MNI INTERVIEW: LNG Export Delay To Chill Investment - Ex-FERC

The U.S. pause on new export approvals for liquefied natural gas to study climate change impacts will be enough to chill future investment and risks antagonizing allies, former FERC commissioner Bernard McNamee told MNI.

Any moratorium on LNG export approvals could delay investment decisions by companies proposing new facilities and would be a hit to America's geopolitical standing, said McNamee, a FERC commissioner from 2018 to 2020, during which time 13 LNG projects were approved.

"LNG exports from the United States to the world have been a big success story, particularly after the issues with Russia invading Ukraine and the shutdown of the Nord Stream pipeline to Europe," he said.

Still, McNamee is optimistic approvals could move forward at the Federal Energy Regulatory Commission. "FERC approvals could still take place," he said, noting the agency's independence and current leaders' plain reading of statutes, but he added any such actions would likely face legal challenges.

The White House announced Friday it has instructed the Department of Energy to study the climate change impact of LNG export terminals, delaying the approval of four projects currently before the DOE, not including the mammoth CP2 project pending before FERC. If the delay lasts past the November election it would impact the approval of nearly a dozen proposed projects. The DOE’s review, which won't affect already-authorized exports, will take a number of months and will be followed by a public comment period, senior administration officials said.

EXPORTS GROWING

FERC has the authority to approve the development of LNG export facilities, while the Department of Energy determines whether the gas can be exported. Proposed projects require initial approval from FERC before moving to DOE for consideration. The DOE under the Biden administration has approved seven projects and reaffirmed an eighth.

The U.S. last year became the world's largest LNG exporter, giving America additional geopolitical leverage, and exports are expected to continue to grow regardless. Projects that already hold DOE export permits and are currently under construction would double the amount of LNG going to market by 2028, Energy Information Administration data shows. (See: MNI: EIA Sees Oil Stable Despite Middle East Tensions)

The United States has seven export terminals with five more under construction and 17 additional terminals have been proposed. The DOE’s review will consider impacts of LNG exports on longer-term energy costs and consider whether the U.S. is oversupplying the market, senior administration officials said.

The Biden team is working to throttle back the ability to export natural gas due to environmental concerns and the coming November election, McNamee said. "It seems they're going to work at squeezing into the public interest determination analysis of greenhouse gases and the impacts of climate change," he said. That "seems to exceed the authority under the Natural Gas Act."