Texas Legislative Committee Proposes Ways to Protect, Expand LNG Industry

“the Biden Administration’s federal permitting pause during a presidential election year appears to be purely political in nature and an attempt to disrupt Texas’ booming economy, now the eighth largest economy in the world…. it is abundantly clear American LNG is in the best interest of the Texas economy, local communities, our national security, and global energy security.”

A state legislative committee is proposing ways to expand Texas’ liquified natural gas (LNG) industry after the Biden administration announced it was pausing pending applications for LNG exports that would significantly impact Texas.

The Texas House Select Committee on Protecting Texas LNG Exports issued its findings after holding a hearing on the topic earlier this month. Led by state Rep. Jared Patterson, R-Frisco, the report states, “the Biden Administration’s federal permitting pause during a presidential election year appears to be purely political in nature and an attempt to disrupt Texas’ booming economy, now the eighth largest economy in the world.

“It has caused long-term uncertainty for both investors and allied nations around the world relying on American energy, particularly in Europe as they seek to wean themselves off Russian natural gas. After multiple studies across Democratic and Republican presidential administrations, it is abundantly clear American LNG is in the best interest of the Texas economy, local communities, our national security, and global energy security.”

House Speaker Dade Phelan, R-Beaumont, created the select committee and charged it with evaluating the impact on the Texas LNG industry and to propose actions the state legislature could take in the next legislative session to protect it.

Phelan’s district is critical to the oil and natural gas industry. It encompasses a region known as the “Golden Triangle,” rich in oil and natural gas production, processing, refining and exports in the southeast towns of Beaumont, Port Arthur and Orange. It includes a key LNG export terminal currently under construction in Port Arthur, where several LNG facilities are also located.

The LNG terminal, once completed and operational, is expected to have an export capacity of 13 million tons a year. With access to the Gulf of Mexico through the Sabine-Neches ship channel, it represents a $13 billion investment in new energy infrastructure, the report states.

The U.S. leads the world in LNG exports, led by the Gulf states of Texas and Louisiana. In 2017, the U.S. became a net exporter of natural gas for the first time since 1957, “primarily because of increased LNG exports,” according to the EIA. The U.S. became a net exporter after Cheniere Energy was the first to export domestically sourced LNG from the Sabine Pass LNG Terminal in Cameron Parish, Louisiana, and from the Port of Corpus Christi in Texas, The Center Square first reported.

Nearly 25% of U.S. natural gas reserves are located in Texas and 30% of the largest hundred natural gas fields in the U.S. are in Texas, the legislative report notes, citing state data. It also identifies six LNG facilities nationwide that would be impacted by the ban, including two in Texas, in Port Arthur and Corpus Christi.

Texas ports, including Port Arthur and Corpus Christi, are among the top ports in the U.S. leading in foreign trade impact, and the Port of Corpus Christi continues to break records in tonnage, primarily due to oil and LNG exports, The Center Square reported.

Texas Oil & Gas Association Chief Economist Dean Foreman, who testified before the committee, said, “Texas and Louisiana bear the brunt of short-sighted federal policies that jeopardize LNG export projects, representing potential investments of $200 billion across the value chain, including a projected 20% increase in Texas’ dry natural gas production.

“The reasons given for this pause – concerns about higher domestic natural gas prices, emissions, and community impacts – are clearly unfounded. U.S. LNG exports have responded to global demand, driving domestic innovation that enhances productivity and reduces consumer costs. LNG has replaced coal in power generation, emerging as a primary driver of emission reductions, and have catalyzed economic growth across the Gulf Coast. On all accounts, U.S. LNG exports have proven to be decisively beneficial.”

Two key claims the administration made for implementing the ban (LNG exports increase domestic energy costs and increase methane emissions) have been refuted, The Center Square first reported. A bipartisan coalition of Texas’ congressional delegation called on the president “to refocus on policies that support US LNG,” understanding that Texas is the energy capital of the United States, The Center Square reported. Sixteen states, led by Louisiana and Texas, also sued, arguing the ban is illegal.

The committee recommended that the legislature “consider legislation and policies authorizing the governor to develop and execute an interstate compact with the goal of sharing state information, resources, and services with other interested states seeking to protect and grow the LNG industry along the Gulf Coast.”

It also recommends that the legislature propose legislation and policies to permit temporary eligibility of LNG facility construction grants and loans when federal permitting pauses occur; provide economic incentives for LNG facilities to counter market consequences of a federal permitting pause; reform specific permitting regulations and increase overall permitting process efficiency; expand funding for project construction and development through the Texas Department of Transportation’s Maritime Infrastructure Program; increase workforce grants made available through local colleges to meet workforce demands for construction and facility operations; and mandate that official reports be published every year providing data on the “relevance and importance of the LNG industry regarding the public interest.”

Bethany Blankley is a contributor at The Center Square.

Originally published by The Center Square. Republished with permission.

Related Topics:#BethanyBlankley #BidenLNGPermitPause #HeartlandPetrochemicalComplex #LNGExpansion #TexasLNG #TheCenterSquare

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Energy

What does a Trump presidency means for Canadian energy?

Published on November 20, 2024

Todayville

From Resource Works

Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more.

Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?

It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.

That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.

The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.

I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.

Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?

I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.

To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.

Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.

Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?

It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.

But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.

The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.

Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?

I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.

That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.

I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.

Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?

Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.

I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.

We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.

It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.

Energy

What Will Be the Future of the Keystone XL Pipeline Under President Trump?

Published on November 18, 2024

Todayville

From EnergyNow.ca

By Terry Winnitoy, EnergyNow

The Keystone XL Pipeline, proposed in 2008, was designed to transport Canadian crude oil from Alberta to refineries in the United States, specifically to Steele City, Nebraska, and onward to refineries in Illinois and Texas, as well as to an oil pipeline distribution center in Cushing, Oklahoma.

Spanning approximately 1,179 miles and designed to transport up to 830,000 barrels of oil per day, the pipeline promised significant economic and energy security benefits. However, it became a focal point of political and environmental controversy, leading to its eventual cancellation by Presidents Obama and Biden.

Here’s a brief look at its history, the reasons it should have been built, the political dynamics that led to its cancellation and will President-elect Trump revive it?

Why the Keystone XL Pipeline Should Have Been Built

Economic and Job Creation

The pipeline was projected to create thousands of construction jobs and several hundred permanent jobs, providing a significant boost to the economy. It was also expected to stimulate economic activity through the development of related infrastructure and services.

Energy Security

By facilitating the efficient transport of a large volume of oil from a stable and friendly neighboring country, the pipeline would have reduced American dependence on oil imports from more volatile regions, enhancing national energy security.

Environmental Safety

Pipelines are generally safer and more environmentally friendly for transporting oil compared to rail or truck, with lower risks of spills and accidents. The Keystone XL was designed with the latest technology to minimize leaks and environmental impact.

Regulatory Oversight

The project underwent extensive environmental reviews and was subject to strict regulatory standards to ensure it adhered to environmental protection and safety measures.

Political Reasons for Cancellation

Environmental Activism

The pipeline became a symbol for environmentalists who opposed further development of fossil fuel infrastructure. They argued it would contribute to climate change by enabling the extraction and consumption of oil sands, which are more carbon-intensive than other oil sources.

Obama’s Cancellation

President Obama rejected the pipeline in 2015, citing environmental concerns and its potential impact on global climate change. He argued that approving the pipeline would have undercut America’s leadership on climate change.

Trump’s Reversal and Biden’s Final Cancellation

President Trump revived the project in 2017, citing economic benefits and energy security. However, President Biden canceled it again on his first day in office in 2021, fulfilling a campaign promise to prioritize climate change issues and transition towards renewable energy.

Political Symbolism

For both Obama and Biden, the decision to cancel the Keystone XL Pipeline was also a symbolic gesture, demonstrating a commitment to environmental sustainability and a shift away from fossil fuel dependence in line with their administrations’ climate policies.

Will President-Elect Trump Reinstate It?

Currently, there is no definitive answer on whether President-elect Trump will reinstate the Keystone XL Pipeline. His previous administration showed support for the project, citing its potential economic and energy security benefits. However, reinstating the pipeline would require navigating significant political, legal, and environmental challenges that have developed over the years.

It would also depend on the current geopolitical, economic, and environmental priorities at the time of his taking office. The Keystone XL Pipeline’s history is a complex tapestry of economic aspirations, environmental concerns, and political maneuvers.

Its cancellation has been a contentious issue, reflecting the broader national and global debates over energy policy and climate change strategy. Whether it will be reinstated remains a significant question, contingent on a multitude of factors including political will, environmental policies, and market dynamics.

That all said, re-instating its approval might be the perfect “in your face” moment for Trump to Obama and Biden as he begins his second term of presidency. We’ll have to wait and see.