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US senators want answers on DOE's plans for revoking LNG export decisions

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US senators want answers on DOE's plans for revoking LNG export decisions

Highlights

With decisions from the US Department of Energy on applications to export US liquefied natural gas looming, two key lawmakers want to know how the agency will go about revoking export licenses.

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Senators Ron Wyden, an Oregon Democrat and chairman of the Energy and Natural Resources Committee, and Lisa Murkowski, an Alaska Republican and the committee's ranking member, are likely to send a letter to Energy Secretary Ernest Moniz asking him to outline the agency's policy on reversing export licenses, sources said Tuesday.

"It's something that we're looking at," said Robert Dillon, a Murkowski spokesman.


Murkowski, who has pushed DOE to quicken the pace of its export approvals, and Wyden, who has pushed for a more cautious approach, want to know what factors the agency will weigh if it decides to revoke an application, whether there would be a hearing or if it may involve a petition process, sources said.

"No matter which side of the debate you're on, that's something worth knowing," a Senate aide said. "These are huge investments, we need to have an understanding of how they might be pulled back."

Under the Natural Gas Act, DOE has the authority to issue orders modifying previous application approvals.

While the agency has been relatively tight-lipped about how a potential decision like this would be made, a DOE official has said the decision would not be based on price, meaning that the agency would not roll back an export approval if domestic gas prices rocket higher.

In a 2012 letter to then-Representative Edward Markey, Democrat-Massachusetts, Christopher Smith, who was then deputy assistant secretary of DOE's office of oil and natural gas, said the decision to change an approval would "only be exercised after opportunity for hearing and for good cause shown."

Markey is now a senator while Smith is now DOE's principal deputy assistant secretary and acting assistant secretary for fossil energy.

In that letter, Smith said DOE "takes very seriously the good-faith investment-backed expectations of private parties subject to its regulatory jurisdiction."

"Accordingly, DOE would be reluctant to withdraw or modify a previously-granted authorization, except in the event of extraordinary circumstances," Smith wrote.

In May, DOE gave a conditional approval for Freeport LNG to export as much as 1.4 Bcf/d to non-free trade agreement nations over 20 years from its facility on Quintana Island, Texas. It was the first approval by the department to export LNG to non-FTA countries since 2011, when the agency approved an application for Cheniere Energy's Sabine Pass liquefaction project in Louisiana.

Under current law, DOE is required to quickly approve applications to export LNG to FTA countries, but the agency can deny or restrict proposed exports to non-FTA nations, if they are deemed not to be in the US' interest. Non-FTA countries include some of the world's largest LNG importers, including Japan.

Some 20 applications to ship to non-FTA countries are currently pending and Moniz has said that more decisions are expected before the end of 2013.

--Brian Scheid, brian.scheid@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com