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House passes bill to reduce application time for small-volume LNG exports

The U.S. House of Representatives passed a bill to expedite the permit reviews for small-scale LNG exports, codifying an existing U.S. Department of Energy practice that mostly eliminates the need for a review of low-volume LNG exports, even those to nations that do not have a free trade agreement with the U.S.

The Ensuring Small Scale LNG Certainty and Access Act, or HR 4606, would shorten the review time for an export license for those seeking to export LNG, as long as the shipments do not exceed 0.14 Bcf/d.

Bill author Rep. Bill Johnson, R-Ohio, said the legislation — "narrowly drafted with bipartisan input" — would ease shipments of small-scale LNG production from the U.S., support American industry and incentivize increased shipments to the Caribbean, Central America and South America to decrease their reliance on fuel oil from a politically unstable Venezuela.

The bill passed 260-146 on Sept. 6, with 37 Democrats voting in favor.

"What we would like to have is more natural gas being used [for] electricity in the Caribbean and Puerto Rico, instead of fuel oil, which is an environmental disaster," Rep. Gene Green, D-Texas, said before the vote. Green, another author of the bill, added that neighboring countries would benefit too. "U.S. LNG in the region would drastically reduce emissions rates from burning fuel oil for power generation," he said.

Among the countries near the U.S. that lawmakers hope will boost LNG imports because of the bill, only the Dominican Republic has a free-trade agreement with the U.S., Green said. Small exporters that wanted to ship LNG to other countries faced a lengthy DOE review to determine if the exports were in the national interest, until the DOE recently adopted a rule to expedite that review for small shippers.

"This bipartisan legislation codifies the Department of Energy's recent efforts to encourage the exports of small volumes of natural gas as countries in the Caribbean, Central America, South America look to the United States to meet their natural gas needs," said Henry Cuellar, D-Texas, a co-sponsor of the bill. He said the bill could reduce exporters wait times "by several months."

Opponents had cited concerns related to pipeline construction and methane leakage as well as the promotion of a fossil fuel. Two amendments that could have lengthened the permitting process with public hearings and required exporters to show that gas production techniques had minimized methane emissions were rejected.

"This bill does not skate around any environmental laws," Rep. Pete Olson, R-Texas, said. "You have to comply with all the rules as they exist today to export this natural gas." He cited the role of natural gas in reducing carbon emissions compared to fuels such as oil and coal.

If the bill passes the U.S. Senate and becomes law, the primary beneficiaries would not be the developers of large, multibillion-dollar terminals driving the nascent U.S. LNG export industry. The bill would help out operators of small projects such as the Eagle LNG Partners export facility in Jacksonville, Fla. Eagle LNG ships its product in ISO containers that can be moved by truck, rail or ship, unlike big LNG export terminals that load liquefied gas into massive tankers specifically designed to carry the supercooled fuel.

Major LNG shippers could benefit from recent efforts by the Federal Energy Regulatory Commission to speed up its reviews of applications to build LNG projects. The efforts included an agreement to collaborate with a federal safety agency and the release of environmental review schedules for a dozen proposed export terminals.

The U.S. LNG industry association Center for Liquefied Natural Gas praised passage of the bill. A Sept. 6 statement from Executive Director Charlie Riedl pointed to the commercial certainty it provides for small LNG operators.

"This legislation reduces hurdles, streamlines the process and allows for the U.S. LNG industry to compete in a global and fast-growing market," Riedl said. "This legislation will allow small scale U.S. LNG exports to better supply markets in the Caribbean and Latin America, benefit our citizens in Puerto Rico, and improve our competitive position in local LNG markets."