OBAMA administration opened the door to a new era of US energy exports on Friday, approving the first liquefied natural gas project since the start of a heated debate over how best to benefit from the shale energy boom.
The Energy Department’s approval of unrestricted natural gas exports from Freeport LNG’s Quintana Island, Texas, terminal ends nearly a two-year pause in its review of export applications.
While the approval had been widely expected after growing signals that President Barack Obama supported exports, many observers had expected the administration would wait until new energy secretary Ernest Moniz had settled into his role before going ahead.
The green light for Freeport’s terminal, which in its first phase will export the equivalent of about two per cent of current US gas production, could pave the way for countries in need of imports such as India and Japan to benefit from America’s burgeoning shale gas supplies.
The response to Friday’s decision was cautiously optimistic on both sides of the debate. Dow Chemical, a major consumer of US gas that fears unfettered exports would drive up prices, said it supported the move as a measured and balanced approach to LNG exports.
The American Petroleum Institute called the move a step in the right direction, but said other 26 applications for exports need to be approved swiftly.
Analysts warned that US exporters are racing the clock. Other countries including Canada and Australia are also building up LNG facilities.
“The window of opportunity is closing quickly so the longer the process takes in getting DOE approval the likelihood that the US will face steeper competition is increasing,” said Teri Viswanath, an analyst at BNP Paribas.