POLITICS: PennAve

Energy Department OKs natural gas export project

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Energy Department,PennAve,FERC,Energy and Environment,Vladimir Putin,Zack Colman,Natural Gas,Ukraine

The Energy Department approved a U.S. terminal to ship natural gas to nations without a free-trade agreement Monday, a move that comes amid escalating Washington pressure to expedite such projects.

The DOE determined a proposal to export 0.8 billion standard cubic feet of natural gas per day for up to 20 years from the Jordan Cove project in Coos Bay, Ore., was in the public interest. The metric invites greater department scrutiny for proposals to export to non-free trade nations and is at the center of evolving discussions on Capitol Hill.

The department took the action — the seventh it has approved — as lawmakers from both parties are calling on it to more quickly green light more export terminals as potential relief to Ukraine and other Central and Eastern European countries that rely on Russia for natural gas. Committees in the House and the Senate are scheduled to hold a combined three hearings on the topic this week.

"The opponents of the Jordan Cove application have not demonstrated that the requested authorization will be inconsistent with the public interest and finds that the exports proposed in this application are likely to yield net economic benefits to the United States," the department said in its approval.

But the Jordan Cove project, which was next up for review in the Energy Department queue, is one of the least likely export terminals to get built, industry experts told the Washington Examiner.

Jordan Cove, unlike the other DOE-approved projects, is a "greenfield" endeavor, meaning it's an entirely new project, compared with retrofitting an existing import terminal like most other proposals.

A greenfield project like Jordan Cove requires developers to go through a more costly and time-consuming Federal Energy Regulatory Commission review.

On top of that, local opposition to the project is greater in Oregon than other export terminals slated for Louisiana and Texas.

"Both the terminal and the pipeline have been very controversial in Oregon," said Tim Boersma, a fellow with the Brookings Institution's Energy Security Initiative.

As far as Ukraine and the rest of Europe goes, the Jordan Cove project could be a non-factor, an industry source said. That source said it's safe to assume any West Coast terminal will primarily send natural gas to Asia, where the price spread is greatest.

That's the case with most export terminals, some Democrats have warned.

Those Democrats have urged caution on calls to export natural gas in light of the situation in Ukraine. Aside from the price issues, they note that Ukraine has no way to convert tanker-carried natural gas into its usable form, and that just one U.S. export terminal will be ready before 2017.

But export supporters — largely Republicans and a growing number of Democrats — say faster approvals would send a signal to Russian President Vladimir Putin that his ability to use natural gas as a diplomatic weapon has an expiration date.

Despite the clamor from export boosters, DOE approvals might be headed for a slowdown, said Kevin Book, managing director at consulting firm ClearView Energy Partners.

With the Jordan Cove approval, potential exports hit 9.27 Bcf per day. That's edging the amount closer to the 12 Bcf per day outcome outlined in a 2012 DOE-commissioned study by NERA Economic Consulting.

That study said exports would be a net winner for the economy, but would marginally raise domestic natural gas prices.

"We continue to anticipate a 'pause' — even if no DOE official ever refers to it as such — well before cumulative volumes reach the 12 Bcf/d," Book said in an email.

This article was published at 1:44 p.m. and has been updated.

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