Midstream

DOE deregulates environmental reviews on LNG exports

LNG export free from environmental reviews

The Department of Energy still under Trump’s administration has issued an order that will exclude environmental reviews on liquified natural gas exports. This comes as another groundbreaking decision the Trump administration is taking just before its term ends in January 20.

DOE issued the order as a pre-publication notice in the Federal Register; it frees LNG exports from the requirements settled in the National Environmental Policy Act, which included environmental reviews on their permits to export.  

Nevertheless, this will only impact shipments to countries with which the United States does not have any free trade agreements; like China and other Asian countries. Canada and Mexico won’t be hit by this new order.

The order issue is aimed to “boost” shipments to Europe and Asia, as the Trump administration continues to seek “energy dominance” for the country. Also, pivots LNG cargo shipments over pipeline exports.

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Issue would expedite National Environmental Policy Act processes

As we’ve reported previously, both pipeline exports and cargo LNG shipments have been on the rise, as natural gas gains competitiveness against coal. Especially in Asia, the demand has been strong.

In fact, the JKM, benchmark for spot gas prices in Asia, is trading at a roughly $7/MMBtus, suggesting that Asian markets will steadily attract US LNG cargoes. Also, according to the latest Energy Information Administration forecast, LNG exports from the U.S. could average 8,4 cubic feet per day in 2021; which is 31% more than in 2020.

DOE said in the notice that the order would “save time and expense in the NEPA compliance process“.

However, the new rule is expected to be overturned quickly by the upcoming Biden administration. For analysts, the issue may even face lawsuits and court battles. Analysts at ClearView Energy Partners, quoted by Reuters, confirmed that suspicion by saying: “The new rule could be rescinded as part of early executive actions on climate by Biden.”

Quoted by Reuters, a senior DOE official stated that environmental reviews on LNG exports mainly focus on the impact of LNG’s “boil-off”, and the process by which the fuel goes back to its gas state from liquid while is being shipped.

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