LNG

The US Department of Energy has removed the requirement for long-term LNG export authorization holders to seek separate short-term permits to export volumes, boosting the flexibility of US companies in the spot cargo market.

By consolidating this authority in a single authorization without any increase in total approved export volumes, the DoE said it was a move to streamline its regulatory process.

“This policy is a sensible and concrete way DoE can remove unnecessary regulatory burdens for LNG exporters,” said Secretary of Energy Dan Brouillette.

“Those exports bring benefits to our economy, while also helping to reduce global emissions,” added Brouillette in reference to US shipments to Asia helping to enable the switch from coal to gas.

The DoE believes that this deregulatory measure would lead to administrative efficiency.

It would also remove a duplicative requirement for exports of LNG to have DoE authorization for the short-term market, where the authorization holder already has long-term export authority.

Concurrent with this policy statement, DOE added that it was amending several long-term LNG export orders to add short-term export authority to the long-term orders.

“We are increasingly seeing more sales of LNG on the spot market, and this action by DoE is allowing more flexibility for US LNG exporters,” explained Deputy Secretary of Energy Mark W. Menezes.

“With this policy, US LNG exporters can let the market - not our regulatory process - determine which LNG cargos will be exported under long-term or short-term agreements on the spot market,” stated Menezes.

Acting Under Secretary of Energy and Assistant Secretary for Fossil Energy Steven Winberg said LNG export policies should support the market aims of US companies.

“We want to have a sensible regulatory system that takes current market realities into account, and this policy statement does just that,” added Winberg.

At the start of January 2021, the DoE also issued its fourth set of LNG export authorizations through to 2050.

This action followed several LNG export term extensions issued since October 2020 pursuant to its global export policies.

The latest term extensions were given to the Southern LNG export facility operating in Georgia, the Elba Island plant, as well as Sempra Energy’s Cameron facility in Louisiana.

The new permits have also been given to the Annova LNG project proposed in Texas and Eagle LNG’s two small-scale facilities in Florida, including the Maxville facility currently in operation.

These issuances extended each project’s long-term LNG export authorization to non-free trade agreement (non-FTA) countries through December 31, 2050. 

Term extensions now apply to permits now held by 18 US LNG export projects, as well as the Costa Azul project in Mexico. 

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.