Energy conversations at CERAWeek by S&P Global usually revolve around supply, demand, and innovation.
This year, the confab has been polluted by the contentious “pause” on U.S. liquefied natural gas.
The Biden administration issued a “temporary pause” on U.S. LNG export applications nearly two months ago.
The measure, which has drawn the ire of energy executives, natural gas proponents and policymakers, has seeped into panel discussions, speeches and sideline conversations among thousands of global energy leaders who descended on Houston for the week-long conference that kicked off Monday.
West Virginia Sen. Joe Manchin told reporters on Day 1, “There needs to be a pause on the pause.”
US Senator from West Virginia Joe Manchin speaks during the CERAWeek oil summit in Houston, Texas, ... [+]
Alaska Sen. Dan Sullivan, along with three other Republican senators—Roger Wicker of Mississippi, James E. Risch of Idaho, and John Barrasso of Wyoming—sent a letter Monday to John Podesta, President Biden’s senior advisor on International Climate Policy and purported driver of the pause. They copied Secretary of State, Antony Blinken, Energy Secretary Jennifer Granholm, and Amos Hochstein, Special Presidential Coordinator for Global Infrastructure and Energy Security.
The letter refutes White House claims that LNG harms the environment and increases the price of domestic natural gas. It also unveils urgent energy and national security concerns that leave U.S. allies without critical energy supplies.
“If the Biden administration’s policy remains in effect indefinitely, we run the risk of effectively losing one-third of the current potential of increased LNG export capacity, threatening our allies’ energy security,” the senators wrote to Podesta.
They said U.S. adversaries have already taken advantage of the Biden administration’s flawed politically motivated policy move.
“Since the administration’s announcement, for example, Russia extended the permit for LNG supplies to SEFE, a German state-owned energy group, until 2040. Chancellor Scholz also stated that Germany is willing to invest in gas from Nigeria, another unstable country,” the senators wrote.
The senators said the pause would also harm U.S. allies in East Asia, including Japan, which is a security treaty partner and the world’s second largest buyer of LNG.
“Halting U.S. LNG export approvals gives Russia the upper hand,” the senators wrote.
The first U.S. LNG export terminal became operational in 2016.
By 2023, the U.S. had become the world’s largest LNG exporter, supplying more than 60% of U.S. LNG to Europe to mitigate a natural gas shortfall in the wake of Russia’s invasion of Ukraine, which strangled energy supplies to Europe in retaliation for Western sanctions on Russia.
Sullivan told reporters Monday at CERAWeek, “What is this all about? A lot of us think this is about domestic politics.”
The pause is having “serious consequences to our national security and the national security of our allies,” he said.
Sullivan said the pause is also driving interest among U.S. LNG buyers to other countries, like Qatar, which could dominate 25% of global LNG.
Meanwhile, the Russians reached out to the Germans about supplying natural gas after Biden issued the LNG pause, he said.
“That is exactly the opposite of the policies we’ve been trying to undertake in a bipartisan way for our country after the brutal invasion of Ukraine, which is to get our allies and enable them to get off Russian oil and gas,” Sullivan told reporters.
SASSNITZ, GERMANY - NOVEMBER 23: The "Neptune," a Norwegian-flagged regasification ship for ... [+]
Biden’s strategy is “upside down in terms of what we’re trying to do as a country,” Sullivan said.
“We’re calling for a lift on that pause. We hope that the administration listens,” he said.
Despite relatively low domestic natural gas prices, adequate supply to meet demand, and only a fraction of US LNG exported—about 14%—the White House paused LNG export applications to study its approval process.
In a January 26 Fact Sheet, the White House said, it wants to analyze the underlying analyses for authorizations.
“The current economic and environmental analyses DOE uses to underpin its LNG export authorizations are roughly five years old and no longer adequately account for considerations like potential energy cost increases for American consumers and manufacturers beyond current authorizations or the latest assessment of the impact of greenhouse gas emissions,” the White House said.
Since then, one CEO after another has urged Biden to lift the pause.
Against the backdrop of this sense of urgency, Energy Secretary Granholm addressed and defended the pause along with Biden’s industrial policy during her CERAWeek luncheon remarks.
US Energy Secretary Jennifer Granholm speaks during the CERAWeek oil summit in Houston, Texas, on ... [+]
“Consumers are calling for change, communities are calling for change, investors are calling for change,” Granholm said.
“This is a pause to study the impact of what’s happening globally on what we have already authorized,” she said.
The U.S. exports 14 billion cubic feet/day, has 12 bcf under construction and another 22 bcf that have been authorized awaiting final investment decision, she said.
“This pause does not touch any of that,” Granholm said in calm tone, dragging out the word “any” as if to assuage the industry’s collective anxiety.
“As we sit here next year…this [pause] will be well within the rearview mirror,” Granholm said.
Despite her final word on the issue, Granholm got no applause from the crowded luncheon. Some conference attendees shook their heads in disbelief, calling the pause a “ban.”
Dan Byers, vice president of climate and technology at the U.S. Chamber of Commerce’s Global Energy Institute said Granholm’s remarks appeared to be “an attempt to take the temperature down on the issue in front of an audience strongly opposed to the moratorium. Maybe this reduces pressure and buys the administration time but we’re still quite skeptical that the pause ends after the election.”
Pause and Effect
By Tuesday, an oil and gas industry trade association had released its own report on the issue.
U.S. liquified natural gas exports do not harm U.S. natural gas production, U.S. producers’ ability to meet domestic demand, and has “minimal” impact on the price of U.S. natural gas, according to new findings released by the American Petroleum Institute Tuesday during CERAWeek by S&P Global.
“Despite a record level of natural gas exports during the first six months of 2023, U.S. natural gas prices at Henry Hub averaged $2.48 per MMBtu, the lowest six-month average in over 35 years” outside of the Covid-19 pandemic, API said in its Impact Analysis of U.S. Natural Gas Exports on Domestic Natural Gas Pricing.
The report said, “Increased U.S. natural gas exports have and will continue to create massive economic benefits for U.S. communities while providing global access to the reliable U.S. natural gas supply needed to further the global energy transition from higher greenhouse gas (GHG) emitting fuels to lower-GHG emitting natural gas.”
In a perhaps ironic nod to President Biden’s concern for energy security, Dustin Meyer, API’s senior vice president of policy, economics and regulatory affairs, said, “The administration’s misguided LNG freeze threatens American jobs and jeopardizes global energy security.”
“If policymakers are truly committed to energy affordability, they should focus on smart policies that remove hurdles to increasing natural gas production and developing critical infrastructure,” Meyer said in a news release.
API coordinated with the U.S. Chamber’s Global Energy Institute on the report produced by Energy Ventures Analysis.
Reading the Tea Leaves
Byers said he’s more concerned about something Hochstein told Al Ararabiya News during the Munich Security Conference in February.
“We’re nervous that Amos Hochstein said ‘the quiet part out loud’ when asked when the pause would end at the Munich Security Conference,” Byers said. “He said it will be ‘10-12-14 months…then we’ll make a decision on what we do…do we continue to pause?’”
Byers said the administration needs to be clear about its policy and its intention. On February 21, Granholm told The National Press Club that the pause would not affect existing LNG licenses and that she was “not going to put a timeline on it.”
This, Byers said, “only adds to the concern that the policy could be permanent and needs to be publicly clarified by the administration.”
Granholm said last month that the pause would give the Energy Department’s national labs time to conduct a modeling study with “an array of inputs” to determine the impact that U.S. LNG has on the environment and on the domestic natural gas market.
“Let’s just take a few months, pause to make sure we’re doing it right,” Granholm told the Press Club.
During the last review, in 2018 and 2019, Granhom said, “We were only exporting 4 bcf of LNG. We are now exporting 14 bcf.”
