The Energy Department (DOE) on Friday approved a controversial application allowing liquefied natural-gas exports to nations that lack a free-trade agreement with the United States.
The department gave the green light to Freeport LNG Expansion and FLNG Liquefaction’s proposal to send 1.4 billion cubic feet per day of natural gas overseas from a terminal on Quintana Island, Texas, for 25 years.
The DOE said that project opponents “have not demonstrated that the requested authorization would be inconsistent with the public interest,” which is the standard proposals for exports to nations lacking a free-trade pact with the U.S. must satisfy.
The project is the second to get DOE approval to send natural gas to non-free trade nations. The developers will now take their plan to the Federal Energy Regulatory Commission (FERC).
The decision comes less than 24 hours after the Senate confirmed Energy Secretary Ernest Moniz, whose position on exporting natural gas had been somewhat ambiguous.
President Obama, who has faced congressional pressure to approve some of the contentious proposals, has also signaled in recent weeks that he plans to move on some of the 20 applications in the DOE’s queue.
The DOE decision will likely stir an already roiling Capitol Hill debate on exports.
The Senate Energy and Natural Resources Committee already has completed one of three natural gas “roundtables” planned for this month. The next roundtable, scheduled for Tuesday, will cover exports.
Several Democrats — such as Energy and Natural Resources Committee Chairman Ron Wyden (D-Ore.) — and some chemical manufacturers have warned against an unfettered expansion of exports. They worry shipping too much natural gas abroad would cause domestic prices to spike.
Wyden, in a statement Friday, said he was pleased with the DOE’s approach.
Rather than approve applications en masse, Wyden said DOE demonstrated it would evaluate proposals in a “measured” fashion.
“The Department of Energy’s announcement today that it will be making export decisions on a case-by-case basis provides a constructive way for this discussion to go forward that’s consistent with my belief that a measured approach on exports will provide the greatest advantage for the U.S economy,” he said.
Republicans and business groups say exports figure to be restrained.
They argue only a handful of the applications on file would get DOE approval, and that many would not follow through with the costly FERC process that follows.
Export proponents also contend that the economic benefits — such as new jobs and reducing the federal trade deficit — would outweigh likely modest price increases.
In its ruling, the Energy Department sided with the arguments of export supporters.
“[W]e find that the exports proposed in this Application are likely to yield net economic benefits to the United States. We further find that granting the requested authorization is unlikely to affect adversely the availability of natural gas supplies to domestic consumers or result in natural gas price increases or increased price volatility such as would negate the net economic benefits to the United States,” the DOE said.
Sen. Lisa Murkowski (R-Alaska), the top Republican on Energy and Natural Resources, praised the department’s ruling.
“This decision is a victory for those who believe free trade is good for the American economy. It’s my hope that Freeport is the first of many projects that will be approved in the coming weeks and months, not years,” she said in a statement.