Posted - 15Aug2013/253 pm EDT/1853 GMT - Washington (Platts) - Brian Scheid, Edited by Jeff Barber
The US Department of Energy could approve soon as many as four more
applications to export LNG before stopping the approval process to
review new data, analysts with FBR Capital Markets said in a report
Thursday.
This "pause" in approvals could lead to more pressure
on the Obama administration to wrap up negotiations on two sweeping free
trade agreements that would open much of the global market to US
exporters without the stringent DOE review, analysts said.
"If
[or] when the approval process slows, exporters could turn to two major
free trade agreements currently being negotiated with Asia and Europe to
expand the marketplace for LNG exports," FBR analysts wrote. "Although
the FTA process is very slow and uncertain, we see it as an interesting
contingency supporting the LNG export story."DOE is required, by law, to quickly approve applications to export LNG
to countries that have FTAs with the US, but can deny or modify
applications to ship LNG to non-FTA countries.
DOE has approved
three applications to ship LNG to non-FTA countries, including since May
two totaling 5.6 Bcf/d, but 19 applications, totaling 23.6 Bcf/d, are
still pending.
Analysts, lobbyists and academics have said the
administration will likely approve all of these applications, but it's
unclear when, a question that has added relevance given that analysts
believe the global market can only support about 6 Bcf/d to 8 Bcf/d of
US gas.
Analysts with FBR said that, because of this potential
threshold, DOE will approve one to four more LNG export applications,
totaling between 1 Bcf/d to 2.79 Bcf/d, before it will "taper" the
process by, potentially, pausing approvals to analyze the cumulative
impact of approved and proposed projects.
This impact was
examined in a DOE-commissioned study that was criticized by some,
including Senator Ron Wyden, Democrat-Oregon, and chairman of the Energy
and Natural Resources Committee, for using outdated Energy Information
Administration data. FBR analysts said the administration will likely
use the EIA's next annual energy outlook, to be released late this year,
to weigh future applications.
"The next outlook could serve as
an opportunity to pause the approval process and evaluate the cumulative
impact of approvals as well as changes in the market outlook," FBR
said. "We emphasize that the underlying law is heavily biased in favor
of approval based on the public interest standard, and application
rejection is much less likely than more time for additional study."
But,
FBR analysts also said, many of the questions over delays in the
application approval process could vanish if negotiations over the Trans
Pacific Partnership with Asia and the Trans-Atlantic Trade and
Investment Partnership with Europe are successful.
The FTAs,
which are still being negotiated and will ultimately need to be approved
by Congress, would involve three of the four biggest LNG import markets
in the world, including Japan, the UK and Spain. South Korea, the
second largest LNG importer in 2012, already has an FTA with the US.
FTAs
with these Asian and European countries would mean applications to
export LNG there "would be quickly and automatically granted," the
analysts said.
Still, the FTAs are still subject to lengthy
negotiations and may not even be ratified before all 19 pending LNG
export applications are approved by DOE.
FTAs "are complex all-encompassing negotiations that would likely take years to complete," the analysts
Post to be found at:
http://www.platts.com/latest-news/natural-gas/washington/us-doe-could-ok-four-more-lng-export-applications-21426625
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