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DOE proposes to allow longer license period for non-FTA LNG exports


New policy would extend licenses through 2050

Cheniere had contended period was key for foreign buyers

Washington — The US Department of Energy is offering to extend LNG export authorizations through 2050 in response to a request from Cheniere Energy.

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Under the DOE proposal, issued Monday, companies that hold licenses to export LNG, compressed natural gas and compressed gas liquid to countries that lack free trade agreements with the US could apply to extend their terms to December 31, 2050. And those companies with pending applications could amend their requests to stretch out their terms to that date. DOE in the future would also adopt a standard term lasting through 2050 unless an applicant seeks a shorter term.


Cheniere in July 2018 had urged DOE to consider going beyond the 20-year period that had become standard, maintaining that for foreign buyers deciding between US LNG and alternative long-term sources, 30 years could prove decisive, DOE said in its proposal. Cheniere in comments had cited interest from buyers seeking contracts beyond 20 years.

In proposing to extend license periods, DOE pointed to the study it commissioned from NERA Economic Consulting, published in 2018. The study looked at the period from 2020 to 2050 and considered different "unconstrained" levels of exports, as determined by market forces. It found exports in volumes up to 52.8 Bcf/d would not be inconsistent with the public interest.

Prior DOE studies did not extend as far out, prompting DOE to keep licenses to the shorter period.

DOE also noted the National Energy Technology Laboratory recently updated its life-cycle analysis for greenhouse gas emissions impacts associated with LNG exports. The update found exports may decrease global GHG emissions, although there was substantial uncertainty.

The longer export period proposed would not yet apply to exports to countries with free trade agreements with the US, although DOE said it anticipates receiving similar requests for those licenses will follow.


The proposal was quickly welcomed by the US LNG sector. Charles Riedl, executive director for the Center for LNG, said in a statement Monday it would enable US LNG to compete on a level footing with global competitors and give customers, builders and investors greater security and comfort in the regulatory process.

"My members were happy to hear the news," he added Tuesday, noting some of his members had started out by seeking longer-term licenses but were granted 20-year licenses by DOE previously.

Nathan Matthews of the Sierra Club said the proposal appears to limit the ability of future administrations to decide that previously approved LNG exports are no longer in the public interest.

"This is just a giveaway to industry — the LNG export industry doesn't need this, and has been happy to build and operate LNG export facilities even when only guaranteed a 20-year term," he said. There's no way to export LNG through 2050 while avoiding truly catastrophic climate change, he added.