Natural-Gas Exports Loom Large Over Washington

COVE POINT, Md.–Along the banks of the Chesapeake Bay, a little more than an hour south of the U.S. Capitol, sits a facility whose golden days of importing natural gas are gone. Back in 2004 and 2005, when fuel prices were high, ships hauling natural gas from overseas docked here two or three times a week.

Since 2012, the 131-acre facility has seen just two ships, neither of which carried natural gas for U.S. markets. Rather, their purpose was to bring fuel to cool the liquefied natural gas already stored in seven massive tanks.

The offshore facility, accessible through a 6-foot-wide, mile-long underwater tunnel, is now largely idle. Seagulls and their droppings have overtaken the half-mile-long pier set up with big equipment to move gas from ships to tanks. The workers say they will clean up the mess when ships start arriving again. But they don’t know when the next ship will come.

Almost a dozen facilities like this were built nationwide in the 1970s to import natural gas when demand for the fuel was increasing and domestic reserves were thought to be scarce. But the shale natural-gas reserves discovered in the past six years have turned this landscape upside down.

Policymakers, companies, and foreign governments are grappling with how to proceed in the face of America’s newfound fossil-fuel abundance, after decades of energy scarcity. One of the biggest questions Washington is facing is whether to export liquefied natural gas, and if so, how much.

“To think that America, in just a short period of time, would be at such a strategic advantage to use our resources to not only help our country domestically with new jobs and energy security, but to also influence Russia’s ability to wield an energy weapon over its European customers, is truly remarkable,” said House Energy and Commerce Committee Chairman Fred Upton, R-Mich., at a hearing last week focused almost entirely on natural-gas exports.

On Tuesday, the Senate Energy and Natural Resources Committee held the first of a series of forums on natural gas. Its second forum, scheduled for next week, will focus exclusively on exports.

Dominion, the owner of the Cove Point facility, is smack in the middle of this debate. The company is seeking a permit from the Energy Department to convert Cove Point from an import to an export facility and send gas drilled in Pennsylvania and West Virginia to Japan and India. Dominion already has contracts in place to send America’s gas overseas, even though it hasn’t received the permit yet.

“We feel confident they’re going to issue some licenses,” Diane Leopold, senior vice president for Dominion Transmission, said Friday. From a list of almost 20 requests, the Energy Department has approved only one license to export the fuel to countries where the U.S. doesn’t have free-trade agreements (which are the countries that want the fuel the most). Dominion’s application is now third in line at the department.

House Minority Whip Steny Hoyer, D-Md., whose district includes Dominion’s facility, supports the Cove Point project because of the jobs and economic growth it is poised to bring to the area. While he hasn’t gone out of his way to talk about it, he has also voted against efforts to restrict exports of natural gas. Given that he is one of the more left-leaning members of the House, this position may take some observers by surprise. For the past couple of years, the federal government has pressed the pause button on deciding whether to approve natural-gas export licenses. During the hiatus, a debate has been brewing over the fuel’s environmental footprint, especially when it come to the controversial hydraulic-fracturing technology that makes it possible to develop the gas, and the geopolitical and economic impacts of exporting the resource. Manufacturers that use natural gas as a feedstock worry that exports would increase the low fuel prices that have helped revive manufacturing in places like Ohio.

During his trip to Costa Rica earlier this month, President Obama took ownership of the decision, signaling the issue’s importance.

“I’ve got to make an executive decision broadly about whether or not we export liquefied natural gas at all,” Obama said. “But I can assure you that once I make that decision, then factoring in how we can use that to facilitate lower costs in the hemisphere and in Central America will be on my agenda.”

The other person key to this decision is Ernest Moniz, Obama’s pick for Energy secretary, who faces a confirmation vote in the Senate as soon as this week. Moniz skirted answering questions on this issue during his confirmation hearing, but he is widely believed to be supportive of exports and has stated as much in papers he helped write during his time directing MIT’s Energy Initiative.

That vote is probably the most substantive thing Congress will do on this issue because current law puts the decision-making power almost entirely within the executive branch. Many experts say that once Moniz is confirmed, the administration will finally let go of the pause button and decide one way or another about whether to export America’s natural gas.