Let's increase LNG exports

By Dan Eberhart

On the last day of December 2013, former U.S. Department of Labor chief economist Diana Furchtgott-Roth outlined 10 economic opportunities the nation had missed during the previous year. For example, by not acting to taper quantitative easing, pursue reasonable pension reform, or approve the Keystone XL pipeline, Furchtgott-Roth said, the Obama administration had missed its chance to "substantially increase our GDP growth rate, enriching Americans and lowering our unemployment rate."

Also on the list of overlooked activities was reforming the "complex permitting process" that is hamstringing the export of American liquefied natural gas (LNG) to an energy-hungry world.

Since 2000, global LNG demand has grown an estimated 7.6 percent per year. And that rate is only expected to increase: By 2030, Ernst & Young predicts global demand will reach 500 million metric tons, double the 2012 level. At the same time, because of the surge of natural gas from American shale developments, the United States is awash in the stuff, with domestic natural-gas production increasing 41 percent in the past decade alone.

Ten years ago, we were an LNG importer, and today we're the world's largest natural-gas producer.

And with the amount of technically recoverable natural gas in the United States 100 times greater than our current consumption, we have a boon to the U.S. economy that is expected to contribute up to 665,000 net jobs and $115 billion to U.S. gross domestic product by 2035. We also have enough supply to meet our own needs, while also helping to satisfy staggering demand in places like Japan, Korea, India, China, and Taiwan.

Clearly, this is an opportunity we don't want to miss. But a protracted, redundant, and expensive approval process could put it just out of reach.

Unlike American crude oil, LNG faces no ban on exports to our free-trade-agreement partners. It's even possible for American companies to get permission to export to non-free-trade-agreement countries.

The problem is that LNG producers have to obtain permission from both the Department of Energy and the Federal Energy Regulatory Commission (FERC) before they can build an export facility.

In recent years, more than 30 U.S. companies have applied for the necessary permits and licenses. So far, only four projects have gotten full approval. And it took anywhere from two to four years for consent to be granted.

Consider the case of Dominion Resources' project in Cove Point, Md., which will export LNG from natural gas produced in Pennsylvania's Marcellus Shale.

The Marcellus has been an economic game changer for large parts of the Keystone State. And while Pennsylvania lags much of the nation in job, income, and population growth, counties where Marcellus drilling is taking place are making impressive economic strides.

For example, between 2008 and 2014, Marcellus Shale counties experienced employment growth of 8.7 percent, compared with 0.6 percent growth in counties without Marcellus activity. The disparity in terms of wage growth is equally telling: In Marcellus Shale counties, average wage growth was 29.9 percent; in non-shale counties, it was less than half that amount.

But getting the nod to open overseas markets to Marcellus LNG wasn't easy. Dominion spent more than two years in regulatory review, finally obtaining more than 60 approvals and permits and meeting 79 environmental conditions before construction could begin.

Delays like this are significant because other LNG-rich countries are much more agile and able to get their products to market with considerable speed. One example is Australia, which exported 47 percent of its LNG production in 2013.

Although the Energy Department has made improvements to its permitting procedures, FERC's foot-dragging continues to hamper the process.

But a bill passed by the House in January may help to move things along. Sponsored by Rep. Bill Johnson (R., Ohio) and cosponsored by more than 10 members of Congress from Pennsylvania, the bill calls for an expedited federal approval process for LNG exports. The measure is currently sitting in the Senate Committee on Energy and Natural Resources.

"The window of opportunity for LNG exports will not remain open indefinitely, so it's important that Congress act immediately," Johnson said.

He's right.

Removing the barriers to exporting LNG will help sustain or increase production levels in the Marcellus, contributing to the financial health of Pennsylvania and the United States alike.

With all that stands to be gained from speeding the LNG export approval process, it's imperative that Congress move quickly to pass this bill and make the powerful economic opportunity to export LNG one we didn't miss.