Eugene Register-Guard, March 27: Caution on LNG exports
As momentum builds in Washington, D.C., to sell vast amounts of domestic natural gas overseas in response to the turmoil in Ukraine, federal officials should continue to move cautiously on removing restrictions on exports and approving the construction of natural gas export terminals.
On Monday, the U.S. Department of Energy conditionally authorized the controversial Jordan Cove Energy Project in Coos Bay to export liquefied natural gas to countries that do not have a free trade agreement with the United States. (Countries with free trade agreements could still buy gas after nominal review.) The project, which includes a liquefaction terminal, a 230-mile pipeline and a natural-gas-fired power plant, would cost $7.5 billion and be able to export 800 million cubic feet of gas each day.
With the addition of Jordan Cove, the Obama administration has approved seven projects that could export a combined total of 9.3 billion cubic feet of gas each day, and at least eight more applications are pending. Only one has started construction, Cheniere Energy's Sabine Pass facility on the Texas-Louisiana border. The rest, including Jordan Cove, must clear additional environmental and health permit hurdles.
Jordan Cove originally received a license as a gas-import terminal in 2009 from the Federal Energy Regulatory Commission. A collapse in domestic natural gas prices caused by the extraction of gas from shale deposits prompted developers to resubmit their application to become an export terminal serving mostly Asian markets. That application has yet to be approved, and the project's backers also have yet to receive other necessary federal and state permits before they can begin construction.
Federal and state officials reviewing those applications should not be rushed by political pressure to increase natural gas exports to Eastern Europe and Ukraine in light of the conflict with Russia over Crimea. In recent days, House Speaker John Boehner and others in Congress have urged the administration to expedite approval of gas export facilities such as Jordan Cove.
But there is ample reason for caution, and gas exports remain a controversial issue with powerful supporters on both sides of the debate.
Long before Russian President Vladimir Putin sent Russian troops into the Crimean Peninsula, U.S. energy companies were eager to take advantage of booming production from U.S. shale fields that have swollen American reserves and driven down domestic prices by two-thirds since 2008. Natural gas produced and sold in the United States is cheap, costing as little as a fourth of what gas sells for in Europe and Asia, and that makes it highly marketable.
But export critics warn that increased gas exports could result in rising utility prices for U.S. consumers who rely on gas for heating and cooking. Higher exports also could increase costs to chemical and fertilizer companies and other U.S. manufacturers who have benefited from the availability of cheap gas.
New evidence suggests that those concerns may be overstated. A recent Department of Energy study agrees that a major expansion of gas exports would increase prices but that they would remain below 2008 levels and increases would occur slowly over the course of several years.
A more pressing concern is environmental damage that could result from increased hydraulic fracturing, the technique used to extract gas from shale formations. Federal officials should not allow unrestricted exports without first tightening the ridiculously lax federal regulation of gas production.
In Oregon, environmental groups and property owners opposed to the Jordan Cove project also have asked the state to reject the LNG terminal not only because of risks of increased fracking, but also because of impacts on landowners whose property will be condemned to build the feeder pipeline, and potential destruction of salmon habitat in the Rogue River and Coos Bay.
Given the lumbering pace of the federal and state review process, no one can legitimately accuse authorities yet of recklessly accelerating the review process. Yet pressure is rising on the administration to cut regulatory corners to increase LNG exports.
Federal and state officials should resist that pressure and methodically, carefully, thoroughly consider the vitally important issues posed by the export of natural gas from the United States.
(Medford) Mail Tribune, March 27: LNG terminal plan has reversed course once; much could change in five years
Opponents of a proposed liquefied natural gas export terminal in Coos Bay and the pipeline across Southern Oregon that would carry gas there have reason for concern after the U.S. Energy Department gave conditional approval to the project this week. But the facility is still years away from exporting any gas, and global market conditions that make it attractive now could change by then.
That's a reasonable possibility because the project literally has reversed direction once since it was first proposed.
Originally, the Jordan Cove project was planned as an import facility, receiving liquefied gas shipments from Asia and other places where gas was cheaper, warming it back to a gaseous state and piping it into California, where it would be stored for use in the domestic energy market.
Jordan Cove received a license to import LNG just as new hydraulic fracturing technology known as "fracking" made possible the recovery of huge quantities of gas from shale formations in this country, driving down the price of gas here relative to the rest of the world. The Jordan Cove project was shelved, but the company behind it, Veresen Inc., then applied to build the facility as an export terminal instead.
Monday's Energy Department decision is only one step in the approval process. Other federal and state agencies must sign off, including the Federal Energy Regulatory Commission and the Oregon Department of Environmental Quality.
Oregon Sen. Ron Wyden, who was lukewarm toward the project as chairman of the Energy and Natural Resources Committee, now touts the facility as a needed provider of jobs. Backers say the project would create 2,000 high-wage construction jobs for four years, and 150 permanent jobs in Coos Bay, long an economic backwater.
Recent events in Ukraine, where Russia has annexed the Crimea region, have increased calls for the Obama administration to accelerate approvals of gas exports as a way to put pressure on Russia, a major supplier of gas to world markets. The Jordan Cove project wouldn't directly affect Russian gas deliveries to Europe because exports from Coos Bay would be headed for Asia, but they would have some effect on the overall world supply.
Still, gas exports would not begin until 2019 at the earliest. By then, any number of circumstances could change again, from the global price of gas to Russia's role in the world market.
U.S. gas production could change, too. The environmental consequences of fracking are causing increasing concern, and restrictions on the practice could push prices higher in the future, making exports less attractive.
Environmental concerns over the pipeline route through parts of Jackson County also will play a role in the approval process, as could challenges from property owners. And opponents question the wisdom of putting a liquefied natural gas facility in a known earthquake and tsunami zone — not idle concerns.
In the end, state and congressional leaders must ensure that any benefits to Oregon's economy are worth the risk to the environment inherent in building a gas pipeline and an LNG export plant.