Pause On US Natural Gas Exports Temporary – Energy Secretary

The Biden administration has, in the week ending March 23, 2024, sought so as to reassure sceptical oil as well as gas executives that a pause when it comes to liquified natural gas- LNG exports from the new projects is going to be only short-lived and would not shift the industry’s meteoric progress.

It is well to be noted that in less than a decade, the U.S. has become the world’s largest LNG exporter since the production of the commodity as well as the construction of export terminals have gone on to reach great heights. LNG is natural gas cooled into liquid form so as to make it easier to transport.

U.S. exports have gone on to provide European allies along with energy security as they seek to end their reliance on Russian gas in the wake of Moscow’s invasion of Ukraine. Industry executives go on to argue that LNG will play a major role in the energy transition by way of displacing coal for electricity generation.

The Department of Energy- DoE has announced a pause when it comes to exports from new projects in January 2024 so as to evaluate the effect the LNG rise has had on the climate, energy security, as well as domestic prices.

As the largest LNG exporter in the world, the US Department of Energy said in January 2024 that it would be pausing LNG exports in order to assess the effects of the surge in LNG exports from the United States on the environment, national security, and local prices.

As per President Joe Biden, this pause on new LNG approvals looks at the climate crisis for what it is- the existential threat of the time.

In a statement made in Houston on March 18, 2024, Secretary of Energy Jennifer Granholm stated that the pause is going to be rather short-lived.

She anticipates that as they sit at the same place next year, this will be looking very well in the rearview mirror. Granholm went on to tell this at the CERAWeek by S&P Global Energy conference with regards to the LNG export pause.

The energy secretary went on to reiterate that the pause happened to have no impact on the 48 billion cubic feet a day that are currently authorized for export. This has 14 billion cubic feet per day, which is currently exported, and another 12 Bcf/d under construction, as well as 22 Bcf/d that is authorized but has not yet received the final investment decisions.

The 48 Bcf/d of the currently authorized LNG happens to be three times the present export capacity of the U.S., says the Department of Energy.

Pushback from the Industry

Oil and gas executives as well as the Republican senators, however, have been unmoved due to Granholm’s remarks, thereby arguing that a pause would shake confidence among the investors who happen to be evaluating new projects, rattle allies who are dependent on U.S. LNG, and potentially also undermine the shift to cleaner energy sources.

The CEO of Hess Corp., a producer of oil and gas, told CERA Week that the pause is climate- and economically unfriendly, as well as security-unfriendly. There is no reason to have a pause at all.

The fact is that one cannot just flip-flop the policy, he added, and that they can do any study they want, but that doesn’t cause a pause or freeze, and rather the study is done parallelly.

Hess remarked that gas will play a crucial role when it comes to the energy transition, especially in countries such as China, wherein the coal supplies 60% of electricity generation. And the only way to get such kind of numbers down is to go ahead and replace them with gas.

The CEO of Baker Hughes, Lorenzo Simonelli, indicated that the U.S. could go on to fall behind its competitors if the pause goes a bit longer than, say, eight to twelve months due to the fact that the international projects will simply march forward. Qatar, which is one of the world’s top LNG exporters, happens to be planning a prominent expansion of its production.

Chevron president of international exploration and production, Clay Neff, opined that the LNG pause can very well shake investor confidence.

Sen. Dan Sullivan said the U.S. allies happened to be worried about the LNG pause during the conversations at the Munich Security Conference in February 2024. Europe happened to be the destination for 67% of U.S. LNG exports, and that too in the first half of 2023, as per the Energy Information Administration.

The senator went ahead and sent a letter to John Podesta, President Biden’s climate advisor, on March 18, asking for the administration to go ahead and lift the pause.

Sullivan said that all this is having serious consequences in reference to their national security as well as the national security of their allies, thereby arguing that the policy goes on to contradict U.S. efforts so as to help European nations end their continuous reliance on Russian energy.

Sullivan went ahead and told Podesta in the letter that this pause would go on to cede market share to countries like Russia as well as Qatar. The U.S. went ahead and supplied 48% of European LNG imports in 2023, while Qatar offered 14% and Russia was placed at 13%, as per the data coming from the EIA.

The pause goes on to include an exception when it comes to unanticipated and immediate national security emergencies, as per the White House. The Biden administration happens to be committed to the strongest possible energy supply bond between the U.S. and Europe, says assistant secretary for energy resources at the U.S. State Department, Geoffrey Pyatt.

He says that, first of all, there is indeed going to be no rollback of the present capacity. Moreover, there happens to be a massive increment when it comes to additional capacity coming into the market.

As per Pyatt on President Biden, there happens to be a profound understanding when it comes to the strategic advantages that come from American energy exports.