US pause on LNG export approvals 'serves the industry', says embattled top official

The US has authorized LNG export projects equivalent to four times current levels and will be exporting 50% more than Qatar by 2030, despite the newly announced pause on approving more projects, Assistant Energy Secretary Brad Crabtree said Jan. 29, defending the moratorium before a deeply skeptical audience in Italy.

Speaking at the Baker Hughes Annual Meeting in Florence, Crabtree said the Biden administration's Jan. 26 announcement of a "pause" on new export approvals, which sent shockwaves through the sector, was appropriate given the need to assemble up-to-date information on trends and the climate outlook. He said it could even prove beneficial for the industry in defending itself before the public, he said.

The pause centers on the criteria the DOE considers in deciding whether to permit projects for exporting LNG to countries that lack free trade agreements with the US, a category that applies to most of the global LNG import market.

However, Crabtree said the review will "serve the industry well in terms of responding to criticism, whether it's about domestic prices in the US or climate implications of our exports."

"We have a special role as the world's largest oil and gas exporter to take our climate obligations very seriously," he said.

Crabtree went on to outline the sizable export increases that would not be affected by the review of policy.

With LNG export capacity of 14 Bcf/d, or 140 Bcm/year, exports currently stand at 120 Bcm/year, he noted.

Following an "enormous" expansion already, "we have authorized additional exports of 12 Bcf/d, or over 120 Bcm/year, that will come on-line between now and 2030 -- that is, essentially, a doubling of our current production and exports today," he said.

"On top of that we have authorized an additional 20 Bcf/d, over 200 Bcm/year, for exports that do not yet have a final investment decision. The total volume of authorized exports in the US is 48 Bcf/d, or more than 480 Bcm/year," he said.

"We have had the most rapid and dramatic expansion of natural gas production and exports probably in the history of any country. By 2030 our exports will be 50% or so larger than the second largest producer Qatar," he said.

Platts, part of S&P Global Commodity Insights, assessed the JKM LNG benchmark price at $9.349/MMBtu on Jan. 29, up 44 cents on the day.

Stormy response

The comments failed to placate senior industry figures attending the event, however.

"We've disagreed with [the Biden administration] on a lot of different issues. This decision I think is probably the worst energy decision they've made so far," said Mike Sommers, president of the American Petroleum Institute. "You have US allies abroad within Europe and in Asia -- they're begging for natural gas. They want it not just because it's going to provide the energy that they need during a time of political turmoil throughout the world, but also they want it because of environmental performance," Sommers said, arguing that US natural gas was 50% cleaner than coal.

"Most of the time US natural gas is replacing coal as the primary energy source, so it goes against Biden's commitments," Sommers said.

The move "completely undermines American and the world's national security. We need more energy in the world right now," Sommers said. "This proposal is bad for American jobs, bad for American national security and it helps people who are opponents to the Western world," like Russian president Vladimir Putin, he said.

Jack Fusco, CEO of exporter Cheniere Energy, said LNG exports were helping countries around the world reduce their emissions by switching from coal to gas in power generation. "That's what we do with our US LNG is we provide that platform so other countries around the world can hit their climate change goals with coal-to-gas switching, just like the US is doing, so I'm very confused as to why that needs to be re-analyzed," he said.

On price-related arguments, Fusco said Henry Hub prices in the US were currently the same as 2016 levels despite the massive growth of US gas exports since then.