Associations Urge Legislative Action to Counter Biden LNG Move

In a release sent to Rigzone recently, the Independent Petroleum Association of America (IPAA) revealed that it had joined several trade associations “in urging Congress to take immediate legislative action to counter the Biden Administration’s recent decision to halt LNG permits”.

In the release, the IPAA highlighted legislation dubbed Unlocking our Domestic LNG Potential Act, which it pointed out was introduced by U.S. Congressman August Pfluger and seeks to place the Federal Energy Regulatory Commission in charge of all LNG export permitting in the United States.

“Removing DOE (U.S. Department of Energy) from the process will help to ensure that political maneuvers will not interfere with energy supplies,” trade associations - including the Energy Workforce & Technology Council, the Western Energy Alliance, and the National Ocean Industries Association - said in a letter sent to Speaker of the House Mike Johnson, House Minority Leader Hakeem Jeffries, Senate Majority Leader Charles Schumer, and Senate Minority Leader Mitch McConnell, which accompanied the release.  

“It is vital that Congress send an immediate message to our allies, and enemies, abroad that U.S LNG will continue to flow uninterrupted for many years to come. We urge leadership in the House and Senate to move to expedite passage of this legislation through any legislative vehicle possible,” the associations added in the letter.

The IPAA stated in the release that the Biden Administration’s announcement to pause new non-FTA permits for LNG export facilities threatens to stifle the progress made by the unprecedented ramp-up of the United States’s domestic energy production and the fundamental shift in European energy security.

“Plentiful domestic natural gas production as a result of the shale revolution made it economical to liquify, transport, and export American natural gas while simultaneously bringing prices down at home,” IPAA President and CEO Jeff Eshelman said in the release.

“It’s IPAA’s view that the Department of Energy restricting LNG exports threatens national security, American jobs, and global climate goals. We support Rep. Pfluger’s Unlocking Our Domestic LNG Potential Act to rightfully put LNG permitting authority with FERC where it belongs,” he added.

Energy Workforce & Technology Council President Tim Tarpley said in the release, “it is imperative that political calculations do not get in the way of energy policy that benefits the U.S. economy, provides energy security to our allies abroad, and supports lower emissions worldwide”.

“In 2022, President Biden stood hand in hand with Europe and pledged to provide Europe with additional US LNG exports. Now, this about face by the administration stands to negatively impact over 115,000 jobs nationwide and an anticipated loss of over $46 billion in GDP,” he added.

“Congress must act immediately to reverse this decision,” he continued.

Kathleen Sgamma, the President of Western Energy Alliance, said in the release, “the notion that we need to stop exports to study them is simply not a regulatory requirement”.

“That’s tap dancing for a bad policy. Our allies, particularly in Europe, will pay the price for the Department of Energy’s politically motivated decision,” Sgamma added.

“As Germany has proven, if our allies don’t have access to U.S. natural gas then they’ll need to burn more coal to keep the power going. Congress should revoke the licensing requirement and get DOE out of the business of gumming up trade, since natural gas export is so obviously beneficial for our country as much as for our allies,” Sgamma went on to state.

Rigzone has asked the White House and the DOE for comment on the IPAA release and the letter sent by the trade associations. At the time of writing, neither have responded to Rigzone’s request for comment.

Matthew Bey, a senior analyst at RANE, told Rigzone that the Biden administration’s pause on LNG approvals shouldn’t have a major impact on the short or medium term for the global LNG industry, “as there are plenty of projects in the U.S. pipeline coming online in the next few years that are not affected by the decision”.

“Should the pause last indefinitely and cause project cancellations, particularly if Biden is re-elected later this year, then it will benefit other LNG exporting countries that are also considering expansions or implementing them, as well as making it easier to move forward with FIDs in places like Mozambique,” Bey added.

“The suspension may also lead to lower overall LNG export capacity, at least at a lower price, that increases some LNG prices relative to what they would have been otherwise in the 2030s,” Bey went on to state.

Last week, Wood Mackenzie’s LNG team outlined that the impact of the Biden Administration’s temporary pause on pending approvals of LNG exports depends on several things.

“The impact of the pause depends on how long it lasts, whether it affects both new non-FTA approval and existing non-FTA approval extensions, and how it will affect future U.S. non-FTA approvals,” the WoodMac LNG team told Rigzone.

“With presidential elections in November, the pause is likely to delay approvals until at least the end of the year, and possibly longer, depending on the outcome,” they added.

In a report sent to Rigzone last week, analysts at Standard Chartered said the pause will have no effect on existing terminals or on those already approved but warned that it is likely to mean decisions on pending approval requests are deferred beyond the November election.

“While there is no effect on short-run supply, we think the decision is likely to raise concerns among consumers and potential consumers of U.S. gas, particularly in Europe,” the analysts said in the report.

On January 26, U.S. President Joe Biden revealed in a statement posted on the White House website that his administration was announcing a temporary pause on pending decisions of LNG exports, “with the exception of unanticipated and immediate national security emergencies”.

“During this period, we will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment,” Biden said in the statement.

“This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time … my Administration will not be complacent. We will not cede to special interests,” he added.

“We will heed the calls of young people and frontline communities who are using their voices to demand action from those with the power to act,” Biden continued.

“And as America has always done, we will turn crisis into opportunity – creating clean energy jobs, improving quality of life, and building a more hopeful future for our children,” Biden went on to state.

To contact the author, email andreas.exarheas@rigzone.com