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Tailwinds and headwinds for North American gas exports

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Tailwinds and headwinds for North American gas exports

A U.S. congressman voiced the substantial support in federal government for LNG exports, but an industry trade group is concerned that rising exports will drive up gas prices for domestic consumers.

Removing the U.S. Department of Energy from the LNG export permitting process would have a "huge" geopolitical impact and help the American LNG industry, according to a Republican congressman from Ohio.

Speaking at a Feb. 14 industry event in Washington, D.C., Rep. Bill Johnson touted U.S. LNG exports as a way to weaken Russia's influence in Europe, a frequent rallying cry for industry supporters in the Capitol. Johnson introduced a bill in December 2017 to expedite approvals of gas exports to countries that do not have free trade agreements with the U.S. The legislation would remove the DOE from the permitting process and put the Federal Energy Regulatory Commission in charge, which Johnson said would facilitate additional LNG exports to allies in Europe that now depend heavily on Russian gas.

"Let's make FERC the lead agent in this process, streamline the permitting process [and] get America into LNG exports on the global stage in a big, big way," Johnson said Feb. 14 at the breakfast hosted by the U.S. Energy Association, a Washington, D.C.-based trade group. "The geopolitical implications of that are absolutely huge."

At another event in Washington, D.C., the leaders of trade groups representing U.S. LNG exporters and U.S. manufacturers went head to head, with one saying LNG exports would have limited impact on domestic natural gas prices and the other saying gas consumers should be concerned.

Charlie Riedl, executive director of the Center for Liquefied Natural Gas, pointed to abundant natural gas supplies and an extensive U.S. pipeline web that he said would insulate U.S. gas consumers from any price movements connected to rising LNG exports. But Paul Cicio, president of the Industrial Energy Consumers of America, doubled down on past calls for a measured approach to permitting U.S. LNG exports, which he said have become "excessive."

"We're going through gas really quick, and we're going through the cheapest gas," Cicio said Feb. 11 at the National Association of Regulatory Utility Commissioners' Winter Policy Summit. "We have to be concerned as consumers."

Cicio said regulators should wait and assess the impact of already approved LNG exports before issuing additional long-term licenses. He again pointed to Australia as an example of how LNG exports can drive up gas prices for domestic consumers. CLNG and the U.S. Energy Information Administration have both claimed this would not happen in the U.S.

TransCanada Corp. is set to play a key role in North American natural gas transportation, including in regions that will hold many LNG export terminals. Its C$2.4 billion plan to increase capacity on its Nova Gas Transmission Ltd. gas gathering system would give shippers increased access to markets in Central Canada, along with the U.S. West and Midwest. Expansion of its pipeline system could give producers in the Western Canadian Sedimentary Basin, which includes the prolific Montney and Duvernay shales, access to LNG terminals and other markets in the U.S. East and Gulf Coasts.

However, regulatory changes in Canada may result in broader reviews for energy infrastructure that include analysis of climate change and other issues. The Canadian Energy Pipeline Association pushed back against some of the changes in a Feb. 8 statement.