According to press reports, new plants for exporting liquefied natural gas from the US have been held up by regulatory delays as government agencies have failed to assess issues such as environmental impact as quickly as the projects’ backers had hoped. At the same time, European countries’ interest in importing US LNG has been sharpened by the rise in tensions with Russia, but there is still only one export project that has begun construction. However, the plans are also coming under growing pressure from environmental groups.
LNG export plants need two sets of approvals: from the Department of Energy (DoE) to sell gas overseas and from the Federal Energy Regulatory Commission (FERC) to show that they will meet environmental, safety and other regulations. President Barack Obama’s administration has stepped up the pace of approvals for export permits for worldwide sales over the past 12 months, awarding six more across five sites, but the approvals from Ferc have not shown a similar pick-up.
Two projects, Cameron LNG in Louisiana and Freeport LNG in Texas, had hoped to secure approval last year, but both have received their first draft environmental impact statements only this year, and face months of consultation before a decision is expected. Another, at Cove Point in Maryland, has been told it will receive its environmental assessment in May, and face further consultations after that.
None of these projects has yet finalised its financing, but analysts say that should not be a problem for plants with reliable buyers for the gas.
Cameron LNG has signed up GDF Suez of France and Mitsui, Mitsubishi and Nippon Yusen of Japan as customers and equity investors, while Freeport LNG has deals with Osaka Gas and Chubu Electric of Japan, and BP.A ccording to US gas analysts, the real constraint on the progress of new liquefaction plants is the Ferc process. Lawyers who have been following the approvals process said one reason for the delays was that Ferc has to incorporate the work of several other government agencies. For example, it had to wait for the Pipeline and Hazardous Materials Safety Administration to model what would happen in the event of an LNG spill.
Tony Clark, a Ferc commissioner, has complained of the "significant workload increase” the regulator faced because of the LNG plants. Ferc is expected to approve the projects it is reviewing. However, campaigners against gas exports, including the Sierra Club environmental group, are likely to mount legal challenges.
Nathan Matthews of the Sierra Club said the National Environmental Policy Act compelled regulators to consider the indirect effects of the LNG projects, including the additional US gas production that would be induced by exports, which Ferc has so far failed to do. 350.org, the group behind the high-profile campaign against the Keystone XL oil pipeline, has also joined the effort to block LNG exports.
