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The United States is exporting more liquid natural gas (LNG) than ever before. Data from the Department of Energy show that LNG exports in November of 2018 were 35% higher than the year previous, reaching 110 Bcf. Now, a group of U.S. Senators has reintroduced a bill to decrease regulatory barriers that allow LNG to reach the international market with ease.
The collective of four Republican Senators authored and introduced a bill entitled the License Natural Gas Now Act of 2019. A nearly identical bill of the same name was introduced in 2017 but did not pass. The bill would require the Secretary of Energy to submit two reports to Congress within 180 days of passing. The individual reports would outline “actions taking by the United States Government, and actions that could be taken by the United States Government, to foster the exportation of natural gas” and “identify" regulations in effect…that inhibit the growth of the market for natural gas exported from the United States”.
There are many regulations that apply to the exportation of domestic resources, so an inquiry into any redundancies could be very beneficial to not only the industry but the U.S. Code. Given the newness of the LNG exportation and American natural gas market, which began in February of 2016, the current trade laws in effect were not created with LNG in mind.
One law, in particular, is the Jones Act. The nearly 100-year-old law regulates the mode in which domestic resources can be freighted by ships from U.S. ports. The Jones Act mandates that ships that can haul resources such as LNG between two ports must fly under U.S. flags, and was recreated in response to certain events in the early 1900s. The Act does not regulate the exportation of LNG from the U.S. to foreign countries, it does directly affect the amount of natural gas that is imported into the states. As the majority of freighters that transfer LNG do fly under foreign flags, and pipeline infrastructure is underdeveloped to equip portions of the nation with natural gas, there are few options for transporting gas from facilities like Marcus Hook’s in Philadelphia to the New England, for example. As a result, the New England states rely on imported LNG, while surpluses in Marcellus and Utica shale basins are exported to foreign nations. The proposed Act could reverse out-of-date regulations like the Jones Act, and tip the United States’ balance of trade by reducing the need for imports and pushing exports.
The bill could be a step in the right direction of eliminating redundant and out-of-date regulations currently in the U.S. Code. The implications of such action could have significant effects for not only the country’s role in international resource trade but for states that have limited access to natural gas.