Long before Russia's annexation of Crimea last month, companies and trade associations that support exporting U.S. liquefied natural gas called for accelerating the existing export review and approval process. With mounting concerns that Russia will continue its incursion into Ukraine, through which major Russian natural gas pipelines travel, U.S. export proponents are seizing the opportunity to repackage their agenda by framing it as a strong signal to Russia that its power over the global liquefied natural gas market is diminishing. However, significantly expanding U.S. exports of liquefied natural gas overseas has major economic and environmental risks, and proposals to accelerate the approval process for export projects in response to the crisis in Ukraine would only enhance these threats.

Past Proposals to "Reform" the Approval Process

Under the Natural Gas Act, companies seeking to import or export natural gas must first obtain permits from the Department of Energy (DOE), the Federal Energy Regulatory Commission (FERC), and state and local permitting agencies. FERC is responsible for authorizing the siting and construction of import and export facilities and ensuring that an environmental impact statement is completed in accordance with the National Environmental Policy Act (NEPA). DOE is responsible for deciding whether to approve or deny the permit based on whether the project is "consistent with the public interest." For exports to U.S. free-trade partners, the public interest standard is satisfied and the permits are automatically approved. The public interest standard is presumed satisfied for exports to non-free trade partner nations, but DOE must solicit public comment on such a proposal before it can be approved.

Oil and gas companies and their allies in Congress claim that this approval process takes too long and have advocated for legislation that would fast-track the environmental review process and bypass the public interest standard altogether. However this legislation has traditionally been met with resistance because of the environmental and economic concerns surrounding liquefied natural gas exports.

DOE has approved seven applications to export liquefied natural gas. The newest approval was announced on March 31 and would allow construction of an export terminal in Coos Bay, OR, which would allow natural gas exports to non-free trade partner nations. Before the project commences, it must undergo an environmental review and receive final regulatory approval.

Repackaging Old Proposals as a New Mechanism for Sanctioning Russia

Following the annexation of Crimea, proponents of accelerating the approval process have seized the opportunity to reframe the issue as a means to send a signal to Russia that it is no longer the only major supplier of natural gas.

In reality, "[t]his is just the latest in a major push to export fracked gas by Congressional leaders at the behest of major oil and gas producers like ExxonMobil," writes Food and Water Watch in a message to the group's supporters. The call to action continues, "The oil and gas industry and their cronies in Congress are using escalating tensions between the Ukraine and Russia to push President Obama to dramatically expedite the approval of U.S. exports of natural gas."

For example, Sen. Mark Udall (D-CO) recently introduced the American Job Creation and Strategic Alliances LNG Act, which would accelerate DOE approvals for gas exports to all 159 members of the World Trade Organization (WTO). Rep. Michael Turner (R-OH) has introduced a similar bill in the House. Rep. Cory Gardner (R-CO), who is expected to challenge Udall in the midterm elections, has also introduced new legislation, called the Domestic Prosperity and Global Freedom Act, which would expedite natural gas exports to ally nations. This bill is expected to receive a vote on the floor of the House in the near future.

Just last week, Sen. Mary Landrieu (D-LA) held her first hearing as chairwoman of the Senate Energy and Natural Resources Committee on expanding liquefied natural gas exports in the near-term to send a signal to Russia.

Landrieu and others in support of energy-sector sanctions on Russia explained that because the country receives a large portion of its revenues from its energy exports, with 30 percent of those revenues coming from exports to the EU, opening U.S. exports to Europe would lower European demand and cause a corresponding decline in Russia's Gross Domestic Product (GDP). David L. Goldwyn of the Brookings Institution testified, "A clear signal from the U.S. that LNG exports will be available to European allies for future purchase would put immediate pressure on Russia's market share, and would also help accelerate investment in and construction of gas transportation infrastructure in Europe."

But the prospect of the U.S. entering the global liquefied natural gas market existed long before the annexation of Crimea. The U.S. shale boom over the last few years reduced the amount of natural gas the U.S. imports, freeing up resources for other importing nations and reducing the price of natural gas domestically. And with several export projects already conditionally approved, future exports from the U.S. have already begun to impact investors' expectations.

Moreover, everyone in the industry knows it will take years for export sites and the necessary transportation infrastructure to be built, even if the permitting process were expedited. And because pending liquefied natural gas applications primarily seek to export to countries in Asia where the price of natural gas is highest, exports from the U.S. would take even longer to reach EU member states.

For these reasons, some experts suggest that threatening to increase U.S. gas exports to Europe could backfire and push Russia to move further into Ukraine.

Edward C. Chow of the Center for Strategic and International Studies explained to the committee, "Since U.S. exports of oil and natural gas would have no impact on Russia's market position in the short to medium term, there is a danger that inflating the rhetoric on exports would actually embolden Russia, which will recognize this as an empty threat, to act even more recklessly. It can also distract us from the more critical task of shoring up Ukraine economically."

Chow recommended the U.S. and EU assist Ukraine with increasing its conventional gas production, which he asserted as a faster way to help secure Ukraine than attempting to accelerate U.S. exports of natural gas.

Economic Risks of Exporting Natural Gas

Contrary to what proponents of liquefied natural gas exports claim, accelerating natural gas exports could hinder economic growth in the U.S. Expanded exports could cause a rise in the price of natural gas domestically, negatively affecting U.S. consumers and U.S.-based industries, such as manufacturing and trucking, which rely on the availability of affordable natural gas. When the U.S. experienced a particularly hard-hitting winter this year, natural gas supplies hit the lowest level in over 11 years, causing the domestic price of natural gas to skyrocket for consumers. Exporting natural gas overseas would only cause the price of natural gas to increase further as supplies are shipped to countries where selling the gas is more profitable.

Sen. Debbie Stabenow (D-MI) noted at the Energy and Commerce Committee hearing that the U.S. needs to send a signal to American manufacturers who are looking to bring jobs home that the domestic natural gas supply will remain plentiful and prices will remain low. She referenced a study by Charles River Associates, which found that using low-cost natural gas in the U.S. to increase manufacturing output would be twice as valuable to our economy and create eight times as many jobs as sending the resources overseas.

The Global Environmental Impact

Liquefied natural gas proponents claim that greater access to the energy resource could provide importing nations an opportunity to transition away from dirty fuels and toward cleaner energy sources. "But the truth is that increasing oil and gas exports to other nations will only accelerate fracking here at home, transforming rural and impoverished communities into sacrifice zones while endangering public health, natural resources and local economies," wrote Food and Water Watch. And recent studies suggest that any potential reduction in carbon dioxide emissions from burning gas instead of coal would be more than offset by methane leaks from natural gas operations.

Health and Safety Concerns

Major incidents involving liquefied natural gas operations have already occurred, both in the U.S. and abroad. After a hearing on exports this past October, the Center for Effective Government questioned whether importing nations have adequate infrastructure or regulatory systems in place to mitigate the health, safety, and environmental risks of natural gas operations conducted within their borders. These questions extend to our domestic infrastructure and regulatory system as well.

On March 31, an explosion at the Northwest Pipeline's liquefied natural gas facility in Plymouth, WA prompted an evacuation of approximately 1,000 residents and agricultural workers within a two-mile radius and shut down nearby roads, highways, railways, and even the Columbia River. The Tri-City Herald reported that the "explosion sent shrapnel into a 14.6-million-gallon storage tank, rupturing it and starting the gradual leak of super-cold liquefied natural gas."

With the global expansion of the liquefied natural gas market, the possibility of catastrophic incidents will increase. It is crucial that we thoroughly assess the risks posed by liquefied natural gas operations, both domestically and abroad, before moving forward. We need to continue to require comprehensive environmental assessments and the satisfaction of the public interest standard before any new liquefied natural gas projects are approved or export operations are allowed to commence.

Conclusion

Exporting liquefied natural gas from the U.S. poses significant risks to economic growth, environmental sustainability and protection, and public health and safety. The U.S. should address these risks before moving forward with exporting liquefied natural gas. The recent incursion of Russia into Crimea and the possibility of further movement into Ukraine must not be used as an excuse for the U.S. or Europe to make decisions about increased exports of natural gas without a stringent review of the impacts on public welfare and the environment.