CERAWeek: Energy Secretary Defends LNG Pause Amid Industry Outcry

U.S. Energy Secretary Jennifer Granholm took pains to paint the Biden administration’s pause on LNG exports—which has been excoriated by the oil and gas industry—as a routine review in remarks made at CERAWeek by S&P Global on March 18.

Granholm said that the Department of Energy (DOE) is conducting a data-based assessment of what further expansion of U.S. exports means “for our climate, for global energy, for national and global security for our allies and for domestic prices.”

Granholm said the U.S., the world’s largest LNG export, currently ships out 14 Bcf per day. The U.S. also has under construction another 12 Bcf per day of LNG export capacity. An additional 22 Bcf has been authorized and is awaiting final investment decision.

“It's 48 Bcf that has been authorized. This pause does not touch any of that,” Granholm said. “This is just a pause to see what the future should bring. We have a responsibility under the Natural Gas Act to approve authorizations for LNG if they are in the public interest.”

Granholm said such studies are done periodically — the latest was undertaken five years ago—and that “like other studies we've done in the past, [DOE is] just assessing where we are so that we can move forward.

“I predict that as we sit here next year … this will be well in the rearview mirror.”

Granholm, occasionally dipping into stump-esque speech, also touted the Inflation Reduction Act’s (IRA) successes, job creation and long-term viability. She updated DOE efforts to replenish the Strategic Petroleum Reserve (SPR) and expressed guarded optimism for bipartisan infrastructure permitting reform.

Filling it up

Granholm, who framed the drawdown of the SPR as a reaction to Russia’s war with Ukraine, said refilling is underway. Many industry observers and critics saw the move to release oil reserves as a way to lower domestic gasoline prices and as a political move during a midterm election year.

Granholm said the release of oil kept refiners and markets supplied and that “folks in this room worked hand in glove with my team evaluating regional inventories, assessing supply risks and options.”

Granholm said the DOE has executed a replenishment strategy that includes accelerating exchange returns and that the department has secured more than 30 MMbbl in repurchases while maintaining another 140 MMbbl by taking congressionally mandated sales “off the books.”

“By the end of this year, we'll essentially be back to where we would've been absent the sales,” she said. “And we've done all this at a price that's good for taxpayers and we've shown that while we can maintain energy security, we can also react responsibly to changing market reality.”

Permit reform?

When asked by moderator Daniel Yergin, CERAWeek founder and vice chairman of S&P Global, about the bottlenecks still facing the department, Granholm said permitting remains a thorny topic.

“We keep talking about getting a permitting bill. We keep trying to. It's hard to get cooperation, but there is some, I think, oasis of bipartisanship around permitting reform and moving quickly,” she said. “We're doing what we can.”

Granholm also addressed permitting of electric transmission projects. At CERAWeek last year, Granholm said federal permitting agencies should use their full authority to speed timelines. On March 18, she said electric transmission permitting on public lands has since been updated through an administrative process to establish a “two-year shot clock” on getting electric transmission approved.

“We'd love to see that kind of shot clock for all kinds of permitting in the U.S.,” she said.

Granholm also said she sees AI and machine learning potentially assisting with permitting by sorting through huge data sets of land characterization, which could significantly speed up permitting times.

“We are beginning a pilot on that ourselves,” she said.

Is the IRA sustainable?

Yergin also asked about the resiliency of the IRA, which House Republicans have variously tried to hobble, including writing legislation to repeal parts of the law.

Granholm touted “unprecedented investment in manufacturing and clean energy technologies,” citing the 600 clean energy products factories announced since Biden signed into law various tax incentives.

At Yergin’s prompting, Granholm said “about 60% of the investments have gone to red states” that are Republican-leaning.

“I think that communities in red states feel very excited about the investments—the steel in the ground is happening right now as we're speaking,” she said. “It's very difficult once a factory is being constructed and people [are] being hired to say, ‘Oh, we are turning around on this policy. It is bad politics, it's bad policy.”

“And as I say, as the president has said to all members of Congress, ‘See you at the ribbon cutting.’”

But Granholm also made clear that the world will need secure supplies of “traditional and new energy for the foreseeable future.”

“The momentum of the clean energy transition is undeniable though, even as we are the largest producer of oil and gas in the world and the largest exporter of LNG in the world,” she said.