A US industrial energy consumer group on Thursday called the Department of Energy’s plan to revoke liquefied natural gas export permits under only extreme circumstances as an “anti-manufacturing” policy that unfairly benefits gas producers and exporters at the expense of US consumers.
In a letter Thursday to Energy Secretary Ernest Moniz, the Industrial Energy Consumers of America said the DOE’s policy protects capital investments in new LNG export terminals while ignoring the capital investment and jobs within the US manufacturing sector.
“We do not believe that LNG export facilities should have greater investment protection than the domestic manufacturing sector, and we respectfully request a full review of this policy,” Paul Cicio, the group’s president, wrote to Moniz. “This is a process that benefits those who produce and export natural gas, who have the financial means to spend millions of dollars to produce numerous studies and hire very expensive law firms. We would have hoped the DOE would play the role of public defender and consumer advocate, but that is not the case.”
The letter is in response to an October 17 letter Paula Gant, DOE’s deputy assistant secretary for oil and natural gas, sent to Senator Ron Wyden, an Oregon Democrat and head of the Energy and Natural Resources Committee, on the DOE’s potential path for revoking LNG export permits.
Gant wrote that DOE would not revoke an export permit “except in the event of extraordinary circumstances,” which apparently would not include a dramatic gas-price spike.
While she did not specifically identify circumstances under which the DOE would revoke a permit, she said DOE officials “take very seriously the investment-backed expectations of private parties and would not rescind a previously granted authorization except in the event of extraordinary circumstances.”
Cicio argued this clearly shows DOE is concerned more about the investments of LNG exporters rather than the manufacturing sector, as well as consumers, who would be affected by a price spike.
In addition, he argued that LNG exporters would be less affected by a US gas price spike since global LNG prices are tied to crude oil-indexed pricing and can pass on any price increase to international customers.
Cicio also argued that the process DOE has set up for hearings on a potential revocation of an export license could limit intervening parties to only the parties that issued intervention notices in the original export applications years earlier.
DOE currently is in the process of approving applications to export LNG to countries that do not have free trade agreements with the US. Last month, it authorized Dominion to export LNG from its Cove Point terminal in Maryland to non-FTA countries, only DOE’s fourth such approval, bringing the total volume of non-FTA permits to 6.37 Bcf/d.
While DOE must quickly authorize exports to FTA nations, it can limit or block exports to non-FTA countries if they are not in the public interest. The department has done a pair of studies on the impact of LNG exports on domestic gas prices and the economy to help it make the public interest determinations.
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