President Joe Biden’s halt to new licenses for LNG exports has the oil and gas industry wondering what the White House will do next to secure votes from the Democrats’ coalition of progressive and climate activists ahead of the November 5 election.
Biden’s dilemma is that few large-scale energy projects awaiting federal approval would carry the same political heft as a single LNG export license decision.
Biden’s administration already signed off on arguably the most contentious oil and gas projects earlier in his tenure, so the potential to curry favor with environmentalists and younger voters on climate is limited.
Those approvals include ConocoPhillipsCOP‘ 600 million barrel Willow development in Alaska last year and the Mountain Valley GasGAS Pipeline in Appalachia, which was green-lit to win Democrat Sen. Joe Manchin’s support for Biden’s signature climate legislation, the Inflation Reduction Act. The U.S. Department of Transportation also cleared the Sea Port Oil Terminal off the Texas Coast, which would add 2 million barrels a day to U.S. crude export capacity.
Approval of these traditional energy infrastructure projects is why Biden is scrambling to prove his climate bona fides with progressives and younger voters, who are alarmed to see that American oil and gas production continues to break records despite Biden’s rhetoric about tackling climate change.
Over the last decade, America has become the largest oil and gas producer in the world, with hydrocarbon liquids output of 21 million barrels a day (13 million barrels per day of crude oil and 8 million barrels per day of natural gas liquids) and 105 billion cubic feet per day of natural gas production. The U.S. alone is now satisfying about 20% of global oil demand. At the same time, American exports of crude oil, natural gas liquids, refined products, and LNG regularly set new records.
The economic and national security benefits of America’s oil and gas sector have become evident to all, whether in domestic job creation or supplanting Russian oil and gas supplies for European allies so they can keep the lights and heat on in a post-Ukraine world.
Biden’s climate agenda, including promises to reduce domestic carbon emissions by 50% by 2030 from 2005 levels and reach net-zero power emissions by 2035, is looking increasingly unattainable. The biggest hurdle may be that America’s vast oil and gas industry now looks “too big to fail” – both on economic and energy security terms.
Environmentalists are now turning to the courts to try to slow down the industry – despite having a Democrat in the White House. On LNG, that means targeting the flurry of LNG export terminals under construction — some 80 million tons per year of export capacity — and projects that have secured federal approval but have not yet broken ground.
Climate activist have their sights on the 46.4 million tons per year in LNG export capacity that the U.S. Federal Energy Regulatory Commission (FERC) is yet to certify for construction under the Natural Gas Act, which includes Venture Global’s 27.7 million ton a year CP2 project in Louisiana.
CP2 has become the latest lightning rod for environmentalists seeking to halt new U.S. oil and gas infrastructure. While the Democratic majority commission at FERC may punt a decision on the project given the U.S. Department of Energy (DOE) pause under Biden, CP2 will likely stay in the headlines as an example of Biden’s weakness on climate – at least to the left.
Large export terminals have drawn fire from climate activists for several reasons, including their potential to lock in fossil fuel production for decades. But environmentalists also see them as vulnerable since, like major pipelines, construction involves many federal and state decision-making tiers that are ripe for legal challenges across multiple agencies.
Such challenges often result in lengthy and costly project delays, making investors think twice. For projects that haven’t reached final investment decisions, the added uncertainty of Biden’s pause, plus more risk of legal challenges, could keep them sidelined – at least until a more supportive administration is in power.
There is some modest regulatory action on Biden’s agenda soon. The latest administration timetable shows environmental rules headed for the Federal Register in March or April. These include new climate rules for power plants, cars, and heavy-duty trucks, guidelines for how petroleum sources tally and report methane, and a new fee on excess methane emissions. Those agency actions, however, could be repealed under future administrations.
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Read More: Biden Between Rock And A Hard Place On Climate, Energy Issues