Reporting requirements for exporters of liquefied natural gas from the U.S. would be reduced at the request of industry under a new Energy Department policy statement and a proposed rule.
The department’s policy statement, which will be published in the Federal Register and go into effect Dec. 19, discontinues “end use” reporting requirements.
Exporters have been required to track and report the country or countries where their LNG was received for end use. The department says discontinuing this requirement will “reduce administrative burdens” for the U.S. LNG export market and will apply to all future export authorizations. The department is also issuing an order removing the end use provision in all export authorizations issued since February 2016.
Additionally, the department is proposing, in a proposed rule due out Dec. 19, to clarify the types of contracts and purchase agreements that LNG exporters must provide to its Office of Fossil Energy. It also would direct exporters to notify the Energy Department within 30 days of execution of any contract of any prospective or actual changes to the information.
The discontinuation of end-use reporting “is good news for the industry,” Charlie Riedl, executive director for the Center for Liquefied Natural Gas, a trade group that represents LNG producers, shippers, terminal operators and developers, told Bloomberg Environment. “It will help all parties and, as DOE explains, more accurately reflect what is happening with U.S. LNG cargoes globally.”
Riedl said the biggest problem that the policy statement is aiming to solve is that as the global LNG market becomes more flexible, or liquid, LNG cargoes will start to be rerouted with greater frequency. “So the complexity of tracking this is only going to increase,” he said. The country where the cargo leaves the vessel for the first time is an accurate representation of how far the cargo needs to be tracked, he added.
Previously, exporters were responsible for LNG cargo up until it when it was burned. In today’s global market, the gas could travel through multiple countries, possibly including sanctioned countries, and the industry didn’t want to be liable for the product that far down the line, Riedl said.
Companies affected by the change would include Cheniere Energy Inc. and Dominion Energy Inc., which are the two businesses that have operating LNG export terminals: Cheniere’s Sabine Pass in Louisiana and Corpus Christi in Texas on the Gulf Coast, and Dominion’s Cove Point in Maryland.
There are approximately a dozen companies that are going through the regulatory approval process to build LNG export facilities, and three approved LNG export terminals are expected to open in 2019: Kinder Morgan Inc.'s Elba Island LNG in Georgia, Sempra Energy’s Cameron LNG in Louisiana, and Freeport LNG’s terminal in Texas.
Cheniere and Dominion didn’t respond to requests for comment. The Energy Department declined to comment on Dec. 18.
Public comment on the proposed rule will be due 30 days after the proposal publishes in the Federal Register.
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(Updated with trade group comments. Cheniere, Dominion and Energy Department did not comment.)
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