Baker Institute expert: Liquefied natural gas permitting still a work in progress

The rise in U.S. oil and natural gas production is altering the profile of the country’s energy landscape and driving federal agencies to adjust their long-standing processes due to the uptick in permit applications for proposed liquefied natural gas (LNG) facilities, according to an expert in the Center for Energy Studies at Rice University’s Baker Institute for Public Policy. And she adds there’s no guarantee the federal government’s efforts to minimize “bureaucratic barriers” will succeed beyond formal declarations.

Credit: 123RF.com/Rice University

Rachel Meidl, fellow in energy and environment at the Baker Institute, outlined her insights in a new issue brief, “FERC and PHMSA Sign Memorandum of Understanding: Is it the Silver Bullet to Expedited LNG Application Reviews?”

On Aug. 31, the U.S. Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Energy Regulatory Commission (FERC) issued a memorandum of understanding (MOU) with the shared goal of accelerating and streamlining the permit application review process for proposed LNG facilities.

The MOU articulates the legal authority, general scope and responsibilities of each agency; information sharing requirements; and inspection and enforcement activities. It further identifies PHMSA’s expanded role to issue a letter of determination to FERC ascertaining whether a proposed LNG facility is capable of complying with DOT’s safety standards and review the location criteria and wind force design standards consistent with the requirements in 49 Code of Federal Regulation Part 193, “Liquefied Natural Gas Facilities: Federal Safety Standards,” Subpart B, Siting Requirements.

Aside from the fact that timely reviews are critical to deliver on major infrastructure projects, it is “in the national interest to promote clean and safe development of our nation’s vast energy resources, while also avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth and prevent job creation,” according to the March 2017 presidential executive order on “Promoting Energy Independence and Economic Growth.”

With approximately 13 LNG export projects currently in the FERC application process and two in the pre-filing process in the U.S., timely reviews are critical and ostensibly more complicated, Meidl said. As an example, LNG exports undergo a liquefaction process, where natural gas is cooled to a liquid state that is 1/600th of its original gaseous volume to allow for safe and efficient export on specially designed, pressurized vessels. At the receiving terminal, the LNG is unloaded into storage tanks and piped into a regasification plant where it is heated and converted back to conventional natural gas at atmospheric temperature for ultimate use by consumers.

“Although the recent expansion of PHMSA’s obligations in reviewing LNG export projects and the memorialization of a FERC/PHMSA MOU are direct results of external pressures and a shifting LNG market, they will, at least in theory, identify and eliminate process impediments to leverage each agency’s expertise,” Meidl wrote. “However, an MOU is only ritualistic rhetoric of an agency’s intended actions, a formality lacking any practical path forward. Furthermore, without a budget increase for PHMSA, an agency that is already under-resourced, understaffed and has numerous competing priorities and outstanding congressional mandates, it is uncertain whether expanded obligations will further strain the agency and limit the efficiency improvement envisioned in the White House ‘One Federal Decision’ MOU.”

Meidl concluded, “It will be interesting to see if the revised MOU will meet the intent of minimizing bureaucratic barriers and optimizing the efficiency and effectiveness of the LNG export application process consistent with Trump’s executive orders and the FERC/PHMSA MOU. It remains to be seen whether the matter is truly a resource issue or a process issue between FERC and PHMSA. While PHMSA has long participated in LNG design review and oversight with FERC, both agencies, including the regulated community, would benefit significantly by better strategic workforce, resource and operational planning to make this transition sustainable, not just by meeting this administration’s priorities but through any administration moving forward.”

Meidl is a former deputy associate administrator of the PHMSA. At DOT from July 2015 to June 2018, Meidl led development of domestic and international policy interests and oversaw the department’s delegations to the United Nations International Civil Aviation Organization, the United Nations Transportation of Dangerous Goods Council and the International Atomic Energy Agency.