Is rehearing on US LNG permitting freeze on the horizon?

Ever since its announcement, the Biden administration’s pause on pending approvals of liquefied natural gas (LNG) exports to non-FTA countries has run the gauntlet of reactions ranging from positive to negative ones. The latest step being taken to overturn this decision comes from the American Petroleum Institute (API), a U.S. trade association representing the oil and gas industry, which filed an application for rehearing.

Within the legal filing submitted to the Department of Energy (DOE), the American Petroleum Institute argued that the indefinite pause on new and pending LNG permit approvals for non-FTA countries was unlawful, violating both the Natural Gas Act and the Administrative Procedure Act and eroding “America’s energy advantage by threatening U.S. jobs, national security, and environmental progress.”

Furthermore, API argues that DOE’s pause contradicts the clear mandate of the Natural Gas Act for DOE to issue LNG export permits to non-FTA countries when there is no evidence that it is not in the public interest. The U.S. trade association is adamant that this indefinite pause violates the Administrative Procedure Act’s requirement for DOE to act “within a reasonable time.”

In addition, the American Petroleum Institute went on to criticize the LNG export pause as “arbitrary and capricious,” highlighting – what it deems to be – DOE’s failure to justify changing its longstanding position. API noted that DOE implemented the pause without prior notice or the ability to comment as required by the Administrative Procedure Act. 

Rob Jennings, API’s Vice President of Natural Gas Markets, outlined: “At a time of geopolitical turmoil around the world, the Department of Energy’s arbitrary LNG freeze is not only unlawful – it cedes America’s energy advantage to hostile nations while jeopardizing thousands of American jobs.

“U.S. LNG is a cornerstone of global energy security, and its benefits – which include bolstering the American economy, reducing global emissions and strengthening our national security – are well-established. There is bipartisan recognition that this move is political, and we will continue to take any steps necessary to resume American leadership on LNG.”

When the Ukraine crisis started in n 2022, the U.S. supplied its domestic markets while sending more than 800 LNG cargoes to Europe, representing a 141% increase from 2021, to help blunt the impact of what is said to be Russia’s weaponization of energy supplies. Recent studies show that Europe and Asia face potential long-term natural gas supply gaps threatening their energy security.

Based on the findings from the International Energy Agency (IEA), American consumers benefit from among the lowest natural gas prices in the world. Even though U.S. LNG exports reached record highs in 2023, domestic prices declined 62% from the previous year, as U.S. natural gas production grew to record levels.

API underlines that this demonstrates the nation’s ability to meet rising global demand for natural gas while maintaining a well-supplied domestic market. Moreover, coal-to-natural gas switching is perceived to be the main reason that the U.S. has taken the lead in reducing CO2 emissions over the past two decades while global coal consumption continues to grow, reaching another all-time high in 2023.

API claims that three out of every four tons of coal consumed by 2024 will occur in China, India, and Southeast Asia. In light of this, the American Petroleum Institute is convinced that U.S. LNG can help these nations replicate America’s emissions reduction success story by displacing higher-emitting fuels like coal.

The natural gas and oil industry supports 10.8 million jobs in the U.S. and contributes $1.8 trillion to the nation’s economy. According to API, LNG exports are “a critical part” of the natural gas value chain, supporting jobs from production facilities in Pennsylvania and New Mexico, pipeline operations in Ohio and West Virginia, and export and liquefaction facilities in Texas and Louisiana. 

During a recent interview with a representative from Bureau Veritas, it was noted that renewables and hydrogen were positioned to reap the benefits from the recent U.S. LNG permitting pause.