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Seeking fast track to export, LNG industry likes sound of Energy Secretary Perry

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Seeking fast track to export, LNG industry likes sound of Energy Secretary Perry

President-elect Donald Trump's pick to head the U.S. Department of Energy could be in a position to help U.S. LNG exports, including streamlining the agency's approval process, a number of industry advocates said.

Trump on Dec. 14 formally announced his selection of former Texas Gov. Rick Perry, who would bring to the office a history of supporting domestic oil and natural gas growth. While FERC is responsible for the permitting of LNG projects, it is the DOE that approves the liquid fuel to be shipped overseas.

Only Cheniere Energy Inc.'s Sabine Pass LNG terminal in Louisiana exports natural gas, after the project's first two liquefaction trains came online earlier in the year. For other projects, receiving DOE authorization to ship to countries with which the U.S. does not have a free trade agreement will be a critical step in determining their ability to compete in a potentially crowded market.

Proponents of a quicker LNG export process recently pushed for Congress to pass language by year-end that would mandate a timeline for DOE approval. The proposed legislation died after House leadership said time ran out for the Senate and House to iron out differences between their energy bills.

Barry Worthington, executive director of the U.S. Energy Association, said the DOE could seek to speed up approvals without a mandate from Congress. "If I'm in the administration, I would restructure the process to expedite permits instead of waiting to have Congress pass a statute that does that same thing," Worthington said in an interview. "[The energy secretary] has that authority. It's a matter of getting the bureaucracy moving."

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Former Texas Gov. Rick Perry's selection to be secretary of energy was publicly revealed Dec. 14.

Photo credit: Associated Press

But streamlining the approval process does not necessarily mean imposing a deadline, he said. "Normally, the industry comes down on the side of not establishing a deadline, because sometimes that results in a quick no, rather than a maybe."

Supporters of quicker export approvals say LNG shipments bolster the U.S. economy and enhance national security by increasing the diversity of global supply.

Fred Hutchison, executive director of LNG Allies, said in an email that he hopes Perry will draw on his familiarity with communities near Gulf Coast LNG export projects and their economies. "There are many applications pending at DOE for LNG exports to non-free-trade-agreement nations from proposed projects in Texas and other states," Hutchison said. "There is much to be gained by acting quickly on these applications and nothing to be lost, since there are sufficient U.S. gas reserves to meet our domestic needs and those of our trading partners for many decades with minimal price impacts."

Jack Gerard, president of the American Petroleum Institute, said in a statement that an expedited approval process would increase certainty, one of the main rallying cries for proponents of faster LNG export approvals, who say foreign buyers need assurance before signing off-take agreements with U.S. suppliers.

"As the former governor of Texas, Rick Perry knows the important impact that energy production has on our nation's economy," Gerard said in the Dec. 14 news release. "In his new role at the Energy Department, he has the opportunity to encourage increased exports of domestically produced natural gas."

But opponents of increased natural gas exports say the DOE should slow down and consider broader environmental implications. High volumes of LNG exports could also increase domestic natural gas and energy prices and disproportionately affect regions that do not produce large quantities of gas, they say.

The Sierra Club recently challenged the DOE's approval of LNG exports after litigation arguing against FERC's permitting of the terminals was ruled in the commission's favor. In this legal fight and others it is engaged in with the DOE over LNG exports, it argues that the agency should review the cumulative and indirect impacts of increased natural gas exports when evaluating a project.

Those pending lawsuits will continue to be a priority for the environmental group, Lena Moffitt, director of the Sierra Club's Beyond Dirty Fuels campaign, said in an interview. "While it's disappointing where the elected decision makers seem to be taking the country, the law is still the law and we still plan on taking our litigation forward."