Texas legislative committee proposes ways to protect, expand LNG industry

A state legislative committee is proposing ways to expand Texas’ liquified natural gas (LNG) industry after the Biden administration announced it was pausing pending applications for LNG exports that would significantly impact Texas.

The Texas House Select Committee on Protecting Texas LNG Exports issued its findings after holding a hearing on the topic earlier this month. Led by state Rep. Jared Patterson, R-Frisco, the report states, “the Biden Administration’s federal permitting pause during a presidential election year appears to be purely political in nature and an attempt to disrupt Texas’ booming economy, now the eighth largest economy in the world.

“It has caused long-term uncertainty for both investors and allied nations around the world relying on American energy, particularly in Europe as they seek to wean themselves off Russian natural gas. After multiple studies across Democratic and Republican presidential administrations, it is abundantly clear American LNG is in the best interest of the Texas economy, local communities, our national security, and global energy security.”

House Speaker Dade Phelan, R-Beaumont, created the select committee and charged it with evaluating the impact on the Texas LNG industry and to propose actions the state legislature could take in the next legislative session to protect it.

Phelan’s district is critical to the oil and natural gas industry. It encompasses a region known as the “Golden Triangle,” rich in oil and natural gas production, processing, refining and exports in the southeast towns of Beaumont, Port Arthur and Orange. It includes a key LNG export terminal currently under construction in Port Arthur, where several LNG facilities are also located.

The LNG terminal, once completed and operational, is expected to have an export capacity of 13 million tons a year. With access to the Gulf of Mexico through the Sabine-Neches ship channel, it represents a $13 billion investment in new energy infrastructure, the report states.

The U.S. leads the world in LNG exports, led by the Gulf states of Texas and Louisiana. In 2017, the U.S. became a net exporter of natural gas for the first time since 1957, “primarily because of increased LNG exports,” according to the EIA. The U.S. became a net exporter after Cheniere Energy was the first to export domestically sourced LNG from the Sabine Pass LNG Terminal in Cameron Parish, Louisiana, and from the Port of Corpus Christi in Texas, The Center Square first reported.

Nearly 25% of U.S. natural gas reserves are located in Texas and 30% of the largest hundred natural gas fields in the U.S. are in Texas, the legislative report notes, citing state data. It also identifies six LNG facilities nationwide that would be impacted by the ban, including two in Texas, in Port Arthur and Corpus Christi.

Texas ports, including Port Arthur and Corpus Christi, are among the top ports in the U.S. leading in foreign trade impact, and the Port of Corpus Christi continues to break records in tonnage, primarily due to oil and LNG exports, The Center Square reported.

Texas Oil & Gas Association Chief Economist Dean Foreman, who testified before the committee, said, “Texas and Louisiana bear the brunt of short-sighted federal policies that jeopardize LNG export projects, representing potential investments of $200 billion across the value chain, including a projected 20% increase in Texas’ dry natural gas production.

“The reasons given for this pause – concerns about higher domestic natural gas prices, emissions, and community impacts – are clearly unfounded. U.S. LNG exports have responded to global demand, driving domestic innovation that enhances productivity and reduces consumer costs. LNG has replaced coal in power generation, emerging as a primary driver of emission reductions, and have catalyzed economic growth across the Gulf Coast. On all accounts, U.S. LNG exports have proven to be decisively beneficial.”

Two key claims the administration made for implementing the ban (LNG exports increase domestic energy costs and increase methane emissions) have been refuted, The Center Square first reported. A bipartisan coalition of Texas’ congressional delegation called on the president “to refocus on policies that support US LNG,” understanding that Texas is the energy capital of the United States, The Center Square reported. Sixteen states, led by Louisiana and Texas, also sued, arguing the ban is illegal.

The committee recommended that the legislature “consider legislation and policies authorizing the governor to develop and execute an interstate compact with the goal of sharing state information, resources, and services with other interested states seeking to protect and grow the LNG industry along the Gulf Coast.”

It also recommends that the legislature propose legislation and policies to permit temporary eligibility of LNG facility construction grants and loans when federal permitting pauses occur; provide economic incentives for LNG facilities to counter market consequences of a federal permitting pause; reform specific permitting regulations and increase overall permitting process efficiency; expand funding for project construction and development through the Texas Department of Transportation’s Maritime Infrastructure Program; increase workforce grants made available through local colleges to meet workforce demands for construction and facility operations; and mandate that official reports be published every year providing data on the “relevance and importance of the LNG industry regarding the public interest.”