LNG

The US Department of Energy has issued a rule to exclude some licensing and environmental requirements for liquefied natural gas export projects that had previously been required in a show of support for the energy industry by the Administration of President Donald Trump.

The rule, which the Department of Energy issued in a pre-publication notice in the Federal Register, frees LNG export and import license applications from including environmental reviews that had been required under an environmental law, the National Environmental Policy Act.

The DoE said it was updating its National Environmental Policy Act (NEPA) implementing procedures pertaining to authorizations issued under the Natural Gas Act.

“These changes will improve the efficiency of the DoE decision-making process by saving time and expense in the NEPA compliance process and eliminating unnecessary environmental documentation for these actions that the DoE has determined normally do not have significant effects,” said the filing to be published in the Federal Register on December 4, 2020.

The DoE said in the notice that the rule would “save time and expense in the NEPA compliance process”.

The rule is effective 30 days after December 4 Federal Register publication.

Analysts said there was a possibility that a new President could overturn the DoE ruling, but the outcome of the November Presidential election is still unclear amid evidence of poll fraud, which has shocked many people in Europe, Asia, Africa and the Middle East and lowered their regard for American fairness.

The Trump Administration has overseen a surge in natural gas development and US energy independence as the nation has become the world’s third-largest LNG exporter after being an net importer before the shale revolution.

The DoE rule would not affect environmental reviews by the Federal Energy Regulatory Commission, the other government office that reviews LNG projects.

President Trump has supported supplying US allies with LNG and the largest recipients of cargoes have been to countries like South Korea and Japan as well as European countries which have been taking US LNG cargoes as an available alternative to Russian pipeline natural gas.

The Energy Information Agency declared the US the third-largest LNG exporter in May 2019, overtaking Malaysia, after shipments reached a new peak of 4.7 billion cubic feet per day.

The US has six export plants on stream, Sabine Pass and Cameron LNG in Louisiana, Corpus Christi and Freeport in Texas, as well as Cove Point In Maryland and Elba Island in Georgia.

Other projects are under development and about half a dozen are likely to be constructed in the next five years, mainly on the Gulf Coast of Texas and Lousiana. 

US President Donald Trump said during a speech in Midland, Texas, that the Department of Energy is issuing a final policy statement that allows for liquefied natural gas exports to Non-Free Trade Agreement countries to be extended through the year 2050.

Oil prices recovered slightly by around 10 percent along with financial markets, helped by statements from President Donald Trump on taking major steps to help the US economy counter the impacts of the spreading coronavirus outbreak and global economic slowdown.

President Donald Trump concluded his two-day visit to India by issuing a joint statement with Indian Prime Minister Narendra Modi on a variety of issues, including future cooperation on liquefied natural gas as both leaders noted that the US-Indian energy relationship over the last four years had been worth $20 billion.

They said they welcomed growing links between the United States and India in trade and investment in hydrocarbons. 

“Through their Strategic Energy Partnership, the United States and India are seeking to enhance energy security, expand energy and innovation linkages across respective energy sectors, bolster strategic alignment, and facilitate increased engagement between industry and other stakeholders,” they said.

Trump and Modi noted the potential for the US to meet India’s goal to diversify its import base for coking and metallurgical coal and natural gas.

“We welcome recent commercial arrangements intended to accelerate access to LNG in the Indian market,” they added, in reference to the accord between US company Tellurian and state-owned Petronet LNG, the nation’s largest importer.

They also referenced moves by ExxonMobil and others to advance with the provision of more LNG fuel use for transportation and small-scale distribution.

“The US has indeed become a very important oil and gas source for India,” they said.

“Over the last four years, our total energy trade volume is about $20 billion,” added the statement.

They also noted that they encouraged the Nuclear Power Corporation of India Limited and US company Westinghouse Electric to finalize the techno-commercial offer for the construction of six civil nuclear reactors in India at the earliest date.

Westinghouse and the Indian nuclear power operator plan to build the 1,100 megawatts reactors in the southeast Indian state of Andhra Pradesh. 

However, there was no statement on the firming up of Petronet’s  supply agreement with Driftwood LNG developer Tellurian, nor on its accord on a possible equity stake.

The initial agreement between Tellurian and Petronet for up to 5 million tonnes per annum of US LNG was signed during a visit to Houston in September 2019 by Modi, who also held a Texas rally for Indians living in the US.

Petronet and Tellurian will continue their talks on the Indians investing $2.5 billion in the Driftwood plans proposed for the west bank of the Calcasieu River, south of Lake Charles in Louisiana.

Petronet currently operates India’s busiest regasification facility at Dahej, north of Mumbai, with 15 million tonnes per annum of capacity and six storage tanks. The terminal is being expanded to handle 17.5 MTPA.

The company was formed by the Government of India in 1998 specifically to import LNG and will be expanding its interests in the years ahead into LNG fuel distribution.

Shareholders in Petronet, which began operations in 2004, include the other big Indian energy players, Gas Authority of India, Indian Oil Corp., Oil and Natural Gas Corp. and Bharat Petroleum Corp.

The US Cameron LNG export plant, developed by California-based utility Sempra Energy and partners, is suffering some technical problems though said it was managing to stick to its cargo shipping schedule.

The American Gas Association has welcomed the balanced perspective taken in the draft guidance released by the White House Council on Environmental Quality in relation to the greenhouse-gas emissions of major energy, pipeline and liquefied natural gas projects.

The new draft guidance is aimed at helping to clarify how federal agencies should consider the greenhouse-gas impacts of major project permitting decisions when conducting environmental reviews under the US National Environmental Policy Act.

“The draft guidance from the White House Council on Environmental Quality will help facilitate the environmentally-responsible construction of natural gas pipelines and other infrastructure that our customers want and need,” said AGA President and Chief executive Karen Harbert.

“Streamlining and clarifying the permitting process helps the natural gas industry provide timely, safe, reliable and affordable service to the 178 million Americans who enjoy the benefits of natural gas and the millions more that want it, but do not yet have access,” added Harbert.

In particular, the draft guidance would help focus agency resources on evaluating the reasonably foreseeable greenhouse-gas impacts of agency permitting decisions, rather than “expending resources on evaluating remote or speculative matters” that do not have a sufficiently close causal relationship with an agency’s permitting decision.

The guidance directs agencies to consider greenhouse-gas emissions when “substantial enough to warrant quantification.”

Agencies do not have to consider how a project might impact greenhouse emissions if doing so would be “overly speculative.”

It reverses a 2016 rule from the same Council under the previous presidency that directed agencies to analyze how the projects they approve will contribute to climate change.

President Donald Trump withdrew the previous guidance in April 2017.

Environmental groups have said the proposal would reduce environmental protection.

The US Congress has been divided along party lines on the proposal, with Republicans praising the Trump Administration for removing hurdles for energy development as the nation embarks on boosting domestic natural gas use in power generation and LNG exports.

“This proposed guidance will help ensure that major energy projects in Wyoming and across the country can move forward without needless delays and litigation,” said John Barrasso, Republican Senator for Wyoming and head of the Environment and Public Works Committee.

The American Petroleum Institute also approved, saying it would “streamline” the National Environmental Policy Act (NEPA).

“NEPA, which is a procedural statute only, increasingly has been misused to delay and prevent development, which negatively affects jobs, tax revenue and investment in communities across the country,” said Howard Feldman, senior director of regulatory and scientific affairs for the American Petroleum Institute.

The US is in the midst of an LNG export build-out focused mostly on the Gulf Coast to earn billions of dollars for the American economy from the shale-gas glut by providing foreign countries with cleaner natural gas to replace coal.

At present four LNG export plants are on stream, Sabine Pass and Cameron LNG in Louisiana, Corpus Christi in Texas and Cove Point in Maryland.

The Elba Island LNG plant in Georgia and the Freeport facility in Texas are also scheduled for start-up to give the US six exporting plants. 

At least a dozen more liquefaction and export plants and feed-gas pipelines are making progress along the regulatory route.

The 177,000 cubic metres capacity carrier “Marvel Crane” is scheduled to arrive on June 18 at the Dunkirk LNG import terminal on the Channel Coast of France carrying the first shipment from the US Cameron export plant at Hackberry in Louisiana.

The Dunkirk LNG terminal opened in 2016 and is now owned and operated by a consortium comprising Fluxys of Belgium, operator of the Belgian Zeebrugge import terminal and insurance and banking groups from France and South Korea.

French energy major Total, a shareholder in the Cameron plant, was one of the original shareholders in Dunkirk LNG with France’s main utility Engie, though both sold their stakes in 2018.

However, Total is still a supporter of the Dunkirk facility, which also receives Russian volumes from the Yamal plant in northern Siberia, where Total is also a stakeholder.

Cameron LNG is located on the Calcasieu Ship Channel and is majority-owned by Sempra Energy, the California-based utility. The other shareholders apart from Total are Japan’s Mitsui & Co. and Japan LNG Investment, a company jointly owned by Mitsubishi Corp. and shipping company NYK Line.

The carrier “Marvel Crane” lifted the US cargo on May 31 and gave its destination as Dunkirk on June 10 in the latest shipping data received. The ship is owned by two other Cameron stakeholders, NYK Line and Mitsui.

The first phase of the Cameron project includes building the first three liquefaction Trains that will enable the export of around 12 million tonnes per annum of LNG, or about 1.7 billion cubic feet per day of natural gas.

The first Cameron cargo was loaded following a visit to the facility by US President Donald Trump.

Trump said in a speech that LNG exports have been a great jobs creator in the US and would generate billions in export revenues.

The facility is one of three LNG export plants Sempra is developing in the region, along with the Port Arthur project in Texas and the Costa Azul plant on the Pacific Coast of Mexico.

Sempra is expected to take Total on as an investor in its other export projects in Texas and Mexico at the same time as the French company is backing another LNG plant in Russia, the Novatek-led Arctic LNG II project.

The Cameron plant is the fourth US LNG export plant to begin commercial operations after Cheniere Energy’s Sabine Pass plant in Louisiana, its Corpus Christi facility in Texas and Dominion Energy’s Cove Point plant in Maryland.

Sempra Energy, the California utility and owner of three North American LNG export projects, said it signed an agreement to supply Saudi Arabian energy company Saudi Aramco with LNG from its proposed Port Arthur plant in Texas as well as equity investment in the venture.

The US shipped a record 11 liquefied natural gas cargoes in the past week compared with seven in the previous week as the nation’s three facilities ramp up production and three other plants are scheduled to start commercial operations in the next three months.

President Donald Trump formally opened the Cameron liquefied natural gas export plant at Hackberry in Louisiana and said the nation was heading for a great energy future with more security as he contrasted the hostile policies of Iran and Venezuela with that of America, which planned to provide power around the world from LNG.

“In Venezuela and Iran, we are now holding dangerous regimes accountable, denying them oil revenue to fund their corruption, oppression and terror,” said the President.

At the same time, he said LNG from the Cameron plant would soon be moving through the Gulf of Mexico and the Panama Canal to Asia to illuminate cities.

“The energy revolution you’re leading is an incredible story that could only be written right here,” he told the Cameron construction workforce and plant personnel numbering  several thousand who had gathered to hear his speech lasting just over 55 minutes.

“As we embrace the potential of our God-given abundance, we are not only strengthening our national security but reducing our dependence on foreign sources of energy,” he said.

Trump added that with increased US oil and gas production and LNG the nation had dramatically increased its power to confront adversaries, support its friends and fight for its interests.

“For example, American allies all around the world, in Poland and Lithuania, are now using American natural gas to reduce their dependence on countries who use energy as a weapon of coercion,” he said.

The Cameron plant, owned by California-based utility Sempra Energy, completed all major construction activities for Train 1 and has just started production of LNG, the final step before cargoes are exported.

The first phase of the Cameron project includes building the first three liquefaction Trains that will enable the export of around 12 million tonnes per annum of LNG, or about 1.7 billion cubic feet per day of natural gas.

Here are the other main extracts from President Trump’s speech, referring to France, the climate-change debate, radical Democrats in Congress and US energy economics.

In his speech, Trump devoted some time mocking opposition radical Democrats in the US Congress who want the nation to rely on windpower.

“Over 100 Democrat members of Congress have sponsored that ‘Green New Deal’, that radical plan to put you out of work,” Trump told the Cameron workers.

“They want to stop oil, to stop coal. They want to stop nuclear. On my watch we will never allow radical activists, special interests or out-of-control bureaucrats to wreck our economy, eliminate our jobs or destroy your future,” stated the President.

“Under the ‘Green New Deal’, they don’t like clean natural gas. They don’t like anything. They don’t know what they like. They certainly like wind, even though it kills all the birds,” he said.

“Do you want to see a bird cemetery? Go under a (power) windmill and you’ll see the saddest sight,” added Trump.

“You know, in California you go to jail for five years if you kill a Bald Eagle. You go under a windmill and you see them all over the place. It’s not a good situation,” he added.

“That’s what (the Green New Deal) is counting on, wind,” he added. “When the wind doesn’t blow you don’t watch television that night,” he said.

“We know that American energy workers like the ones here at Cameron LNG are the foundation of American strength. That’s what you are,” said the President.

“By unleashing American oil, natural gas and clean coal you are helping to fuel America’s historic economic boom,” he added.

“We have the greatest economy in the history of our country. Last month we created another 263,000 jobs,’ he said.

“Since the election we have created 6 million jobs, including 57,000 new oil and gas pipeline construction jobs,” declared Trump.

“In 2018 alone, America added 150,000 new energy jobs,” he said.

“The previous Administration tried to put America’s vast energy resources under lock and key. ‘We don’t want energy,’ they said. I don’t know what they were thinking. And they tried to put energy producers out of business,” said Trump.

The President was then widely cheered when he declared: “I withdrew the United States from the terrible, very expensive, one-sided Paris Climate Accord.

“You just take a look at Paris. The (French) President’s a friend of mine. Sometimes I’ll call him up. How are you doing over there? Not so good? The yellow vests! You know that was all to do with the Accord. Because they were charging people tremendous amounts of money (for diesel and gasoline) and sending it all over the world to countries that they’d never heard of. People get tired of it,” said Trump.

“I saved $1 trillion through not going with the Paris Accord,” stated the President. “I thought I would take a lot of heat for doing that. But instead we’ve been praised,” he added.

“The Paris Accord was an agreement that would have shut down clean energy production in America while allowing top foreign polluters to do whatever the hell they want,” he said.

“It was a restriction on America. It was almost made to hold us back,” he said.

“No longer will we allow other countries to tie America’s hands and take America’s jobs and hurt American energy,” he stated.

“This quarter, America produced record amounts of oil and natural gas. Since the election private companies have invested half a trillion dollars in the US energy industry,” added Trump.

“And it looks as if it’s going substantially up from there, including in this great state where there are many tremendous projects,” he said.

“The US has now been a net exporter of natural gas for two straight years and energy imports are at their lowest level for 60 years,” he added.

“In 2018, American energy exports alone brought down our trade deficit by $215 billion,” he added.

“We are pursuing a vision not just of energy independence but of American energy dominance,” stated the President.

“By next year America’s LNG capacity will more than double. What does it really mean? It means jobs, jobs, jobs. That’s what it means,” he said.

“In the past, politicians and pundits had said America was running out of oil and natural gas. They were saying it 10 years ago, five years ago. I was hearing it all the time. They said the United States would never again be an energy power house,” he said.

“They said Americans would have to learn to get by with much, much, much less,” added the President. "But you proved them wrong,” he said. “You silenced the critics and shattered the predictions.

“You are powering our cities, uplifting our nation and you are lighting up the world. You are building a better future for our families and our children and for every patriot, and you are true patriots,” said Trump.

“You’re making America safer, prouder and stronger than ever before. I just want to say it’s been a great honor to be with you today. It’s been a special day. This is your first day of many, many days of producing something that is very special,” he said.

“It’s a tremendous achievement. I want to congratulate everybody involved in the project. And most importantly I want to congratulate the state of Louisiana and all the work we’ve done together with the federal government and I want to congratulate the workers. It doesn’t work without the workers,” concluded the President.