If the Obama administration doesn’t act soon, the nation may miss out on a key opportunity to begin closing its trade deficit while U.S. companies also miss out on the chance to sell abundant natural gas to eager international customers, lawmakers said Tuesday.
As pressure mounts, the Energy Department continues a lengthy review of nearly two dozen applications to operate liquefied natural gas (LNG) export facilities — including one in Calvert County, Md., where fuel from the Marcellus Shale and other vast deposits could be sold to markets in Asia and elsewhere.
Federal law requires the department to determine whether the exports to nations with which the U.S. does not have a free-trade pact meet “the public interest,” a term that gives the administration wide latitude in making its decision.
Opponents of LNG exports argue they will drive up prices in the U.S. while billion-dollar energy companies pocket huge profits.
Backers of the idea, including members of Congress from both parties and governors, including Virginia’s Bob McDonnell, say domestic supply outweighs America’s needs and argue that it’s foolish to deny companies the chance to sell their product abroad.
Current U.S. prices are so low that some producers have decided that exploring for more natural gas isn’t worth it. Opening up major new markets could change that.
“We could lose this boom if we don’t get a market. I just want to make sure you all are aware of the urgency of getting this done. This is the time,” Rep. Blake Farenthold, Texas Republican, told a top Energy Department official at a House hearing Tuesday afternoon. The House Oversight and Government Reform subcommittee on energy policy, health care and entitlements hosted Chris Smith, the department’s acting assistant secretary for fossil energy, and other witnesses to discuss the pros and cons of natural gas exports.
“We have a tremendous sense of urgency for this process. This is something important,” Mr. Smith said. “This is going to be a structure that is in place for decades. These are long-term decisions, and they’re going to lead to long-term investments. We’ve got to get this right.”
He also acknowledged the “unprecedented opportunity for the U.S.” offered by the increase in domestic natural gas production, a sentiment often echoed by President Obama and other high-ranking administration officials.
Thus far, the Energy Department has signed off on just one LNG export site: a terminal in Sabine Pass, La., which is scheduled to come online in 2015. Energy could choose to approve all, some or none of the pending applications.
One facility awaiting an answer is energy giant Dominion Resource Inc.’s Cove Point terminal on the Chesapeake Bay near Lusby, Md. Cove Point would be the only such site on the East Coast, with all of the others located in the Gulf of Mexico region.
The more-than-$3 billion task of constructing the necessary liquefaction facilities is expected to begin in 2014 and be completed by 2017, according to company spokesman Dan Donovan.
“It’s going to be good for Calvert County and it’ll be good for the region,” he said Tuesday.
While the Energy Department has yet to decide whether LNG export facilities are in the nation’s interest — and, if so, how many — some lawmakers and many in the energy industry are optimistic. That optimism is based largely on a recent study, commissioned by the Obama administration, that found an expansion of natural gas exports would be a net economic positive for the U.S.