A backlash is brewing against U.S. LNG exports
Washington lacks 'political comfort' with energy exports, API economist says
Canadian producers counting on exports of liquefied natural gas (LNG) in the United States to jump-start a rally in North American prices could be pinning their hopes to a political time bomb.
Sensitivities in Washington are not limited to imports of Alberta bitumen, it turns out. Legislators on Capitol Hill also lack a “political comfort” with energy exports, says Steve Crookshank, a senior economist at the American Petroleum Institute.
He warned of a looming pushback against outbound shipments of the super-cooled product at a Calgary natural gas conference held this winter by the Canadian Energy Research Institute.
Seven LNG export applications are currently under review by the U.S. Department of Energy. Even if half of them are approved and built, the U.S. could add 22 million tonnes of LNG per year to global markets, RBC Capital Markets calculates.
The liquefaction schemes are seen as one way to ease a storage glut that continues to weigh on prices and eat away at Alberta’s traditional share of the U.S. export market. But not everybody is keen to see them approved.
The North America Natural Gas Security and Consumer Protection Act introduced by Representative Ed Markey (D-Mass.) this past February illustrates the point. It would prevent the U.S. Federal Energy Regulatory Commission from approving any export terminals until 2025.
Another Markey-sponsored bill, called the Keep American Natural Gas Here Act, would ban foreign sales of natural gas produced on federal lands.
The legislation is a repeat of apprehension that toppled TransCanada Corp.’s original application to deliver oil sands production to refineries in Texas and Louisiana, Crookshank told Calgary executives. The pipeline exposed deep-seated anxieties about energy exports among legislators, he said. “It’s hard to imagine they would treat natural gas produced domestically any more gently.”