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Time to act on energy exports

Once again the world is looking for America's leadership in unsettled times. Our diplomats have limited options to combat Russia's annexation of Crimea, but they can take greater advantage of a new tool in their toolbox that no administration has had for generations — U.S. energy abundance. American energy exports will not only create economic opportunities here at home but will provide strategic geopolitical advantages abroad.

The crisis involving Ukraine and Russia highlights the need for American energy leadership. Russia remains the world's largest exporter of natural gas, supplying 30 percent of Europe's imports. Countries on Russia's periphery, many nearly completely dependent on Russian supply, pay exorbitant oil linked prices. Many are NATO allies.


A LNG tanker sails through the Houston Ship channel.
Tim Johnson | Bloomberg | Getty Images
A LNG tanker sails through the Houston Ship channel.

Central and East European leaders have called for help in accessing U.S. liquefied natural gas for their future supply. Certainty as to whether and when U.S. LNG will be available for export will help them bargain for more competitive natural gas prices today, and weaken Russia's market share. Poland's LNG import terminal has excess capacity, leaving room for other neighbors to access LNG through their port. Europe has other LNG import terminals and interconnections planned that would come on line just as U.S. LNG export terminals could be ready to deliver.

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The pace of approvals for LNG exports to countries without free-trade agreements with the U.S. creates too much uncertainty as to whether and when help could be on the way. Even if U.S. LNG went to Asia — where allies like Japan need competitively priced gas supply – the certainty of exports would force natural gas prices lower everywhere, helping Ukraine, Lithuania and others to bargain for cheaper supply.

We have natural gas in abundance. Thanks to advances in technologies like horizontal drilling and hydraulic fracturing, U.S. shale gas production has tripled since 2009 levels, and America is now the world's largest producer of natural gas. According to the U.S. Energy Information Administration, the U.S. estimated future supply of natural gas (reserves plus resources) stood at 2,718 trillion cubic feet (Tcf) at the end of 2012 – enough natural gas to meet America's diverse energy needs for more than 100 years. With careful practices and sound regulation we can ensure that this gas is produced safely, and that our air and water are well protected.

The president and U.S. Energy Secretary Ernest Moniz deserve credit for approving seven export permits for natural gas to countries with whom the U.S. does not have free trade agreements. But frankly, the approval process needs to be much faster since there are more than 20 other applications pending. The permit approval is needed to line up financing, customers and complete other regulatory steps. They won't all be built, but the market is better equipped than our government to figure which ones are viable.

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The president has full and unquestioned authority to approve energy exports by executive action without Congress. The Natural Gas Act says the Department of Energy makes the decision on export permit approvals, and the law presumes exports are in the public interest. The administration can and should move faster on approving export permits.

However, Congress is also stepping forward with a sensible solution with House bill H.R.6 that will expedite the approval of U.S. LNG export applications. Similar legislation was introduced in the Senate. Congress should pass this legislation without delay.

The main criticism of expedited approvals of natural gas exports is that it is not an immediate fix and that LNG terminals take years to construct and finance. Yet, this criticism misses the point for three reasons. First, yes LNG terminals take years to construct, but changing policy to provide unfettered exports of natural gas would send an immediate message that will get Russia's attention. Second, Lithuania, Estonia, Hungary and Bosnia-Herzegovina will soon be negotiating new contracts with Gazprom, Russia's largest gas company, and the prospect of U.S. LNG exports can give them additional leverage. Lastly, permit approvals are needed now because it takes years to construct. In 2008 Russia invaded territories in Georgia. If we had started construction of LNG terminals six years ago, export capacity would now be available. Will the U.S. be ready for the next crisis?

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America is now an energy superpower. If we act to enlarge the scope of natural gas exports it can help strengthen our own economy and at the same time help our friends throughout the world who need and want a diversity of gas supplies. America should seize this opportunity. It's time to act on energy exports.

Commentary by Spencer Abraham, a Republican and former Secretary of Energy under President George W. Bush, and Bill Richardson, a Democrat and a former Secretary of Energy under President Clinton.

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