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Congressman Gene Green

Representing the 29th District of Texas

Green Takes On Natural Gas Crisis

May 21, 2004
Press Release
Washington, DC - To counter the negative effects of soaring natural gas prices on the economy and consumers, Rep. Gene Green (D-Houston) and Rep. Lee Terry (R-NE), introduced legislation to simplify the siting of onshore Liquefied Natural Gas (LNG) terminals.
 
In June 2003, Alan Greenspan testified before the Energy and Commerce Committee and said that Liquefied Natural Gas (LNG) was critical for the future stability of our economy, said Green.  We want to help by providing LNG with the same regulatory certainty we provide natural gas pipelines.
 
According to the National Petroleum Council, the United States is on course to pay an additional $1 trillion in natural gas costs over the next 20 years due to shortages.  Along with increased domestic production and an Alaskan natural gas pipeline, LNG projects promise to help stabilize prices, but the permitting process for LNG facilities is uncertain and disputed, without clear lines between state and federal authority.
 
We need LNG, and we must make LNG terminals safe and secure.  We will fully consider the current safety and security procedures and other proposals during this debate, added Green.
 
Unless we get LNG right, our nations $454 billion chemical industry and 1 million jobs could look like the steel industry, concluded Green. Electric power and heating bills are also crunching consumers.  This country needs to address LNG in a meaningful way, and this legislation moves us on the right track.
 
**A summary of The Liquefied Natural Gas Import Terminal Development Act of 2004 follows.
 
Summary of the Terry-Green LNG Legislation
 
Why we need to expand LNG capacity
 
Because of its efficiency and environmental benefits, natural gas use has increased dramatically over recent years.  Demand has caught up with supply, and natural gas prices are up more than 80 percent over the past four years.  At the same time, U.S. natural gas production is falling at about two percent a year. 
 
Over the next two decades, U.S. natural gas consumption is expected to rise 40 percent (and 70 percent throughout North America).  It is expected that U.S. production will meet only 75 percent of the nations demand by 2025.   This is especially sobering considering that the United States consumes about 25 percent of the worlds natural gas production but holds only three percent of the worlds natural gas reserves.
 
We must look for new options now, if we are to avoid the adverse economic implications.  (According to the National Petroleum Council, the United States is on course to pay an additional $1 trillion in natural gas costs over the next 20 years due to shortages.)  The Rocky Mountains, the Gulf of Mexico and Alaska will continue to be a vital part of our supply.  However, expanding our liquefied natural gas (LNG) capacity is also critical, so we may bring natural gas from more ample supplies from around the world creating a safety value to provide some leverage in determining natural gas availability and prices.

LNG natural gas chilled to -260 degrees Fahrenheit allows the safe transportation of gas from large-producing fields in places such as western Africa, the Caribbean, Malaysia, Australia, Qatar, South America, Russia, and Eastern Europe.  LNG has been safely transported by ship for nearly half a century, with countries such as Japan receiving LNG shipments every 20 hours.

Currently, around 30 LNG terminals are in various stages of planning in the United States.  With natural gas prices up from $1.50/thousand cubic feet pre-1995 to more than $6 today, boosting LNGs role in our energy portfolio is a sensible step. 
 
What the Terry-Green LNG legislation would do
 
This legislation would compliment the pending energy bill (H.R. 6) by working to add LNG to our energy portfolio.  It would also provide parity between the application/review process for on-shore and offshore terminals.  Specifically, this bill would:
 
 Eliminate jurisdictional conflicts and legal ambiguities on siting and construction of LNG terminals.    Jurisdictional conflicts between federal and state agencies threaten to delay or kill new LNG projects.  Since the importation of LNG is a matter of foreign commerce, the Terry-Green bill would clarify that approval and siting authority for LNG facilities is most appropriately determined at the federal level, as established under the Natural Gas Act.  It also clarifies that a public interest finding by the Federal Energy Regulatory Commission (FERC) regarding the siting, construction, expansion and operation of LNG terminals under the Natural Gas Act is pre-emptive, and is not subject to second-guessing under state or local law.
 
 Create a lead agency for LNG project review and permitting.  Currently, several federal departments, and some state agencies, have a role in the approval process for construction or expansion of an onshore LNG terminal.  This bill clarifies that the FERC is the lead agency, to streamline environmental review and permitting.  Other federal agencies and state agencies with authority delegated by federal law keep their independent regulatory responsibilities.  However, such agencies must act in a manner consistent with the public interest determination made by the FERC under the Natural Gas Act.
 
 Set a deadline for FERC review of LNG terminal applications.   Currently, there is no time requirement for FERC review of a LNG terminal application.  To ensure a prompt evaluation, this bill requires the FERC to issue its decision one year after the application has been completed.  The bill also gives the FERC authority to establish deadlines for other agencies making permitting decisions, taking into account timelines established by other Federal statutes.
 
 Remove regulatory uncertainties for those building/expanding onshore LNG terminals.  This bill codifies the FERCs important Hackberry decision on open access requirements, giving developers the certainty they need regarding economic regulation.  This policy is necessary to encourage the development of new LNG capacity, especially considering a typical onshore LNG project can cost more than $500 million.
 
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