The US Department of Energy (DOE) has issued a final rule that will expedite the approval process for small-scale US exports of natural gas, including as LNG.
The initiative aims to accelerate the DOE’s processing of small-scale export applications and reduce administrative burdens for the small-scale natural gas export market. The rulemaking will enable LNG projects with an estimated export capacity of 1M tonnes per annum (mta) or under to avoid the current extensive permitting procedures.
Under the new regulation, which becomes effective on 24 August 2018, the DOE will issue an export authorisation, without public notice and comment, to an applicant submitting a complete application to export natural gas, including LNG, to countries with which the US does not have in place a free trade agreement (non-FTA countries).
In addition, the new export project authorisations will only apply to those schemes that do not require an environmental impact statement. In effect, this means that the project in question must be eligible for a categorical exclusion under the US National Environmental Policy Act of 1969 (NEPA). Such exempt facilities are those that do not require “new construction”, so the export of LNG in ISO tank containers, for example, would qualify for the new DOE fast-track authorisation process.
The DOE rulemaking acknowledges that the export of LNG in targeted small volumes will not adversely impact domestic US natural gas prices and that the increased natural gas exports that will result are likely to generate net economic benefits for the US.
The DOE final rule also recognises that there is a robust and evolving niche market for smaller-scale LNG projects. There is a second tranche of credible buyers in Central America, South America and the Caribbean who want smaller volumes of cargoes than those delivered by large, conventional-size LNG carriers to traditional import terminals.
The US DOE notes that the small-scale export market has developed as a solution to the practical and economic constraints limiting large-scale natural gas exports to non-FTA countries in the Americas. The final rule is also consistent with the DOE’s policy of minimising federal control and involvement in energy markets and promoting energy diversification.
Seven companies have received DOE approval for the export of up to 1 mta to non-FTA countries under the old authorisation regime. American LNG Marketing has already commenced shipping LNG to Barbados in ISO tank containers.