US approves $10-bn LNG export facility in Texas

In a significant development, the US government has given its approval for a $10-billion liquefied natural gas (LNG) export facility in Texas, paving the way for the country to become a major energy supplier to the global markets.

In a statement, the US energy department said that it has conditionally authorised Freeport LNG Expansion LP and FLNG Liquefaction LLC to export LNG to countries that do not have free trade agreement (FTA) with the US.

The decision will pave the way for India, which does not have a FTA with the US, to allow Indian companies to seek similar licenses for import of shale gas from the US in large quantities from other terminals.

FLNG Expansion LP and FLNG Liquefaction LLC are companies owned by four limited partners and a general partner including oil and gas giant ConocoPhillips.

Subject to environmental and final regulatory approval, the facility is permitted to export at the rate of up to 1.4 billion cubic feet (bcf) of natural gas per day for a period of 20 years.

"I hope this means that more facilities will get approval in due time, sooner rather than later. The country needs these exports for jobs, for balance of trade and for geopolitical reasons - our allies are asking for them," Freeport LNG chief executive Michael Smith said in an interview with The Wall Street Journal.

The US, which has been a traditional importer of natural gas, is poised to become the world's largest natural gas producer thanks to the latest unconventional shale gas extraction technologies.

According to Energy Information Administration's (EIA's) forecast, the country is expected to achieve a record production rate of 69.3 bcf per day this year.

The government gave the first authorisation to export natural gas to non-FTA countries two years ago, by permitting Cheniere Energy Inc's Sabine Pass LNG Terminal in Louisiana to export up to 2.2 bcf per day.

According to the US federal law, for natural gas exports to country's that do not have an FTA with the US, the energy department can grant export permits to enterprises, provided such exports ''will not be inconsistent with the public interest.''

Prior to its final decision, the energy department conducted an extensive review of the application to export LNG from the Freeport terminal which included economic, energy security and environmental impacts as well as numerous public comments for and against the proposal.

The development of US natural gas resources is having a transformative impact on the US energy landscape, helping to improve our energy security while spurring economic development and job creation around the country, the government statement said.

Supporters of the development argue that exporting cheaper natural gas to global markets will help the country's trade balance, facilitate adoption of cleaner fuels around the world.

However, some believe that exports may send up domestic gas prices, affecting consumers and some industries such as chemicals that have benefited from cheap natural gas.

The energy department said that it will continue to process the pending applications on a case-by-case basis which will undergo the detailed review process, considering the latest information and market developments.