US Legislators Introduce North Atlantic Energy Security Act

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Four U.S. senators introduced the North Atlantic Energy Security Act Friday, which they say will cut the red tape inhibiting energy production and infrastructure development, reduce natural gas flaring, and speed up the export of liquefied natural gas (LNG) to U.S. allies. Through this legislation, Senators John Hoeven (R-N.D.), John McCain (R-Ariz.), Lisa Murkowski (R-Alaska) and John Barrasso (R-Wyo.) are seeking to amend U.S. federal law by requiring U.S. Secretary of Energy Dr. Ernest Moniz to approve LNG exports to the Ukraine, Japan and U.S. allies in the North Atlantic Treaty Organization, in addition to free trade countries.

Russia’s seizure of the Crimea in the Ukraine in March of this year underscores the importance of Europe’s drive for greater energy security, Reuters reported in March of this year. Since the takeover, Ukrainian forces and separatists have been fighting in the country. Reuters reported Thursday that Ukrainian forces regained more ground but sustained further casualties, and two Western allies urged Russian President Vladimir Putin to exert more pressure on rebels to negotiate to end the conflict.

The U.S. Department of Energy (DOE) will also be required to make a decision for other LNG export applications within 45 days after a company finishes the pre-file process with the Federal Energy Regulatory Commission (FERC). To date, DOE has fully approved one LNG export terminal, Cheniere Energy Inc.’s Sabine Pass export plant. Six other terminals are conditionally approved and approval is pending for 26 other terminals. The majority of these terminals have been waiting for a decision for over a year, according to a press statement released Friday by the senators.

FERC last month awarded final U.S. approval to Sempra Energy to build an LNG export terminal, according to a June 19 Bloomberg report.

“Achieving energy independence needs to be a priority for our economy, and also for our national security,” said Hoeven in a July 11 press statement. “We’re producing more than 30 trillion cubic feet (Tcf) of natural gas in our country, but use only 26 Tcf. That means we can not only produce more energy than we use in the United States to create jobs, reduce flaring and decrease our dependence on Middle Eastern oil, but also produce enough energy to help our allies, including countries like Ukraine, avert conflicts over energy with hostile neighbors.”  

McCain said in a statement that speeding up LNG exports to Ukraine and Europe would enable the U.S. its goal of leveraging its energy boom to reduce dependence of U.S. allies on Russian natural resources.

“The U.S. renaissance in oil and natural gas production has been a rare bright spot in our economy, but the vast majority of that production has occurred on state and private lands. This bill takes several important and long overdue steps to bolster our energy security, our economy, and our allies across the Atlantic,” said Murkowski in a July 11 statement.

Some U.S. legislators have called for the United States to speed up approval of proposed LNG export terminals to soften Russia’s grip on European energy supplies, Bloomberg reported in March. Chevron Corp. Chairman and CEO John Watson told attendees at the 2014 CERAWeek in Houston that the U.S. should move forward with LNG exports, noting that it would benefit U.S. consumers and allies.

An analyst told Rigzone in March that LNG was the most powerful weapon the United States had in addressing the Ukraine crisis. But with one approved license, LNG will not flow for some time, with the next set of LNG shipments estimated to leave the U.S. until 2017 or 2018, Moniz was quoted as saying in the Bloomberg report. Moniz told reporters at CERAWeek that he would “welcome consultation” with U.S. Congress on altering the U.S. LNG export approval process.

The four legislators are seeking to streamline the onshore production process by reforming the leasing process for onshore oil and gas projects on federal lands to eliminate unnecessary delays. The bill would seek to encourage timely development of federal U.S. resources, and set clear rules for the development of U.S. oil shale resources. It would also “establish common sense steps to create an all-of-the-above American energy plan for U.S. federal resources, and allow Internet-based oil and gas lease auctions”.

The approval time for a drilling permit for public lands in North Dakota currently is between 180 and 270 days, according to the legislators. The senators said the bill would expedite natural gas gathering systems by providing a categorical exclusion under the National Environmental Policy Act for certain gas gathering lines on federal and Indian lands and service any oil, but not gas, wells. Lines on lands include the U.S. national park system, the National Wildlife Refuge System, and the National Wilderness Preservation System. This portion of the bill is based on Barrasso’s S.2112, which was introduced in March to the U.S. Senate Committee on Energy and Natural Resources and would have authorized the approval of gas pipelines and establish deadlines for expediting permits for certain gas gathering lines on federal and Indian lands.  

The Secretaries of the Interior and Agriculture will be required to issue right-of-ways for gas gathering lines that qualify for a categorical exclusion within 30 days, and rights-of-way for all other gas gathering lines servicing oil wells within 60 days.

Forty percent of all gas produced on public lands in North Dakota is flared, and 212 billion cubic feet of gas is flared across the United States. The level of natural gas flaring in North Dakota prompted the North Dakota Industrial Commission, the state’s oil and gas regulating entity, to pass this year more restrictive regulations to reduce gas flaring from existing and new gas wells in the state. Estimates prior to the new regulations found that as much as 30 percent of gas found in the Bakken was flared, higher than the national average of less than one percent.

By expediting permits for gas pipelines and LNG export terminals, the bill would allow other nations that “desperately” want to buy gas access to U.S. gas, creating a “win-win” for the environment, U.S. workers, and the energy security of U.S. allies and strategic partners.

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