Lawmakers, policy analysts and industry executives found areas of common ground on the potential geopolitical payoffs of rising U.S. LNG exports during a House hearing Feb. 27. But differences emerged over the urgency of reforms to the U.S. permitting process and ways the Paris Agreement on climate change affects the emerging sector.
The House Natural Resources Committee's Energy and Mineral Resources Subcommittee held a hearing showcasing the emergence of the U.S. as what panel Chairman Paul Gosar, R-Ariz., described as an "undeniable force within the global energy market." Noting a tripling of global demand for natural gas in the past two decades, he said, "This trend will no doubt continue and increase America's role in energy security for our allies."
He highlighted the potential for the proposed Nord Stream 2 pipeline to increase European dependency on Russian gas, as well as the potential for U.S. LNG to help Europe diversify its supplies.
That view got strong backing from Peter Doran, president and CEO of the Center for European Policy Analysis, who said Russia uses energy as a weapon, most recently to drive a wedge between the U.S. and European allies.
"Russian advocates like to say that Russian gas is cheaper than American LNG," Doran said. "My main message to the committee is this: There is no such thing as cheap Russian gas. More than the cost of the Btu, energy relations with Russia impose high political and geopolitical costs on countries and customers and the idea of fair play in the marketplace."
David Livingston, the Atlantic Council's deputy director for climate and advanced energy, stressed the role of climate leadership and advanced energy technologies in further advancing global gas markets and U.S. national security. Climate goals are helping to drive gas demand in countries like China, Livingston said, suggesting that the U.S. should embrace an international climate framework like the Paris climate accord that is flexible and fair and that will grow markets for gas, renewables and other advanced energy technologies in which the U.S. has advantages.
While the U.S. can isolate itself on climate policy, it cannot be insulated from the climate architecture that can affect it, Livingston said. "The European Union is now refusing to complete a new trade agreement with any partner that has not only joined but also officially ratified [the] Paris agreement."
Subcommittee ranking member Alan Lowenthal, D-Calif., called natural gas important but as an intermediate rather than long-term energy solution. He went further to critique the administration's policy as a "just fossil fuel approach" in service of "an ill-defined agenda of geopolitical bullying he called 'energy dominance.'" "Focusing on the energy of the part and ignoring the impacts of climate change is not a formula for being dominant," Lowenthal said. "Instead, it will simply marginalize us internationally and handicap us economically."
Energy executives under questioning agreed that the Paris climate accord helped bolster natural gas demand.
Cheniere Energy Inc. Senior Vice President Christopher Smith agreed with the notion that U.S. gas has the advantage of providing an energy source that comes "without political requirements or pressures," as well as the view that many countries are choosing gas as part of a shift toward a lower carbon mix.
"We have a role in promoting environmental standards that will maintain the sustainability of the LNG that we sell," he said.
Under questioning from lawmakers, he also backed the prior administration's regulation to curb methane emissions from production on public lands.
Amid the debate over the need to streamline infrastructure permitting, Smith cautioned that Cheniere's business model "does not benefit from cutting corners," and he emphasized the importance of a transparent regulatory process that can "withstand public and legal scrutiny."
Meg Gentle, president and CEO of Tellurian Inc., was more bullish on the need for permitting reforms, calling on lawmakers to support a streamlined and efficient regulatory process. "When I did work for Cheniere, we permitted the Sabine Pass export terminal in 12 months, and it will take us about double that time to permit the Driftwood LNG facility," Gentle said. Overall, Gentle contended, more than $170 billion of investment is needed in pipeline and export infrastructure in the U.S. as supply centers shift and gas needs to move in a new direction.
The hearing came as bills have been floated to ease permitting hurdles. Rep. Jim Costa, D-Calif., spoke in favor of legislation to remove the need for the U.S. Department of Energy to sign off on exports to countries that have free trade agreements with the U.S.
Committee Chairman Rob Bishop, R-Utah, said there will be an effort to streamline permitting as part of energy policy legislation. "The United States can play a huge role in working with our allies to stabilize geopolitically this world if we're smart on how we actually do it," Bishop said. "That's one of the reasons why we need to have more pipelines and rights of way. We also have to have more LNG ports, and we have to be able to do it faster, not taking away the transparency and accountability, just the damn time it takes to do what is blindingly obvious."
Maya Weber is a reporter for S&P Global Platts, which like S&P Global Market Intelligence is owned by S&P Global Inc.
