Scores of energy industry representatives criticized the Department of Energy’s findings on the LNG sector, released on Dec. 17, even though the report’s recommendations are unlikely to become policy.

The report—a government-funded scientific study—is likely to come up in the courtroom even after the Donald Trump administration takes power and presumably disregards the DOE’s proposals, according to Arbo, a firm that tracks government issues for the energy industry.

The Dec. 17 “release of DOE's long-anticipated export study officially ends the pause but potentially complicates the path forward,” Arbo wrote in a newsletter.

The DOE report forecasted unrestricted LNG exports could increase domestic natural gas prices by 30%. The increased use of LNG could also increase global greenhouse gas emissions by delaying the transition from a hydrocarbon-based energy infrastructure to one based on solar and wind. A strong supply of LNG on the global market could also potentially help America’s opponents, especially China, the report said.

Energy Secretary Jennifer Granholm's “emphasis on these findings, along with environmental justice concerns and public interest considerations, sets up potential hurdles for the incoming administration,” Arbo wrote.

The study now has a 60-day comment period, which extends past the date when Trump moves into the White House. At that time, the DOE is expected to shift its LNG analysis to a more economically focused approach.

However, the expected shift from the Trump administration could result in legal challenges. Future plaintiffs against LNG expansion could potentially cite the study when making a case against the government, Arbo said.

Recent LNG projects—even already permitted facilities—are facing legal action. In August, a federal appeals court vacated the federal permits for two LNG facilities located in South Texas—Texas LNG and Rio Grande LNG. In its reasoning, the court cited environmental justice arguments that the DOE included in the just-released report.

Arbo also noted that the recent U.S. Supreme Court Chevron decision will further complicate legal matters because the ruling took away some of the executive branch’s power to create regulations, meaning rules implemented under the Trump administration will be under greater legal scrutiny than prior administrations.

There is some optimism for the LNG industry, however. Under the Natural Gas Act, the DOE retains “considerable discretion” to determine the public interest for LNG permit authorizations, Arbo said. The flexibility could mean the DOE may have fewer problems changing its current policies.

Minimal pause effect

The White House implemented the LNG permitting pause in February. After a year, the concrete effects of the move appear to be minimal against the larger backdrop of expanding LNG export capacity, said Jack Weixel, senior director at East Daley Analytics.

According to the DOE, five LNG projects are currently waiting for permits: Calcasieu Pass 2 (3.96 Bcf/d); Commonwealth (1.21 Bcf/d); Port Arthur Phase II (1.91 Bcf/d); Lake Charles (2.33 Bcf/d); and Magnolia LNG (1.23 Bcf/d).

“The fact of the matter is that through the new administration’s first and only remaining term, the DOE pause only really ever impacted Venture Global’s CP2 project and Kimmeridge-backed Commonwealth LNG,” Weixel told Hart Energy.

Combined, the two facilities had a capacity of 3.9 Bcf/d of incremental demand. The DOE had already permitted about 15 Bcf/d of capacity for development, Weixel said.

With or without the pause, the U.S. export capacity for LNG is expected to double between now and 2028, from about 14 Bcf/d to more than 28 Bcf/d. One project, Venture Global’s Plaquemines LNG, began production on Dec. 13. Cheniere Energy’s Corpus Christi LNG expansion is expected to start production within the next few weeks.

Weixel also noted the DOE is partially correct in that domestic natural gas prices will rise, but such an increase was expected, regardless of whether any new export capacity is approved. Producers likely plan to increase supply once LNG demand kicks in.

Natural gas prices have remained low over the past two years thanks to abundant supplies, especially out of the Permian Basin, where natural gas has been priced below $0 for much of 2024. Many of the LNG facilities are also adjacent to the Haynesville Shale, located in Texas and Louisiana.

“The point is that there is plenty of natural gas to produce into another 3.9 Bcf/d of feedgas demand,” Weixel said. “It’s just a matter of putting in the infrastructure to move that gas to the Gulf Coast.”

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