February 08, 2024

Manchin: Politicizing LNG Exports is Reckless and Dangerous

Washington, DC – Today, U.S. Senate Energy and Natural Resources Committee Chairman Joe Manchin (D-WV) held a hearing to examine the Administration’s pause on liquefied natural gas (LNG) export approvals and the U.S. Department of Energy’s (DOE) process for assessing LNG export applications. During the hearing, Chairman Manchin stressed the importance of protecting American consumers and businesses while supporting our allies and trading partners as well as questioned whether facts or political motivation led to the White House’s decision to pause permit approvals for exports of LNG to non-Free Trade Agreement (FTA) countries.

“I believe that our first priority is ensuring that none of our exports harm U.S. families, businesses, or our economy. Beyond that, we also have a responsibility to our allies and trading partners who may have no other choice but to turn to countries that don’t share our values if they can’t count on American support. The United States has shown that we can do both of those things,” said Chairman Manchin.

“Over the past seven years, our LNG production has ramped up from essentially no exports in 2016 to a peak capacity of around 14 billion cubic feet (bcf) per day today, which is about 14% of current U.S. production capacity and more than any other exporting nation. To support these increased exports, we’re producing more energy than ever in our country—4.7 billion barrels of crude oil and 37 trillion cubic feet of gas in 2023. And during that time, our domestic natural gas prices have remained flat on average—the average Henry Hub price was about $2.50 both in 2016 and in 2023. But at the same time, as we’re producing and exporting more than ever, American consumers are using a record amount of gas—now more than 32 trillion cubic feet annually. So let me be clear—a lot has changed in a few years and there are sensible reasons to update the market assessments that DOE uses when reviewing export applications to ensure the trajectory we’re on won’t risk harming American families and businesses. But these types of decisions should be firmly based on facts, not politics,” Chairman Manchin continued. 

Chairman Manchin also questioned the facts behind the Administration’s pause.

“Unfortunately, the Administration hasn’t actually done its new market assessment yet or presented us any facts that justify this pause at all. They do throw around some data points—for example they tout that the U.S. is on track to export 26 billion cubic feet per day by the end of this decade, between facilities currently operating and those now under construction. But my question is this: where is the analysis showing that 26 is the magic number and that’s all we can do? It seems to me that 26 billion cubic feet per day is just what happened to be in the hopper when the White House made the political calculation to pause exports. The White House has gone out of its way to signal that the pause is a political ploy intended to get votes in an election year—it’s all about politics, not economics, and we just saw yesterday what that does for us. Between the two statements issued by the White House announcing the pause, climate and environmental issues are mentioned more than 35 times. All combined, consumer costs, energy security, and helping our allies are mentioned less than half as much,” said Chairman Manchin. 

This reminds me all too well of the Administration’s misguided and unlawful pause on oil and gas leasing, which I know my fellow committee members will recall. Simply put: politicizing LNG exports is reckless and dangerous and it could empower and enrich Russia, Qatar and Iran. Deputy Secretary Turk, if I’m correct, DOE is just now beginning its new analysis of the economic impacts of our growing export levels. If that is the case, this pause should be reversed immediately. Facts must come before action, not the other way around. Unfortunately, it seems the White House has already sided with climate activists determined to block any more LNG exports, and I am deeply concerned the White House will put its thumb on the scale at DOE to get the political outcome they want,” Chairman Manchin stated.

Chairman Manchin and The Honorable David M. Turk, Deputy Secretary of the U.S. Department of Energy, discussed the decision to pause export approvals before conducting a complete analysis of the effects of a pause and appropriate export levels.

“If we were talking about considering a pause, this is a great panel for this. You have an executive order doing a pause. That’s the difference. You’ve put the cart before the horse…You don’t draw the brakes on everything and send scare tactics around the world before we know for sure,” said Chairman Manchin. 

Chairman Manchin questioned Dr. James Watson, Secretary General of Eurogas, about how Russia’s war in Ukraine could affect long-term export agreements.

“Dr. Watson, we all know that American LNG developers need to sign long-term contracts with customers abroad in order to finance new export facilities. At some points in the past, it has been difficult for American exporters to secure long-term contracts in Europe due to European companies and officials questioning whether Europe will need American LNG in the long run. In some cases, this has meant countries that do not share our values, like China, have subscribed to America’s LNG capacity instead of our allies in Europe. How did the Russian invasion of Ukraine shift your members’ views about signing long-term export agreements for American LNG and what impact does the Administration’s pause have on your long-term agreement contracts that might be needed or are in the works?” Chairman Manchin asked. 

“Everything depends upon having a stable relationship…I think there is a strong concern about the pause because in essence we still take a lot of Russian LNG and pipe gas,” said Dr. Watson.

“If you had a constant supply from us, knowing we were reliable and long term, can you replace all of your Russian dependency?” questioned Chairman Manchin.

“That would certainly be the objective,” said Dr. Watson.

Chairman Manchin questioned Mr. Charlie Riedl, Executive Director of the Center for LNG, about an acceptable export capacity that would not harm American consumers.

“If permits were not an issue, where do you assess our exports would cap out at, if any?” asked Chairman Manchin. 

“The U.S. market has demonstrated the ability to absorb the increase that we’ve seen. The comment earlier that we’re at 14% of current production value; production will rise to match that. The market will determine exactly just how much more volume is brought on. When we start trying to pick winners and losers in projects, I think we’re automatically losing,” said Mr. Riedl. 

The hearing featured witnesses from the U.S. Department of Energy, Center for LNG and Eurogas.

To watch the hearing in full, please click here.