The US government on Monday approved a seventh natural gas export project, giving the green light for a liquefied natural gas (LNG) terminal in Oregon, at a time when the Obama administration is under pressure to signal willingness to help Europe offset Russian gas influence.
The US Department of Energy gave its conditional approval for the Jordan Cove LNG terminal, which is proposing to export up to 800 million cubic feet of natural gas over the next two decades to countries that don’t have free-trade agreements with the US.
The Jordan Cove LNG project, owned by an arm of Calgary-based Veresen Inc., will rely primarily on natural gas supplies to be transported through an existing pipeline network from Western Canada to Oregon
There is much speculation that the project’s approval was the result of increasing pressure on the Obama administration to respond to Russia’s annexation of Ukraine’s Crimean Peninsula earlier this month. However, at the same time, the Jordan Cove LNG project’s approval is in line with the current pace of the granting of LNG export licenses.
Europe—and particularly Central European countries—have been lobbying hard for exports of US LNG, which could help offset dependence on Russian gas.
Former Soviet satellites Poland, the Czech Republic, Hungary and Slovakia—otherwise known as the “Visegrad 4”—have been lobbying Washington heavily to remove bureaucratic hurdles for exporting US natural gas to Europe to minimize the effects of gas a key weapon in Russia’s political arsenal.
However, even with these projects approved, there remains a long process of financing and construction, and the necessary volume of US LNG exports capable of offsetting Russian influencing could not be reached for at least five years.
Despite the fact that the US natural gas industry is supporting efforts in Congress to pressure the DOE to speed up the export approval process—most recently citing the need to counter Russian influence--exporters will be eyeing the much more lucrative Asian market, where LNG fetches substantially higher prices.
“A quick and efficient approval process to responsibly export natural gas from our shores will also reduce the stronghold that countries, like Russia, currently exercise over their neighbors,” said Mary Landrieu, the new chairwoman of the Senate Energy and Natural Resources Committee.
Of the seven LNG projects conditionally approved by the DOE, only one has won final approval and is expected to begin exports in late 2015. Other projects, if approved, would not start exporting until at least 2017.
At the end of the day, if all seven projects receive final approval, it would mean the export of up to 9.3 billion cubic feet of natural gas daily for non-FTA countries.
By James Burgess of Oilprice.com