Congress is inching closer to fast-tracking natural gas exports — a reform backed by the fracking industry that has found new momentum in light of the crisis in Crimea.
On Tuesday, the Senate and House Energy Committees both held hearings on boosting liquefied natural gas (LNG) exports. The House Committee focused on Rep. Cory Gardner (R‑Colo.)’s H.R. 6, which would streamline the Department of Energy’s export application process by fast-tracking exports to all WTO countries. (Current law expedites applications to a much shorter list of countries that share free trade agreements with the United States.) Meanwhile, on Wednesday, the House Committee on Foreign Affairs tackled the subject, without devoting itself to any one of the many pieces of legislation that would ease the DOE’s export rules. Later in the week, Sen. Mark Udall (D‑Colo.) and Sen. John Barrasso (R‑Wyo.) plan to attach amendments to an aid package for Ukraine that would liberalize LNG export policy.
Supporters of these measures argue that boosting American gas exports would undermine Russia’s geostrategic influence over its U.S.-allied neighbors. Moscow’s state-owned energy company, Gazprom, currently provides Europe with 30 percent of its gas supply; Ukraine, meanwhile, gets 70 percent of its gas from Russia.
“The last thing Putin and his cronies want is competition from the United States of America in the energy race,” said Senator Mary Landrieu (D‑La.), presiding over her first hearing since becoming chair of the Energy Committee. “Tyrants and dictators throughout history have had many reasons to fear revolutions. And this U.S. energy revolution is one they should all keep their eyes on.”
The next frontier, then, for natural gas is overseas — an economic reality that took shape well before the Kremlin’s latest military aggression: Over the last decade, fracking and horizontal drilling have lead to skyrocketing gas production and cheap prices stateside. That’s caused a growing number of U.S. producers to consider shipping their fracked gas abroad, to places like Europe or Asia, where natural gas commands much higher prices. From as early as 2011, gas producers have sung the praises of LNG exports to Capitol Hill. Since then, they’ve earned the blessing of representatives from gas-rich states like Alaska, Colorado, Louisiana, Texas and Wyoming.
Today’s most fervent advocates of LNG exports are no strangers to the cause. But the specter of Russian imperialism has given these champions new impetus, and grabbed the attention of the mainstream press like never before. The editorial boards of The Wall Street Journal and USA Today, two of the nation’s three most widely circulated newspapers, both endorsed easing export rules this month, casting reforms in a geostrategic light. Readers of the New York Times, meanwhile, were treated to a column from Thomas Friedman calling for the U.S. to compete with Russia in an “Earth Race.”
The United States currently lacks export capacity — the first LNG export terminal isn’t scheduled to start shipping until late 2015, and others aren’t expected to be active before 2017 or 2018. But streamlining the application process now would likely pay future dividends. As such, the gas industry has welcomed the unexpected interest with open arms.
“We didn’t gin up the Ukrainian crisis,” Center for Liquefied Natural Gas President Bill Cooper told reporters on Monday. “We didn’t gin up the idea that it ought to be connected in some way to LNG exports. But Congress did, obviously, and a lot of editorials, experts and geopolitical analysts have all jumped on that. We appreciate the attention that LNG exports are receiving, and if it does provide a catalyst to make something happen that heretofore has not, then we’re going to be very happy with that.”
This week’s hearings would seem to indicate Cooper’s side faces little pushback in Washington.
With some exceptions — the House committee’s ranking member, Henry Waxman (D‑Calif.), criticized the notion of “rubber-stamping unlimited LNG exports without any determination that they are in the public interest” — the three hearings generally featured support for boosting exports and speeding up the DOE review process.
That might have had something to do with the witnesses, many of whom, as Steve Horn has reported, have industry ties. Arguably, the most enthusiastic defense of exports came from David Montgomery, senior vice president at NERA Economic Consulting, who testified at both energy committee hearings. His firm’s clients include Louisiana’s Cheniere Energy, which operates the LNG terminal that’s scheduled to open in late 2015. Montgomery in his prepared remarks noted that “he do[es] not speak for Cheniere.”
While advocates of export reform acknowledge that the immediate material impact of reforming the permitting process is negligible, they argue that the signal to Russia is crucial.
“While we won’t be able to ‘turn the spigot’ and bring immediate energy to our allies around the globe, we can send a signal to the rest of the world that help is on the way,” America’s Natural Gas Alliance President and CEO Marty Durbin said in a statement. “Doing nothing on natural gas exports, as some would prefer, would allow other countries with abundant natural gas to leap ahead of us in LNG export capacity and technologies.”
The conversation on the Hill this week, however, was marked by a glaring omission — an actual back-and-forth discussion about the environmental impact of exports.
The Senate hearing featured no mention of climate change at all — a frustrating oversight, no doubt, for many of the environmental groups who have raised the case that LNG exports would accelerate the effects of climate change. On March 18, the leaders of sixteen different national and regional green groups, including 350.org, Food & Water Watch, and the Sierra Club, sent a letter to President Obama, asking that the administration stop approving gas export facilities. The DOE has already approved seven such terminals.
“It is alarming that there was no mention at all of climate change in today’s Senate Energy Committee hearing,” says Mike Tidwell, director of the Chesapeake Climate Action Network (CCAN). “Credible new analysis shows that the ‘life-cycle’ greenhouse gas emissions of fracked, liquefied, and exported U.S. gas could be as bad as coal. Natural gas is just another harmful fossil fuel, especially when liquefied and sent to the other side of the planet for combustion.”
Tidwell’s group, CCAN, has led opposition to the proposed conversion of an LNG import facility at Cove Point in Lusby, Md., into an export terminal.
When asked by In These Times about her hearing’s omission of climate change, Landrieu defended herself.
“I want to be open to [environmentalists’] positions,” Landrieu said. “I don’t want to be close-minded in any way. But there is an environmental panel that works in Washington and they could bring their concerns there. This is an energy lands committee where we want to both promote and focus on energy production. Its impact on the environment is important but not primary.”
With a hodge-podge of bills and potential amendments up for debate in both chambers, it’s unclear what steps Congress will take next. Landrieu told reporters that it was up to party leadership to decide what amendments would be allowed.
She praised Sen. Udall’s proposal that, like Rep. Gardner’s bill, expands the list of fast-tracked list of countries to include all WTO countries. Unlike Gardner’s legislation, however, Udall’s version doesn’t take the additional step of triggering the approval of all pending applications for which a notice has been issued in the Federal Register.
Whatever happens this week, exports are likely to remain on the legislative agenda for the remainder of the session.
“This committee is going to be very focused on a true domestic energy production policy for this country,” Landrieu said. “This is important for jobs in America but it’s important for America’s strength and for democratic expansion in the world.”
It also is important for the 2014 election cycle.
Recent polls show Landrieu trailing her GOP opponent this fall by a small margin. As she tries to fend off that challenge, Landrieu has reeled in more cash from the oil and gas industry than any other Democratic member of Congress. Senator Udall, too, faces a tough re-election bid, and, in this campaign cycle, he ranks just below Landrieu when it comes to energy industry contributions to Democrats. His leading opponent in the GOP primary? That would be fellow gas export champion Rep. Cory Gardner.