WASHINGTON — The Energy Department on Friday conditionally approved a Texas company's proposal to export liquefied natural gas, only the second such project allowed to move forward amid a production boom that has led to glut of domestic natural gas.
The action would allow Freeport LNG Expansion L.P. to export up to 1.4 billion cubic feet of liquefied natural gas per day from its terminal near Freeport, south of Houston. The Energy Department said granting such a permit for shipments to countries that do not have free trade agreements with the U.S. was in the public interest.
Sen. Jim Inhofe, R-Tulsa, who has pushed for more LNG exports, said the approval was “a step in the right direction, but it's only a step.”
“Our nation's reserves of natural gas have expanded rapidly in recent years, but production activities have declined significantly because of insufficient demand,” he said. If the Energy Department fails to approve the remaining applications, “further production activities may be jeopardized, which could harm job creation in Oklahoma and across the country.”
Inhofe urged Energy Secretary Ernest Moniz to approve remaining applications, saying, “markets should be in charge of determining appropriate export levels, not the federal government.”
Freeport is the second export project to win Energy Department authorization, following the Sabine Pass LNG Terminal in Cameron Parish, La.
Energy companies are seeking federal permits for more than 20 export projects that could handle up to 29 billion cubic feet of LNG a day. Approval could lead to more hydraulic fracturing, a technique also known as fracking that has allowed companies to gain access to huge stores of natural gas but raised concerns about alleged groundwater contamination and other problems.
A drilling boom has lowered natural gas prices while boosting production by one-third since 2005. Production reached a high of 25.3 trillion cubic feet last year, according to the U.S. Energy Information Administration.
But production has begun to level off as the natural gas glut keeps U.S. prices down. Producers have pushed to export to Europe and Asia, where prices are higher. Approval of projects under review by the Energy Department could result in export of more than 40 percent of current U.S. natural gas production. The gas would be chilled to liquid form before being exported on tanker ships.
Marty Durbin, president and CEO of America's Natural Gas Alliance, an industry group, and Michael Smith, CEO of Freeport LNG, said expanded natural gas exports would help create jobs, stimulate the economy, and improve the U.S. balance of trade.
Consumer groups and some manufacturers that use natural gas oppose expanded exports, saying they could drive up domestic prices. Many environmental groups also oppose LNG exports, fearing more drilling could lead to environmental damage.
CONTRIBUTING: Chris Casteel, Washington Bureau
Our nation's reserves of natural gas have expanded rapidly in recent years, but production activities have declined significantly because of insufficient demand.”
Sen. Jim Inhofe, R-Tulsa,