Over the past few weeks, a lot has been said and written about lifting the archaic U.S. ban on crude oil exports. But there’s another energy issue that is just as critical and should not get lost in the shadows of that debate:
The need to increase natural gas exports.
Unlike sales of crude overseas, which are currently banned under a law that dates back about 40 years, the United States does allow exports of natural gas. But companies seeking approval of export terminals have to go through both the Department of Energy and the Federal Energy Regulatory Commission in a process that is so long, complicated, and expensive it has the practical effect of limiting exports.
For example, Cheniere applied to the Department of Energy for approval of its Sabine Pass terminal on Sept. 7, 2010. It got the go-ahead from FERC on April 16, 2012, and from DOE 113 days later.
More recently, Dominion Resources submitted its request to permit a facility in Cove Point, Md., on Oct. 23, 2011. It didn’t clear FERC until Sept. 30, 2014, and was only just approved by DOE about three weeks ago. In the process, Dominion had to get more than 60 permits and approvals and agree to 79 conditions laid out by the commission.
Those aren’t the exceptions, either. They’re the rule.
The handful of terminals that have won FERC approval initially applied to DOE three to five years before being authorized, according to America’s Natural Gas Alliance. Over half of the permits that are still awaiting approval were sent to federal regulators in 2012 or earlier.
That’s ridiculous. But of course, it hasn't stopped critics from raising equally ridiculous arguments designed to cripple the prospects for LNG exports.
They say that we run the risk of running out of natural gas if exports are allowed. But what they conveniently ignore is that right now the amount of recoverable gas in the United States is over 100 times more than the amount consumed last year. Not only that, but the Energy Information Administration has projected that U.S. natural gas production will increase 48 percent between 2010 and 2035.
We’re not running out of gas. We’re awash in it.
Critics also argue that exporting LNG will push domestic natural gas prices up significantly. But a study from Deloitte found it would raise prices only minimally, 1.6 percent over 20 years. And while EIA has forecast slight increases to end users, many experts believe that higher prices could serve as an incentive for more exploration and production, boosting supplies, and offsetting some of increases.
Those bogus criticisms aside, here’s why we need to simplify the permitting process now:
Global LNG demand is growing. Since 2000, it has risen 7.6 percent per year, and Ernst &Young forecasts it will reach 500 million metric tons by 2030. A lot of other countries – including Russia, Oman, and Qatar – are looking to get a foothold in the market. If we don’t do something now to encourage exports, we run the real risk of not only missing the economic and trade benefits of that market, but also turning it over to countries that don’t share our strategic interests.
Congress is currently considering measures to expedite the process for applications. Measures in the House and Senate are aimed at shrinking the time between DOE and FERC approval, to 30 and 45 days, respectively. Both have strong bipartisan support, and Energy Secretary Ernest Moniz has indicated that his department will be able to comply with the proposed time frames.
It’s time to act. Washington needs to craft a single bill, pass it into law, and help ensure that the United States strengthens its global standing as a true energy superpower.