The liquefied natural gas (LNG) export industry is a significant part of the Lone Star State’s energy economy, and it’s come under threat recently. The Texas Oil & Gas Association (TXOGA) was called on to testify in support of the LNG industry, with TXOGA President Todd Staples and Chief Economist Dr. Dean Foreman testifying before the Texas House Select Committee on Protecting Texas LNG Exports earlier this month. Both men spoke out against the Biden administration’s pause on LNG export permit approvals and its negative impact on Texas.
In his testimony, Staples underscored the multifaceted repercussions of the federal government’s decision. “We commend Speaker Phelan for recognizing the tremendously positive impact of LNG, and Chairman Patterson and the Committee for their leadership in convening this hearing,” Staples said. “The suspension of LNG export permits not only threatens immediate economic stability and job security for Texans but also undermines our global energy leadership. Reliable, responsibly produced energy from Texas is more critical than ever.”
Foreman supported these assertions with his own economic insights, placing a spotlight on the investments at stake, noting, “Texas and Louisiana bear the brunt of short-sighted federal policies that jeopardize LNG export projects worth $200 billion. These projects are crucial for a projected 20% increase in Texas’ dry natural gas production.” He noted that LNG exports have not affected domestic pricing, and have instead driven productivity, reduced consumer costs, and significantly cut emissions by replacing coal in power generation.
The House Select Committee’s Report
Following the hearing, the Texas House Select Committee released its report, citing TXOGA’s contributions and noting the economic and geopolitical ramifications of the federal permitting pause. The report observed that the timing of the Biden Administration’s decision suggested political motivations aimed at disrupting Texas’ burgeoning economy, the eighth largest globally.
The committee’s findings underscored the strategic importance of American LNG in bolstering not only Texas’ economy but also national and global energy security. This is particularly crucial for our allies who are attempting to reduce reliance on Russian natural gas given the current geopolitical landscape.
Recommendations for Sustaining Texas LNG
The committee’s report also laid out several strategic recommendations to mitigate the impacts of federal policy and ensure the growth of the LNG sector:
- Establish the Gulf Coast LNG Interstate Compact: Proposed legislation would enable Governor Greg Abbott to form an interstate compact to share resources and information, fostering regional collaboration to protect and grow the LNG industry.
- Issue Annual Public Interest Reports: Legislation could mandate annual reports on the LNG industry’s economic, environmental, and social benefits, providing consistent evidence to address federal public interest concerns.
- Allow Temporary Facility Construction Grants: State funding could be made available to support LNG facility construction during federal permitting pauses, ensuring continued project progress.
- Economically Incentivize the LNG Industry: Economic incentives, such as state tax breaks, could attract more LNG projects to Texas, countering the negative market impacts of federal permitting pauses.
- Reform State Permitting Regulations: Streamlining state-level permitting processes and allowing construction to proceed during hearings would improve efficiency and reduce delays.
- Increase Funding for Maritime Infrastructure: This expansion of funding would enhance port facilities, benefiting LNG transportation and commerce.
- Prioritize Regional Industry Workforce Grants: Increased use of workforce grants in partnership with local colleges would meet the growing demand for skilled workers in LNG facility construction and operations.
TXOGA’s Ongoing Advocacy
Since the administration’s announcement in January, TXOGA has stood at the frontlines to protect LNG exports. The association has collaborated with other trade groups in voicing concern to the U.S. Department of Energy, and published analyses demonstrating the positive impact of LNG exports. Dr. Foreman’s research pointed out that LNG exports have driven innovation without impacting domestic natural gas prices.
As Staples concluded, “Irrefutable testimony was provided by a variety of witnesses on the significant benefits of LNG exports and the adverse impacts of the suspension. We applaud Texas leaders for highlighting the essential role LNG plays in local communities, the state economy, and global energy security.”
