Policy: Environment & Energy

Lawmakers look to move some natural gas exports higher in Energy Department review, says industry chief

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Energy Department,Russia,PennAve,FERC,Energy and Environment,Zack Colman,Natural Gas,Lisa Murkowski,Ukraine,Trade

Lawmakers are considering ways to give some natural gas export applications to nations that lack a free-trade agreement with the United States higher priority in the Energy Department review process, the head of a major natural gas trade organization told the Washington Examiner.

The Ukraine crisis has "shed more of a light" on the pace of export approvals at the Energy Department, America's Natural Gas Alliance CEO Marty Durbin said in a Friday interview at the organization's Washington headquarters.

That pace has Capitol Hill and Obama administration officials considering moving applications that have gone through a pre-filing process with the Federal Energy Regulatory Commission to the top of the DOE's queue, Durbin said. That would be a change from the current routine, in which the department rules on projects on a first-come, first-serve basis.

"There have been discussions both on Capitol Hill and within the administration," Durbin said. "There are those on the energy committees in Congress that are looking at what are some specific things that you could do to reorder the list."

Durbin said that Russia's infiltration into Ukraine, which for decades has bent to Russian influence because of Russia's role as natural gas supplier, has caused the DOE to look at new ways to evaluate the natural gas export process. But he stopped short of saying the administration was ready for major changes in how it evaluates export applications to non-free-trade nations, which face more scrutiny from DOE because they must be deemed in the public interest.

The White House has embraced the idea that natural gas exports -- while not necessarily heading directly to Ukraine from the United States -- could help increase global supplies and give allies leverage when negotiating contracts with Russia. Energy Secretary Ernest Moniz has emphasized that geopolitical realities have always been part of the equation at DOE.

Still, administration officials have avoided discussing whether projects should be approved faster. It's also unlikely President Obama would sign legislation that takes the DOE out of the equation, as several lawmakers have aimed to do in proposals that would shorten or circumvent the agency's reviews.

Therefore, export advocates are looking to a more technical alteration that works within the current system.

Proponents of reordering the stack at DOE argue that not all the projects that have been conditionally approved would get built. Some developers further down the list of 24 pending applications, however, have already begun investing millions of dollars into the FERC pre-filing process.

Time is of the essence, industry insiders say. They believe that a "pause" in processing applications could come when the total amount of natural gas exports conditionally approved to non-free trade nations reaches 12 billion cubic feet per day. Currently, the DOE has given the thumbs-up to seven projects that total 9.3 billion cubic feet per day of exports.

"There's not going to be anything officially called a 'pause,' let me put it that way. There is a possibility you could see a de facto pause — it will just start taking a lot longer for the next set of approvals to come along," Durbin said.

At issue is whether reordering the stack of applications is legal.

Officially, the DOE prioritizes applications that began the pre-filing process at FERC before Dec. 5, 2012. It then considers applications to DOE before that date. Applications received after Dec. 5, 2012, are evaluated in the order in which they were received, regardless of FERC pre-filing arrangements.

Christopher Smith, principal deputy assistant secretary for fossil energy at DOE and Obama's pick to run the agency's fossil energy arm, said in a May 2013 natural gas roundtable held by the Senate Energy and Natural Resources Committee that it might be possible to change that order.

But the DOE quickly walked those comments back. It said such a move would violate the Administrative Procedure Act, which governs how agencies propose and implement regulations.

Sen. Lisa Murkowski, R-Alaska, the top Republican on the Senate Energy and Natural Resources Committee, recalled that May 2013 roundtable, but gave Smith a pass because the export issue was in its "exploratory phase," she said in a recent interview with the Examiner. But she said she thinks DOE has the authority to change the review order.

"I've done a lot of background on this since that, that it is not set in regulation who goes first," Murkowski told the Examiner in a recent interview. "That is something I'm looking at that could help expedite or facilitate a process that folks have rightly criticized for being too lengthy."

Durbin, though, said there is some ambiguity as to whether the DOE can reorder the queue. That said, he noted any steps to smooth out the review process with FERC would be an improvement.

"As to whether or not DOE can do that on its own, can they find a way even if it's a matter of ... saying we're going to coordinate more closely with FERC and find a way of being able to essentially accomplish [faster reviews] without saying it," Durbin said.

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