Draft of Long-Awaited Report on LNG Exports Expected by Year’s End

WASHINGTON — A draft report on the future market demand for liquified natural gas exports, and the potential impact those exports could have on the climate, should be available for public scrutiny by the end of the year, Energy Secretary Jennifer Granholm said on Thursday.

Speaking at this week’s Atlantic Festival 2024, Granholm said putting the draft out for public comment will enable the Energy Department to “continue to evaluate the impacts, both positive and negative, of LNG across the globe.”

“Of course, we’ll have to look at the results of that process before the department and the administration would be looking to, or even be open to, changing our energy policy,” she said.

Last January, the Biden administration announced a temporary pause on pending decisions on liquefied natural gas exports to Europe and Asia pending an Energy Department review of the process it uses to evaluate those authorizations.

The review, which is supposed to determine whether the department has been taking full account of the economic and environmental impacts of LNG plants and the export infrastructure, was cheered by climate activists.

But 16 Republican-led states including Texas, Louisiana and Florida sued, arguing the pause on new approvals overstepped the department’s authority to regulate LNG exports under the Natural Gas Act.

Specifically, they said the law requires the agency to affirmatively show LNG projects are inconsistent with the public interest before denying applications.

In July U.S. District Judge James Cain in Lake Charles, Louisiana, a Trump appointee, lifted the temporary moratorium, holding that it was imposed “completely without reason or logic.”

Cain said he based his decision on the “voluminous studies” the states attached to their exhibits, “all of which boast of both the economic and environmental benefits of exporting natural gas.”

The Energy Department said it disagreed with the ruling and would evaluate next steps.

Since then, it has approved one pending permit, a five-year license granted to New Fortress Energy Inc., which is  developing the small-scale LNG export plant known as Fast LNG offshore near Altamira, Mexico. 

The order, which was issued on Aug. 31, allows the exporter to ship LNG to Europe, Japan and China, and it was for a significantly shorter time period than the 50-year license New Fortress sought.

In granting its first approval since the pause was announced in January, the department concluded the U.S. natural gas market could support the exports in the short term, but said it had far greater uncertainty when it came to long-term demand and other factors.

On Thursday, Granholm said the department is continuing to update its analysis of LNG exports to ensure it is relying on the best information, guided by science, as it continues to evaluate permit requests for other facilities “as they come in.”

“Demand from our allies is only one aspect of this review process,” she said. “We also have to consider the impacts on the ground, and the reality is these terminals are often located in disadvantaged communities that then have got to deal with the negative impacts of these developments.

“So, let’s just say that the Natural Gas Act does require us to evaluate permits or authorizations based upon whether the project is in the public interest. Fine,” she continued. “But what’s in the public interest has to be evaluated based upon science and our best data.”

Granholm noted that even with the temporary moratorium on new permits, the United States remained the largest exporter of liquified natural gas in the world.

“The program was that there was just so much queued up, waiting to come online, that we thought a pause was necessary to prune some of the new and existing projects,” she said. “What we wanted to do was take a look, using our national labs, at number one, what the global demand for liquified natural gas will be over the long term, and number two, what the greenhouse gas impacts of the spread of this infrastructure will be.

“So we’re going to look at what those factors are when the data comes in [from the draft report], and there may or may not be an adjustment. It all depends on what the studies find,” Granholm said. 

Dan can be reached at [email protected] and @DanMcCue