Tristan Monastery
It goes without saying that natural gas under normal conditions does not liquefy on its own. That seems to be the case with the Biden-Harris administration, which is a shame.
As the gas emerges from the ground, it must be captured immediately, transported through a pipeline to a processing plant, processed, fed into another pipeline, and then transported to a liquefaction facility where it is supercooled to minus 260 degrees (Fahrenheit) and turned into a liquid . But that's only half the story. After liquefaction, the natural gas is loaded onto a specialized ship called an LNG carrier and transported across the ocean to a regasification facility, where it is regasified, fed into another pipeline, and then transported to residential customers where it is supplied to their homes. Heating or cooking food; generating electricity in power plants; and as raw material for various factories to make fertilizer, steel, plastics, paint, and other goods.
For the U.S. economy, breaking into the global LNG market has been a generations-long effort and a huge success. Mastering the complex technologies required to liquefy, transport and regasify this important hydrocarbon is no easy task. Each LNG cargo represents the culmination of years of permitting and construction, billions of dollars of investment, and contract negotiations (also known as “offtake agreements”) that will last for decades. Long-term operations, long-term relationships, long-term impact.
The Biden-Harris administration celebrated the arrival of carriers laden with U.S. liquefied natural gas in Europe in the months after Russia invaded Ukraine in 2022. Metaphorically speaking, these ships set sail a decade ago, when LNG export terminals were going through a shabby federal regulatory process. These liquefaction facilities in turn rely on natural gas supplied from natural gas fields, which themselves must undergo years of exploration and development.
But now the White House incumbent is playing with fire. Their decision in January 2024 to suspend most export approvals until repeated economic and environmental studies were completed has damaged the credibility of U.S. natural gas supplies. Japan, one of our closest allies and the most important customer of LNG, was the first to sound the alarm. The damage will be even more severe if these studies provide an excuse for the federal government to force concessions from the U.S. natural gas industry before authorizing restoration.
Regulatory uncertainty means higher costs, longer and delayed timelines, and potentially disrupted supply chains. “Shutting down” LNG exports would cause a chain of disruptions throughout the economy, not just the export sector. China has spent the better part of a generation achieving dominance in natural gas. With the stroke of a pen, there is risk. The next president could lift the approval moratorium, but this would require caution to reduce the risk of litigation, and only Congress can provide a permanent solution.
Tristan Abbey is a senior fellow at the National Center for Energy Analysis and author of the new report, “A Generation Opportunity: Achieving U.S. Dominance in Global LNG.”
This article was originally published by RealClearEnergy and provided via RealClearWire.
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