US Speeds up LNG Export Process


The U.S. House of Representatives approved legislation that would set a deadline for the Energy Department reviewing liquefied natural gas (LNG) export applications , a move aimed at securing swifter approvals for shipping gas overseas.

The Republicans made the case that U.S. LNG exports would help U.S. allies reduce their dependence on Russian gas. The bill “would send an immediate signal to our allies and our enemies that the United States is serious about energy security,” said Cory Gardner, the Republican sponsor of the legislation.

U.S. LNG exports are projected to provide an economic benefit to gas importing countries. Because of the embedded take-or-pay volumes in long-term gas supply contracts and limited regional production in many parts of the world, U.S. LNG exports could reduce global prices and costs of supplies for gas importers.

U.S. LNG exports could accelerate the transition away from oil price indexation of gas supply contracts. Since supplies for U.S. LNG exports are expected to be pegged to U.S. gas prices (e.g. Henry Hub), rather than oil prices, this will create “gas-on-gas” market competition. Furthermore, LNG could replace oil fired electricity generation in certain nations who wish to switch to gas.

Gas exporting countries could suffer a decline in revenue due to price erosion and/or supply displacement. Entry of new supply clearly benefits consumers, but negatively impacts suppliers through price reductions.

Russia, the leading gas exporter to Europe, appears to be especially vulnerable to U.S. LNG exports. Because of its huge volumes of gas exports, primarily to Europe, and their high cost to markets, makes Russia vulnerable to additional supply competition and price reductions.

There are very valid concerns that increasing gas exports will force the price of U.S domestic gas up. Either way, political involvement in controlling commodities is always a double edged sword, what can be granted today, can easily be taken away tomorrow.

Alfa Energy Group

Alfa Energy Group, an Edison Energy company, is an international energy, sustainability and technology consultant partner with 250 employees over 3 international locations. For over 25 years, Alfa has been servicing its clients’ needs through energy and water management, sustainability, and compliance consulting, and an intuitive ecosystem of user-driven energy, water, and carbon management software platforms. With coveted awards, an international industry-wide recognition, and clever simple solutions, today Alfa is partnering with clients to establish and deliver pivotal net zero strategies. Through smart energy management, the expertise and diligence of its people, transparent processes, and data management, Alfa continues to lead through its recognised gold standard of service delivery.