U.S. Seeks to Revise Rules on Gas-Export Projects

Proposal Could Push Back Approval Process for Some Companies’ LNG Permit Requests

By ALICIA MUNDY and ALISON SIDER  WSJ.com

Cheniere is well-positioned to export liquefied natural gas. Pictured, its LNG terminal in Louisiana last year. Cheniere Energy/Bloomberg News
The Obama administration said it would perform a more rigorous upfront review of proposals to export liquefied natural gas, offering a mixed bag for the roughly two dozen projects seeking federal approval.

The U.S., which is enjoying a natural-gas boom, is expected to start exporting LNG in significant volume next year. The administration has only approved one export facility, but about 25 additional proposed projects are under review. A few projects far along in the approval process could benefit from the proposed rules change because they could be cleared as others are delayed by the new requirements.

The Energy Department said Thursday that the proposed revisions would require export-terminal proposals to first undergo a more expensive regulatory review by the Federal Energy Regulatory Commission involving an environmental impact assessment before the DOE reviews the permit application. The DOE previously was granting conditional approval either parallel to or before completion of the environmental review, a process that allowed companies to get a project started with a smaller financial commitment.

The proposal could push back the approval process for some companies’ LNG permit requests, while more-advanced proposed projects are expected to be able to jump forward in the queue.

“The proposed changes to the manner in which LNG applications are ordered and processed will ensure our process is efficient by prioritizing resources on the more commercially advanced projects,” DOE Assistant Secretary Christopher Smith wrote in a blog post on the department’s website.

Kevin Book, of ClearView Energy Partners LLC, said under the proposal, energy companies will need to clear the environmental review before they can raise capital or secure loans to build LNG export terminals.

Houston-based Cheniere Energy Inc. LNG +8.94% is the only company that has already attained all the required permits to export natural gas from the U.S. to any country in the world. Its Gulf Coast plant in Louisiana is under construction and on track to begin shipping LNG in late 2015.

Oregon LNG’s proposed export facility in Warrenton, Ore., is the next one in the Energy Department’s queue. Chief Executive Peter Hansen said the company’s request for conditional export approval is probably just weeks away, based on how the department has processed other applications. He said it wasn’t clear whether the revised procedure could change the timeline. Oregon LNG is in good shape to move forward with Asian and North American partners, once the permits are in place, he said.

Mr. Hansen said the DOE’s proposal makes sense; as it stands, coordination between the DOE and FERC could be improved. “When you do sort of look at the fact that a lot of the projects that are fairly high up on DOE’s list—some of those haven’t done much yet. They’re barely real. And yet there are projects that are clearly real much further down,” he said. “Maybe the DOE queue wasn’t really reflective of the real world.”

The proposal is subject to a 45-day public review and comment period before the rules can be made final.

Write to Alicia Mundy at alicia.mundy@wsj.com and Alison Sider at alison.sider@wsj.com