August 7, 2013 / 4:35 PM / 7 years ago

UPDATE 3-U.S. approves natural gas exports from third terminal

* Export terminal wins approval to export 2 bcf a day

* Nearly two dozen applications waiting for export decision

* Lawmaker calls for swifter action on applications

* Industrial group warns of price spikes from exports

By Ayesha Rascoe

WASHINGTON, Aug 7 (Reuters) - The Obama administration on Wednesday approved natural gas exports from a third U.S. facility, the second permit issued in about three months, triggering debate over whether the review of a long backlog of export applications is picking up steam.

The export terminal in Lake Charles, Louisiana, was given a conditional license from the Department of Energy to ship liquefied natural gas to all countries. The terminal is backed by BG Group Plc and Energy Transfer Partners LP’s Southern Union Co.

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 upon the Lake Charles terminal receiving a permit from the Federal Energy Regulatory Commission for construction of the facility.

The decision came nearly three months after Freeport LNG’s Quintana Island, Texas, terminal got the go-ahead. This exceeded the eight-week wait that an Energy Department official recently suggested might be necessary between each of the nearly two dozen pending applications. But it still may set the stage for a more predictable review process going forward.

“I think over the next several months we will see the administration move forward with further approvals, particularly now that there is a new energy secretary in place, and the pace at which this happens could also pick up,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and former adviser to President Barack Obama.

The Obama administration has attempted to balance its embrace of a boom in U.S. gas production and the opportunity to export, with concerns that allowing unfettered exports could harm American industries and consumers.

The Energy Department said on Wednesday it would evaluate the impact of each succeeding request for export authorization “on the public interest with due regard to the effect on domestic natural gas supply and demand fundamentals.”

The United States has now 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.

Some lawmakers and companies have complained that the government is not moving fast enough to approve LNG exports. Other companies, who have benefited from cheap domestic natural gas prices, have urged caution in approving applications.

Senator Ron Wyden, the Democratic chairman of the Senate energy committee and an outspoken skeptic of unlimited gas exports, promised to closely monitor the department’s review process going forward.

“While I am pleased to see DOE is continuing to proceed on a case-by-case basis with each new permit to send natural gas overseas, the Energy Department has a higher bar to prove these exports are in the best interests of American consumers and employers,” Wyden said in a statement.

Before the Freeport project was approved on May 17, the department had not ruled on a gas export application for nearly two years, during which time it studied the implications of allowing significant amounts of U.S. gas to be exported.

In 2011 Cheniere Energy Inc’s Sabine Pass terminal was the first project to get permission from the Obama administration to export to countries without free trade agreements with the United States.

Gas exports require authorization from the Energy Department, except for shipments to the handful of countries with free trade pacts with the United States.


The Center for Liquefied Natural Gas, a trade group representing LNG producers and terminal operators, welcomed the latest permit, but urged the Energy Department to approve more projects.

The group believes that “increased LNG exports will unlock significant benefits to our economy, workforce and trade partnerships,” said CLNG President Bill Cooper. He urged the DOE to “act quickly on the pending applications.”

But the prospect of the United States becoming a major LNG exporter has alarmed manufacturers and heavy industry. They have warned that unlimited gas exports could harm their resurgent sectors by raising domestic prices.

“The question is, can production keep up with this?” said Paul Cicio, president of the Industrial Energy Consumers of America. “It is going to be a challenge, and if they can’t keep up with it, there are going to be price spikes.”

On the other side of the debate, Senator Lisa Murkowski of Alaska said she hopes the latest permit means the department will move more swiftly to approve other pending projects.

“The window for building out our LNG capacity is not open-ended - it could close if we don’t seize this opportunity to have America’s natural gas play a major role in the growing global gas market,” Murkowski, the top Republican on the Senate energy committee, said in a statement.

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