipelines to take the gas to the ultimate consumer. But just because the process requires more infrastructure does not diminish the need to do something now. In
the words of Mark Twain, "The secret of getting ahead is getting
started."
Conversely, if we don't get started, we will fall further behind.❒

SUSAN GINSBERG is vice
president of crude oil and natural gas regulatory affairs for
the Independent Petroleum
Association of America. She
covers legislation and regulation, focusing on the CFTC
and FERC. Her experience in
natural gas regulatory affairs
spans 25 years.

American Oil and Gas Reporter - February 2016

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