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US DOE clears way for LNG exports by Golden Pass into uncertain global market

Washington — Against a backdrop of a seemingly glutted global LNG market and continued concerns about the impact on US natural gas prices, the Department of Energy on Tuesday turned thumbs up on a plan by Golden Pass Products to export domestically produced LNG to countries that do not have a free trade agreement with the US.

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With the DOE nod, Golden Pass is authorized to send out the equivalent of 2.21 Bcf/d of gas from a terminal to be developed near Sabine Pass in Jefferson County, Texas.

Platts Analytics' Bentek Energy expects that global LNG markets will remain oversupplied through 2022 based on the current slate of forecast LNG export projects.

Further, Platts Analytics expects that global gas prices will not support incremental spot supply during this oversupply period, which could discourage the signing of new LNG supply contracts.



According to DOE, the Golden Pass order brings to 19.2 Bcf/d the total LNG exports to non-FTA countries authorized to date from planned and operational facilities in Texas, Louisiana, Florida, Georgia and Maryland.

"These projects, if built, would position the United States to be the dominant LNG exporter in the world," said DOE in a statement.

"This announcement is another example of President Trump's leadership in making the United States an energy dominant force," added energy secretary Rick Perry. "This is not only good for our economy and American jobs but also assists other countries with their energy security."

Clearance for the construction and operation of LNG export terminals is left to the Federal Energy Regulatory Commission, while DOE makes a national interest determination that looks largely at the expected impact of an export on the US economy and consumers.

The federal agencies have steadily approved projects, and several others are pending, even as prices remain low amid a glutted market. Cheniere Energy's Sabine Pass is the only operational facility in the Lower 48 states, and four others are under construction.

The US exported just under 0.6 Bcf/d of LNG in 2016 from trains one and 2 at Sabine Pass. Total global supply averaged 34.4 Bcf/d over the same time period.

Related Snapshot video: Natural gas from prolific Permian Basin seeks new demand from LNG, Mexico

Platts Analytics expects that six LNG export projects will be completed in the US over the next five years -- Sabine Pass, Cove Point, Cameron, Freeport, Elba Island, and Corpus Christi -- for a total export capacity of around 10.5 Bcf/d.

US exports are expected to reach 8.1 Bcf/d by 2022, with the US rising to around 17% of the global LNG market.

According to DOE, Golden Pass estimates the construction of its facility will provide 45,000 direct and indirect jobs over five years, and provide 3,800 direct and indirect permanent jobs over the next 25 years of operational activity. Golden Pass also estimates the cumulative impact of construction and 25 years of operation will provide up to $2.4 billion in federal tax revenues and $1.2 billion in state tax revenues, said the press statement.

Among other things, DOE looked into the economic, energy security and environmental impacts represented by adding the Golden Pass project to those already approved, "including macroeconomic studies that showed positive benefits to the US economy in scenarios with LNG exports up to 28 Bcf/d," it said. It determined that exports from Golden Pass, jointly owned by Qatar Petroleum (70%) and ExxonMobil (30%), for a period of 20 years, "was not inconsistent with the public interest."

--Christopher Newkumet, christopher.newkumet@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com