Reports related to this article:
Project(s): View 2 related projects in PECWeb
Plant(s): View 2 related plants in PECWeb
Released July 05, 2024 | SUGAR LAND
en
Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--A Lake Charles, Louisiana, federal judge ruled Monday that the Biden administration overstepped its authority by ordering a moratorium on liquefied natural gas (LNG) export permits to non-Free Trade Agreement (FTA) countries.
In the ruling, Judge James Cain, Jr., of the U.S. District Court for the Western District of Louisiana, a Trump appointee, said the moratorium was "completely without reason or logic." In the ruling, Cain agreed with the 16 Republican-led states who had filed suit in his court, vacating the Biden administration order to halt new export licenses to non-Free Trade Agreement countries while the DOE reviewed the economic and climate consequences of further LNG exports.
On the environmental side, Cain noted that any exported LNG would likely be replacing fuels with higher carbon content. And regarding economic impact, he pointed out that even with higher demand and exports, natural gas production has increased enough to keep Henry Hub prices much lower than equivalent costs in the EU and Asia, which pay several times the Henry Hub price.
What This Actually Means
Some industry observers point out that the ruling did not strip the Department of Energy (DOE) of any oversight authority, it only removed the ordered pause--so the $61 billion in pending infrastructure projects--in Louisiana alone--are not necessarily about to leap forward.
But there are a lot of things to like about the future in light of this decision, say IIR's Jesus Davis and Shane Mullins.
Mullins sees hope "for U.S. projects that have suffered from a lack of additional long-term agreements signed since the pause was announced in January." With the pause, the momentum had shifted to Canada.
It's also good news for projects that were awaiting DOE Non-FTA approval, he said. Those include the Commonwealth LNG project and Venture Global LNG's (Arlington, Virginia) CP2 project, which recently received Federal Energy Regulatory Commission (FERC) approval. Those are now "back to having an active review underway" rather than contending with "an election year waiting game," he said. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can learn more by viewing by the project reports on the CP2 and Commonwealth projects.
Davis agrees, saying the decision "should restart the signing of supply purchase agreements (SPAs) between U.S. LNG exporters and their offtakers around the globe. The pause did give LNG exporters outside the U.S. an opportunity to sign deals while additional U.S. LNG export agreements were in a pause-induced state of confusion."
Asia and Europe had begun to look elsewhere, but now the momentum can shift back to the U.S.
What's Next--Will We Wait Until After the Election?
The most likely next step, in Davis's view, is that the DOE will appeal the decision, perhaps all the way to the Supreme Court. That would mean there would be no judicial resolution until after the November elections, at which time "the pause could well be a non-issue."
For the immediate future Davis said, 2024 is half over, so only the CP2 project is lined up to receive final investment decision (FID) before the end of the year.
Regardless of the pause situation--appeal or not--there are 11.2 billion cubic feet per day (Bcf/d) of LNG export capacity under construction--enough to almost double the existing 15 Bcf/d capacity, according to IIR figures.
The Cain Gambit Works
Oil and gas states and industries have fared well with the strategy of challenging the administration through the Lake Charles district court. Cain has also prevented the Bureau of Ocean Energy Management's (BOEM) plans to protect Rice's whale habitat from development, issued an injunction against the Environmental Protection Agency's plan to use civil rights as a basis for increasing enforcement of environmental laws in Louisiana, and, in 2022, stopped the administration from using the social cost of carbon in tagging carbon emissions.
The 5th U.S. District Court of Appeals later reversed the carbon emissions ruling.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
In the ruling, Judge James Cain, Jr., of the U.S. District Court for the Western District of Louisiana, a Trump appointee, said the moratorium was "completely without reason or logic." In the ruling, Cain agreed with the 16 Republican-led states who had filed suit in his court, vacating the Biden administration order to halt new export licenses to non-Free Trade Agreement countries while the DOE reviewed the economic and climate consequences of further LNG exports.
On the environmental side, Cain noted that any exported LNG would likely be replacing fuels with higher carbon content. And regarding economic impact, he pointed out that even with higher demand and exports, natural gas production has increased enough to keep Henry Hub prices much lower than equivalent costs in the EU and Asia, which pay several times the Henry Hub price.
What This Actually Means
Some industry observers point out that the ruling did not strip the Department of Energy (DOE) of any oversight authority, it only removed the ordered pause--so the $61 billion in pending infrastructure projects--in Louisiana alone--are not necessarily about to leap forward.
But there are a lot of things to like about the future in light of this decision, say IIR's Jesus Davis and Shane Mullins.
Mullins sees hope "for U.S. projects that have suffered from a lack of additional long-term agreements signed since the pause was announced in January." With the pause, the momentum had shifted to Canada.
It's also good news for projects that were awaiting DOE Non-FTA approval, he said. Those include the Commonwealth LNG project and Venture Global LNG's (Arlington, Virginia) CP2 project, which recently received Federal Energy Regulatory Commission (FERC) approval. Those are now "back to having an active review underway" rather than contending with "an election year waiting game," he said. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can learn more by viewing by the project reports on the CP2 and Commonwealth projects.
Davis agrees, saying the decision "should restart the signing of supply purchase agreements (SPAs) between U.S. LNG exporters and their offtakers around the globe. The pause did give LNG exporters outside the U.S. an opportunity to sign deals while additional U.S. LNG export agreements were in a pause-induced state of confusion."
Asia and Europe had begun to look elsewhere, but now the momentum can shift back to the U.S.
What's Next--Will We Wait Until After the Election?
The most likely next step, in Davis's view, is that the DOE will appeal the decision, perhaps all the way to the Supreme Court. That would mean there would be no judicial resolution until after the November elections, at which time "the pause could well be a non-issue."
For the immediate future Davis said, 2024 is half over, so only the CP2 project is lined up to receive final investment decision (FID) before the end of the year.
Regardless of the pause situation--appeal or not--there are 11.2 billion cubic feet per day (Bcf/d) of LNG export capacity under construction--enough to almost double the existing 15 Bcf/d capacity, according to IIR figures.
The Cain Gambit Works
Oil and gas states and industries have fared well with the strategy of challenging the administration through the Lake Charles district court. Cain has also prevented the Bureau of Ocean Energy Management's (BOEM) plans to protect Rice's whale habitat from development, issued an injunction against the Environmental Protection Agency's plan to use civil rights as a basis for increasing enforcement of environmental laws in Louisiana, and, in 2022, stopped the administration from using the social cost of carbon in tagging carbon emissions.
The 5th U.S. District Court of Appeals later reversed the carbon emissions ruling.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
