Construction of the Golden Pass LNG Terminal in June 2023, in Sabine Pass. The photo was taken from the Louisiana side of the Sabine River.
Construction on the Golden Pass LNG Terminal in Sabine Pass.
A large liquified natural gas transport ship sits docked in the Calcasieu River in June near Cameron, La.
Environmental protestors gather across the street from the George R. Brown Convention Center in Houston during the CERAweek energy conference in March 2023. The “Climate Criminals” parade and protest was hosted by the Permian Gulf Coast Coalition and ‘Save Texas’ campaign to bring attention to the negative impacts of fossil fuel pollution on Texas and Louisiana communities.
Texans rely on revenues from fossil fuels to keep the state and local governments operating, so President Joe Biden’s pause in approving new liquefied natural gas export facilities is a disappointment to many. But consumers should rejoice.
The oil and gas industry’s fury was swift and ferocious when the Biden administration announced it would review how it evaluates the climate and economic impact of LNG projects. The American Petroleum Institute cried wolf so loudly you’d think the president was ripping natural gas companies limb from limb.
“The administration’s decision is going to push investment away from the United States and into other countries,” Mike Sommers, API’s CEO, told CNBC. “There is as much natural gas awaiting approval at the Department of Energy as the country of India uses on a yearly basis. That’s how much natural gas is being blocked at the Department of Energy.”
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Sommers and his allies in U.S. Chamber of Commerce make a muddied pitch. They brag about the United States becoming the world’s largest oil producer and largest LNG exporter since Biden came into office. But in the same breath, they complain he is killing the U.S. oil and gas industry.
The administration has already approved 13 new LNG facilities that will double LNG exports from current levels in the next three years, the Energy Department explained. Once completed, the U.S. will export 50% more LNG than any other nation.
“This increased capacity has and will continue to support our European, Asian and other allies,” the announcement said. “Just as it has since 2022 when U.S. LNG played a critical role in helping Europe backfill its lost gas supplies from Russia and reduce its energy.”
The government last updated guidelines used to evaluate the economic and environmental impact of natural gas exports in 1984, when President Ronald Reagan was denying climate change. A pause is necessary to evaluate the impact of expanded LNG exports on global warming.
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The oil and gas industry, though, sees a short-circuiting of its LNG expansion plans, which are critical as oil consumption drops. Shell, BP and Exxon Mobil have all touted natural gas as a cleaner fuel to generate electricity. Politicians in petrostates, like Texas, see a threat to their tax base.
API argues LNG enables nations without natural gas to reduce their dependence on coal and reduce greenhouse gas emissions. Asia was the primary market for U.S. gas until Russia invaded Ukraine. Since then, European countries have bought U.S. gas to reduce their dependence on Moscow.
Critics argue the benefits of switching from coal to gas are exaggerated. Gas burns cleaner than coal, but environmentalists say the delivery network leaks so much that it doesn’t make a difference.
Methane, the principle component of natural gas, is responsible for 30% of global warming and is 28 times worse for the climate than carbon dioxide over 100 years, scientists report. Sommers, the Texas Railroad Commission and other industry lobbyists have also fought tooth and nail against regulations to limit methane leaks.
“It takes an enormous amount of energy — and coughs up vast amounts of the carbon pollution driving the climate crisis — to extract, transport and process LNG,” the Natural Resources Defense Council explained. “Liquefaction terminals cover hundreds of acres, require miles of pipeline and inflict disproportionate hazard and harm upon low-income communities and people of color.”
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Biden promised hard-hit communities he would reduce the environmental impacts on their families. His administration also committed to weaning the United States off fossil fuels at last year’s COP28 climate conference.
The bigger challenge is what will happen to parts of the country that depend on oil and gas for their economy. Texas and local governments relied on the industry for more than $750 million in tax revenues in 2021, research from the Resources For the Future and the University of Michigan shows.
If you wonder why Texas politicians deny climate change, it’s because they don’t want to tackle the economic challenges of phasing out greenhouse gas emissions. Oil and gas companies also don’t want to switch to clean energy because the rate of return is only 5% to 10%, rather than the 20% to 50% they make on fossil fuels, Dan Pickering, the chief investment officer at Pickering Energy Partners, told NPR.
Stopping additional natural gas exports would benefit consumers, though. Keeping more gas at home could save U.S. consumers $75 billion a year, the Institute for Energy Economics and Financial Analysis calculated.
Before listening to the Chicken Littles in the oil and gas industry, follow the money.
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Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonhchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.
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