A federal court has ruled the Department of Energy (DOE) should resume considerations for new worldwide LNG export permits while it reviews the impact of natural gas trade on the U.S. economy and climate.
On Monday, U.S. District Court Judge James Cain of the Western District of Louisiana issued a preliminary order and sided with 16 Republican attorneys general (AG) who filed a lawsuit after the White House ordered DOE to halt non-free trade agreement (FTA) permits.
In his decision, Cain referred to the pause as an “export ban” using the same phrasing as Republican and industry opponents of the agency’s review (No. 2:24-CV-00406). While the Natural Gas Act (NGA) allows DOE to review policies for granting permits, the decision to halt considerations altogether in January was an “unlawful action” that harmed developers and states where projects were planned, Cain wrote.
“Here, it appears that the DOE has failed to provide a more detailed justification for its halt of the approval process to conduct an update, especially considering that past precedent, which the applicants relied upon, allowed the approval of the applications to proceed when updates were made,” Cain wrote.
A DOE spokesperson told Reuters the Biden administration disagreed with Cain’s ruling and was evaluating next steps. The administration could appeal the decision.
Since the policy review and permit pause began, the development timelines for at least 17 proposed liquefied natural gas projects are uncertain. That list includes at least seven proposed for the United States and Mexico that are commercially advanced, according to an NGI review of pending projects.
Those seven projects amount to a combined 9.3 Bcf/d in export capacity that previously were expected to come online around 2030.
Many of those projects are proposed for Louisiana, which has led the coalition arguing that the pause would negatively impact their funding levels because of the loss of taxes and job creation.
“As Judge Cain mentioned in his ruling, there is roughly $61 billion dollars of pending infrastructure at risk to our state from this illegal pause,” Louisiana AG Liz Murrill said. “LNG has an enormous and positive impact on Louisiana, supplying clean energy for the entire world, and providing good jobs here at home.”
Since the projects impacted by the pause are pre-final investment decision, and likely would not be operational until the end of the decade, analysts with EBW Analytics Group said the decision may not move the needle on demand fundamentals before 2027.
However, resuming permit considerations could “increase confidence in the coming wave of LNG feed gas demand, and provide “bullish upside” for New York Mercantile Exchange futures “into the end of the decade,” the EBW analysts wrote.
In the meantime, project developers are unlikely to see decisions on their requests to move forward any time soon, according to policy experts. The ruling orders DOE to resume considerations of requests, but the NGA gives the administration leeway on how long it may take to render decisions.
ClearView Energy Partners LLC analysts said longer review times, however, could end up helping project developers that are likely to face lawsuits from environmental groups. “We would also suggest again that operators facing potential legal challenges to non-FTA licenses may not want to receive rushed orders,” the analysts said.
DOE has not provided a concrete timeline for its review. However, officials including DOE Secretary Jennifer Granholm have suggested the process could be completed by the end of the year. The review, conducted by several DOE national laboratories, includes focusing on the impacts to domestic natural gas prices given the increase in LNG export capacity since the last review.
However, Deputy Energy Secretary David Turk confirmed to a House committee in June that researchers are also considering threats from climate change as it pertains to the national interest.
