The pause by US President Joe Biden's administration on the issuance of permits for new LNG export terminals is a gift to competitors of the US and its energy industry, executives said at a major US energy conference this week.
"This is bad for the US, good for Qatar," Chevron president of midstream Colin Parfitt said on Monday at the CERAWeek by S&P Global conference in Houston, Texas. For LNG buyers "around the world, it just puts a big uncertainty about the US as a reliable supplier," he said.
Biden in late January ordered a "temporary pause" on licensing for new LNG export terminals, effective until the US Department of Energy (DOE) completes a review of the proposed terminals' effect on costs, energy security and the environment, including climate effects. The move has drawn widespread criticism from the oil and gas industry, Republicans and some Democrats, while eliciting praise from environmental groups.
Freeport LNG chief executive Michael Smith said today that customers overseas, who are making decisions about where to source their LNG through 20-year contracts, are "not going to choose the US for projects that don't have their permits."
"They're going to go elsewhere," he said. "It's bad even if it's a short-term thing."
Smith's comments contrast with statements made on Monday by US energy secretary Jennifer Granholm that the pause should be "well in the rearview mirror" a year from now.
When Smith first applied for permits from the US Department of Energy (DOE) in late 2010 to build Freeport, he said, that process was held up by a different study conducted under former US president Barack Obama's administration on the effects of increased US LNG exports on domestic gas prices. The study was supposed to be completed in the first or second quarter of 2012, but was pushed out to December 2012, "conveniently" the month after the presidential election, he said.
The industry should expect the same sort of extended, politically motivated delay with the LNG permit pause happening under Biden, Smith said.
US natural gas producer EQT chief executive Toby Rice, who has been saying for weeks that the pause is a harmful, vote-seeking gambit, said today he felt it was backfiring politically for Biden.
The "bipartisan blowback" from the pause is "the reason why I think you hear the (Biden) administration yesterday saying that this is going to be in the rearview mirror quickly," Rice said. "This needs to be ended today."
The license pause applies only to LNG export terminals that have not yet been authorized. Combined US LNG export capacity from terminals that are currently operating, those under construction and those that have been authorized and are awaiting financing totals 48 Bcf/d (1.36bn m3/d), more than triple the total US export capacity today, the DOE said.
