“With respect to LNG exports, time is of the essence.”
That was Marty Durbin, president of America’s Natural Gas Alliance, telling the Senate Energy and Natural Resources Committee that the Obama administration’s go-slow approach for approving applications to export liquefied natural gas could have devastating long-term consequences – for American workers, American companies, and U.S. economic growth.
What Durbin makes clear is that investors and businesses need to be able to act now to seize rare commercial opportunities worldwide. Otherwise, these multi-decade business growth opportunities may slip away and go to other companies and nations.
Here’s how he explained it to the committee last week:
Global demand for natural gas is expected to increase between 18 bcf/d and 38 bcf/d by 2025. Proposed new global LNG capacity outside the U.S. is approximately 50 bcf/d. Given the disparity between projected demand, and the number of facilities being proposed worldwide, the window of opportunity for the U.S. to get involved is narrow. The facilities that come online the fastest will have a competitive advantage in serving the expected global LNG demand.
That’s the issue in a nutshell. There’s a lot of proposed capacity, both in the U.S. and worldwide. It won’t all get built. The projects that get built first are the ones that will be able to take advantage of the immediate commercial opportunities that are out there.
Right now there are a number of viable U.S. projects waiting for permits to export. One is a project, Golden Pass Products, in which ExxonMobil has an interest. We submitted our application to the U.S. Department of Energy nearly two years ago, and we are still waiting.
During the period we have been waiting, DOE slowly began to handle applications in the lengthening queue one at a time – a process the Brookings Institution calls “politically provocative.” In the past four years, DOE has only issued 7 authorizing permits (six of which are conditional).
Several weeks ago, DOE announced it would change its approach for processing applications. Whether the new system works any better remains to be seen, but what is inarguable is that DOE is still not doing the most obvious thing: That would be to grant permits for all applications and let investors and consumers sort out which projects are most viable and serve people the best. Market-driven mechanisms would ensure benefits for American consumers, according to a study that DOE commissioned.
Durbin is ultimately right. The commerical viability of a number of these projects depends on whether they can get approved and built in time. Washington needed to hear that message last week.
Still, Marty Durbin didn’t tell lawmakers anything they shouldn’t already have known. After all, similar warnings have been issued by other experts, including former World Trade Organization official Spencer Bacchus, Wood Mackenzie energy analyst Asish Mohanty, and ExxonMobil chairman and CEO Rex Tillerson.
Yesterday a bipartisan majority in the House of Representatives voted to expedite applications for LNG exports, requiring DOE to act within 30 days of an environmental review. Hopefully the Senate will concur.
With each passing week, the window closes a little more. At risk are the jobs, growth, and economic activity that experts agree LNG exports would bring.