US natural gas companies across the value chain need a more transparent and reliable regulatory regime if they are to remain competitive on the global stage, top energy executives said at an industry conference this week.
The difficulty of securing the permits required to build pipelines connecting US shale with planned LNG export terminals in Texas and Louisiana is one of the booming US LNG industry's biggest obstacles, Golden Pass LNG chief commercial officer Jeff Hammad said at the North American Gas Forum in Washington, DC, today.
Particularly vexing is the policy stipulating that gas pipelines crossing state lines trigger involvement by federal regulators, adding costs and delays to project timelines, Hammad and other executives said.
The result of that policy is that developers now are simply eschewing interstate pipeline projects in favor of intrastate ones, feeding planned LNG plants on the Louisiana coast from the Haynesville shale in the northern part of the state, while connecting plants on Texas' Gulf coast to the Permian basin, hundreds of miles to the west, Hammad said.
The difficulty of building new interstate pipelines is especially important to northeast US producers like EQT, the second-largest US gas producer by volume, that operate on acreage spanning several smaller landlocked states. EQT chief executive Toby Rice, a vocal critic of US pipeline permitting rules, argues those rules waste the resources within the mammoth Marcellus shale of Appalachia.
"We've got a Ferrari, and we're driving this thing at 20mph," Rice said.
President Joe Biden's pause on the issuance of LNG export licenses to countries with which the US does not have a free trade agreement (non-FTA), which is expected to be overturned shortly after president-elect Donald Trump takes office on 20 January, was another favored target of industry ire. While the pause may not "yet" have had any tangible gas market effect, it has cast "doubt" on the so-called "third wave" of US LNG export terminals, slated to come on line in 2029-30, said Dennis Price, vice president of marketing and trading at Expand Energy, the largest US gas producer by volume. That doubt has also reverberated outward, making the securing of financing for new pipelines to feed those planned terminals more difficult, he said.
The pause has also "made the rest of the world question the availability of US supply going forward," and "opened the door to other LNG providers to step in and fill the void" left by the US, Price said.
But there was some hope for change, as well. In an interview with Argus this week, Alan Armstrong, chief executive of Williams, owner of the largest US gas pipeline, said he was optimistic about the Trump administration's ability to overhaul US pipeline permitting rules, especially given that the presidency and both houses of Congress will be Republican controlled. Armstrong said he hoped the incoming administration would take a "responsible" approach that tries to streamline the permitting process "for everything, not just pipelines," because that would make it a lot easier for the Republicans to get the necessary votes.
