Department of Energy Approves LNG Export Project
May 29, 2013
The DOE on Friday announced its approval of the Freeport LNG application to export liquefied natural gas produced in the U.S. The approval is the first since 2011 and the first since the DOE completed and released in December its study that concluded that additional LNG exports would provide a net benefit to the U.S. economy. This is not entirely surprising news, but the natural gas futures market did react to the reality of increasing exports in the future by moving up on Friday after the announcement.
The Freeport LNG project still requires FERC approval, though DOE approval was viewed as the more difficult hurdle by most. The project will have the capacity to export 1.4 BCf per day of natural gas once online in 2017, representing about 2% of current domestic production. There are still over 20 applications for approval of LNG projects pending with the DOE, and the DOE stated that it will consider each on a case-by-case basis in the order they were received. Next in the queue is the application of the Dominion Cover Point LNG terminal in Maryland.
Manufacturers such as Dow Chemicals and other U.S. companies that are significant consumers of natural gas have voiced strong opposition to unlimited exports of natural gas. Dow released a statement Friday that while positive, did make clear its view that there should be limits to the amount of gas that can be exported.