Posted February 1, 2016
Iran’s plan to export liquefied natural gas (LNG) within two years is what you call a market signal, one that should cause U.S. policymakers to reconsider the ponderous pace with which proposed U.S. LNG export projects are gaining federal approval. The Wall Street Journal reported:
Iran is pushing to find new ways to extract and export its vast natural-gas reserves, including developing facilities to liquefy the commodity and ship it to Europe in two years now that western sanctions are no longer in place, according to a top Iranian official. Iran holds the world’s largest reserves of natural gas, but has long lacked the export infrastructure of competitors like Russia and Qatar. … Tehran is exploring several options to help the country “join the international LNG club,” said Alireza Kameli, Managing Director of National Iranian Gas Export Co., in an interview here.
Options for Iran include restarting its own advanced LNG export project that was halted in 2012 because of the western sanctions; building a pipeline under the Persian Gulf to Oman, which has LNG export facilities Iran might be able to use; and the construction of floating LNG facilities. Iranian officials say the country could export about 30 billion cubic meters (more than 1 trillion cubic feet) to the European Union long-term, the Journal reported.
While experts may disagree over how soon Iranian LNG exports could reach global markets, it makes sense for the United States – the world’s leading natural gas and oil producer – to capitalize on its natural gas abundance by speeding up federal approvals for domestic LNG exports to non-Free Trade Agreement countries. While a number of LNG export projects have received the go-ahead from Washington in the past couple of years, final non-FTA authorizations for more than 20 facilities remain under review at the Energy Department.
Comprehensive energy legislation under debate in the U.S. Senate would expedite the process. Clearly though, the window of opportunity for U.S. LNG exports won’t stay open forever. API President and CEO Jack Gerard wrote to Senate leaders last month:
[Senate legislation] provides a streamlined process for natural gas export projects before the Department of Energy which will accelerate America’s rise as a world-class exporter of natural gas, create U.S. jobs, grow our economy, and significantly strengthen the global energy market. And expediting the free trade of natural gas from America will help enhance our national security interests and bolster our global allies’ independence from nations that would use their energy resources as a diplomatic and economic weapon.
The United States has resumed exporting domestic crude oil after a four-decade hiatus. A raft of scholarly studies found that crude oil exports would encourage domestic production, benefit U.S. consumers and provide aid to U.S. allies overseas. A number of the same free-market principles apply to the export of U.S. LNG. Energy Department-commissioned studies in 2012 and 2015 found that increasing LNG exports would result in economic benefits with minimal impacts on domestic prices. An ICF International study found that easing self-imposed restrictions on U.S. LNG exports would create up to 452,300 new American jobs and add up to $73.6 billion in economic activity.
As a leading natural gas producer, the United States should be a major player in the global LNG market alongside other major producers. The U.S. has become an energy superpower thanks to its shale energy revolution, unleashed by safe hydraulic fracturing and modern horizontal drilling. We have abundant natural gas to supply domestic needs while also supplying allies abroad. The current approvals process is anti-competitive, unnecessarily disadvantaging U.S. companies vying for opportunities in the global market – opportunities that aren’t guaranteed to last indefinitely. Gerard, from remarks at this year’s State of American Energy event:
“Today, the global energy world is realigning with the United States poised to remain a dominant global player – something unforeseen just a decade ago. The energy policy decisions we make today will determine whether this nation remains a positive and stabilizing force in the world’s energy market and whether consumers can continue to count on reliable, affordable and abundant domestically produced energy for generations.”
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.