Permitting delays jeopardize US LNG exports

American Council for Capital Formation

The American Council for Capital Formation (ACCF) has published a paper reporting that, to date, the US administration has approved just two permits to export liquefied natural gas (LNG) out of approximately 20 applications to build and operate LNG export terminals.

The paper, “Liquefied Natural Gas: Why Rapid Approval of the Backlog of Export Applications is Important for US Prosperity,” reports that some of these applications have been under review by the US Department of Energy for as long as two years. 

"We fear that this protracted bureaucratic delay significantly undermines the vast potential that LNG exports can bring to our nation's economy," said Dr. Margo Thorning, ACCF’s chief economist. "This inaction endangers the state, local, national, and global benefits of producing and exporting LNG. America is racing against international competitors for LNG sales abroad, with at least 63 LNG export projects planned or under construction around the globe. So time is of the essence." 

Expanded LNG exports have the potential to spur positive increases in nationwide employment (73,100 to 452,300 between 2016 and 2035) and US gross domestic product ($15.6 billion to $73.6 billion annually between 2016 and 2035), according to a recent study by ICF International. Benefits at the state and local level – in areas that would house export facilities and produce natural gas – would be significant.

The ACCF paper provides a compilation of the status of LNG export applications, the current length of application review, the estimated economic benefits listed in each application, and total estimated capacity. ACCF asserts in the research paper – as well as in an online platform Act on LNG – that the multi-year federal approval process is creating significant opportunity for delay, which could derail the overall investment if foreign competition is realized. 

Considering that each project can take five years or more to move from approval to export flow and cost billions of dollars to permit and build, the paper highlights the importance of the Energy Department and the Federal Energy Regulatory Commission approving all applications so that the market can best determine appropriate supply and demand, as well as which projects are best positioned to move forward.

 

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