In a key development that will help the U.S. export its vast energy resources, the Obama administration last week approved an application for a liquefied natural gas (LNG) export facility in Texas.
The decision is part of a closely watched process in which the federal government must determine whether such exports are in the economic interest of the nation. Friday’s approval marks the second LNG export project approved under this White House, the other being in Louisiana.
At least 19 similar LNG export applications are under review, including a plan by energy giant Dominion to move fuel from Cove Point in Lusby, Md.
Oil and gas industry leaders and congressional Republicans are calling for quick action by the Energy Department, arguing that more exports mean more American jobs.
“It remains unclear when these decisions will be made. Given the obvious benefits America stands to gain from these export opportunities, I hope [the Energy Department] will move forward with the review process and provide greater clarity on the schedule,” said Rep. Fred Upton, Michigan Republican and chairman of the House Energy and Commerce Committee.
Less than a decade ago, many analysts projected that the U.S. would need to import natural gas in order to meet demand. Thanks to technological breakthroughs, especially advances in the drilling technique known as fracking, that equation has been flipped, and the nation is now poised to become a leading exporter of natural gas.
Federal law allows companies to export LNG to countries with which the U.S. has a free-trade agreement. Shipments to countries without such a deal, however, undergo intense scrutiny by the federal government and must be approved on a case-by-case basis.
The central question in the review process is whether sending fuel abroad will significantly reduce domestic supply or raise prices for American consumers.
In approving the LNG export site in Quintana Island, Texas, the administration said that the answer to those questions is “no.”
“We find that the exports proposed in this application are likely to yield net economic benefits to the United States,” the Energy Department said in its announcement.
It also determined that the export facility “is unlikely to affect adversely the availability of natural gas supplies to domestic consumers or result in natural gas price increases.”
The move will help bridge what’s sometimes been a large divide between the White House and the oil and gas sector, with industry leaders immediately praising the decision.
“The more natural gas America exports, the more America benefits,” said Kathleen Sgamma, vice president of government and public affairs with the Western Energy Alliance, which represents energy companies in Western states.
“Exporting natural gas to countries that need it will encourage production, while strengthening the U.S. trade balance and creating thousands of jobs for Americans,” said Barry Russell, president and CEO of the Independent Petroleum Association of America.