The U.S. Department of Energy, under the direction of the White House, is instituting a “temporary pause” on decisions on liquefied natural gas export applications to non-FTA countries, officials announced on January 26. Energy Department leaders say they will update their process for analyzing LNG applications before resuming decision-making.
The pause directly affects four proposed projects that are pending Department of Energy approval. That figure doesn’t count additional projects, such as Venture Global’s multibillion-dollar Calcasieu Pass 2 LNG pipeline and export terminal project, which still need approval from the Federal Energy Regulatory Commission before they can move forward for consideration of the Department of Energy. FERC has four applications pending and two more projects in the filing stage, records show.
“As our exports increase, we must review export requests using the most comprehensive and up-to-date analysis of economic, environmental and national security considerations,” Energy Secretary Jennifer Granholm said during a Press conference.
The US is the largest exporter of LNG in the world. Since the Department of Energy’s last comprehensive economic analysis of LNG exports was completed in 2018, U.S. LNG export capacity has more than tripled from 4 billion cubic feet per day to 14 Bcf/d, according to Granholm. And the added capacity from projects that have been approved but are still under construction brings cumulative approved LNG export capacity to 48 Bcf/d, he added.
“We need to have an even greater understanding of the market need for long-term supply and demand of energy resources and environmental factors,” Granholm said. “Thus, by updating the analysis process now, we will be better informed to avoid export authorizations that diminish our national energy availability, weaken our security, or undermine our economy.”
The Energy Department has approved seven LNG export authorizations during the Biden administration and reaffirmed eight more.
According to FERC, the largest LNG export terminal by capacity currently under construction in the US is Tellurian Inc.’s 3.81 Bcf/d Driftwood LNG project in Calcasieu Parish, La. EPC contractor Bechtel Energy Inc. construction began in 2022. This project is followed in capacity by NextDecade’s 3.73 Bcf/d Rio Grande LNG in Brownsville, Texas, and Venture Global’s 3.32 Bcf/d Plaquemines project in Plaquemines Parish, The.
Approval of projects
Under the Natural Gas Act, FERC is responsible for approving the construction and siting of onshore and nearshore LNG export facilities, and the Department of Energy is responsible for approving exports of LNG to countries that do not belong to the Free Trade Agreement.
Previous Department of Energy assessments of LNG export proposals have considered economic factors, geopolitical dynamics and environmental impacts.
Senior administration officials who spoke to reporters said the scale of projects like the 3.96 Bcf/d Calcasieu Pass 2 raises questions about whether the industry is overstretched. Working with the Department of Energy’s national laboratories, such as the National Energy Technology Laboratory and the Pacific Northwest National Laboratory, officials aim to determine what exporting so much LNG means for domestic prices, the competitiveness of American companies and the types of ‘impacts it could have in terms. of other economic, health, environmental and national security effects.
“It’s about getting the facts straight, making sure we understand the consequences for our frontline communities, for our climate in light of increased science and understanding, for our economy , for our consumers and for our allies and partners as we move forward,” said Ali Zaidi, White House National Climate Advisor.
The review of the months-long process is not the norm, but will be followed by a public comment period, officials said.
Energy Markets
Environmental advocates applauded the announcement, but the move has angered the natural gas industry. In a statement, Dena Wiggins, president and CEO of the Natural Gas Supply Association, called the pause and review “an ill-advised action” and said it could destabilize energy markets and damage relations between United States with its allies.
The US LNG sector has helped supply parts of Europe that have reduced their imports from Russia since the start of Russia’s invasion of Ukraine in 2022. Charlie Riedl, executive director of the LNG Center, said in a statement that the pause sends a signal to Europe. allies who cannot rely on the US to help with energy security.
“It undermines America’s energy leadership in the world with no benefit to our shared climate goals and at considerable risk to the American economy, jeopardizing future projects and the jobs associated with them, as well as the destabilization of international energy markets,” Riedl said.
Meanwhile, environmental groups praised the Biden administration for taking the step. Abigail Dillen, president of Earthjustice, said in a statement that building more LNG infrastructure “threatens to keep us locked into decades of fossil fuel use and climate-warming emissions.”
“As communities across the country grapple with the devastating impacts of the climate crisis and fossil fuel pollution, it has never been clearer that rubber-stamped LNG exports are not in the public interest,” he Dillen said.
