The debate over whether or not to export the glut of U.S. natural gas – in the form of liquefied natural gas, or LNG – to countries that don't have a free-trade agreement with the U.S. rages on.
Advocates maintain that LNG exports would be beneficial to the U.S. economy, potentially creating tens of thousands of jobs and adding tens of billions of dollars per year to U.S. GDP over the next two decades. Meanwhile, skeptics argue that unfettered exports would raise domestic gas prices, hurting the consumers and companies that use the cleaner-burning fuel to power their homes and offices.
So far, only two LNG export projects have been approved by the U.S. Department of Energy (DOE) to export U.S. natural gas to countries that don't have a free-trade agreement with the U.S.: Cheniere Energy's (NYSEMKT:LNG) Sabine Pass terminal in Louisiana, which received the go-ahead back in 2011, and the Freeport LNG project in Texas – a $10 billion facility whose general partner, Freeport LNG-GP, is 50% owned by ConocoPhillips (NYSE:COP) – which was granted approval last month.
With Freeport's approval signaling the Obama administration's support for LNG exports, many are wondering if more approvals on the way?
LNG export approval criteria
Yes, almost certainly. But don't expect the floodgates to be opened any time soon. That's because the approval process is moving deliberately slow, as the DOE attempts to gauge the incremental effect of additional projects. Importantly, the DOE is concerned with the "cumulative impact" of new ventures on domestic gas prices and the economy, which implies that, after each approval, it will carefully reassess the cumulative impact.
Christopher Smith, DOE's acting assistant secretary for fossil energy, recently outlined the six criteria the department is considering in determining whether or not a project should be approved. They include, in no particular order: U.S. energy security considerations; international considerations; domestic need for the gas proposed to be exported; supply considerations; impact on the U.S. economy, as well as domestic gas prices; and environmental considerations.
Will more projects be approved?
However, for the nearly two-dozen companies awaiting decisions on their pending applications, there may be some good news. Last week, U.S. Energy Secretary Ernest Moniz suggested that decisions on at least a few of the outstanding applications would be made before the end of the year.
Speaking before the House Energy and Commerce Committee, Moniz said that he has been "reviewing fastidiously" the DOE's approval process. Though Moniz, who took office about a month ago, said he didn't plan to amend the current review process, he said he intended to make final decisions on pending applications "expeditiously."
Of the remaining applications, the DOE said it will work through them in the order they were received. That means the next likely projects up for review will be the Cove Point LNG terminal in Maryland, operated by Dominion (NYSE:D).
Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Dominion Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.