Bloomberg News

Gas Exports Called Illegal by Markey

June 16, 2014

Senator Edward Markey is taking a new tack in his fight to block U.S. natural gas exports, now suggesting such sales are illegal.

In a letter to Commerce Secretary Penny Pritzker, the Massachusetts Democrat said a 1975 law barred overseas sales of oil and natural gas, unless such sales were exempt from the ban under rules adopted by the agency.

While regulators moved to stop most crude sales to foreign countries, they never issued regulations for natural gas. Markey says the lapse probably violates rules setting a timeframe for implementing laws passed by Congress. If his push succeeds, pending applications for exporting natural gas could face further delays and tighter restrictions.

“We should ensure that these American resources benefit American consumers, our economy and our national security,” Markey wrote. He asked Pritzker to set out a plan for correcting the oversight and issuing export rules for gas.

His effort to stop the sales may be a longshot. Exports of natural gas have broad support in Congress, where members have called for speedier permit approvals to undermine Russia’s influence after its annexation of Ukraine’s Crimea region. President Barack Obama said more U.S. exports could be good for Europe, which gets about 30 percent of its gas from Russia.

The Commerce Department “has received the request and will look into the issue as appropriate,” Marni Goldberg, a spokeswoman, said in an e-mail. A spokeswoman for the Energy Department declined to comment.

Fracking Gains

Exporting natural gas and oil has only recently become a political issue, amid a surge in domestic production tied to hydraulic fracturing. In fracking, drillers shoot water, sand and chemicals underground to break apart rock formations trapping natural gas and oil.

A decade ago, companies were building terminals to import natural gas to meet U.S. needs. Now the Energy Department is reviewing 26 applications from companies seeking to export the gas.

The department has approved seven projects, with Cheniere Energy Inc. (LNG:US)’s Sabine Pass in Louisiana so far the only terminal to also win the needed safety and environmental approvals from the Federal Energy Regulatory Commission.

Lawmakers including House Speaker John Boehner, an Ohio Republican, have called on the U.S. to expedite natural gas exports as a way to blunt Russia’s influence in eastern Europe. Markey has introduced legislation restricting such sales.

1975 Law

Now he’s says the restrictions were part of the 1975 Energy and Policy Conservation Act, passed in response to the Arab oil embargo that pinched supplies and raised domestic gasoline prices.

The law gives the president the authority to exempt the export ban when sales are deemed to be in the national interest. The Commerce Department issued rules providing narrow exceptions to crude oil exports.

Natural gas apparently never faced similar limits. That was little consequence because just a few companies sought to export the fossil fuel. Sales to Mexico and Canada did occur.

Record gas production though has renewed interest in the fuel. The Energy Department, which took authority for natural gas exports from the Commerce Department, says it’s reviewing the applications under a different law, the 1938 Natural Gas Act.

The agency has commissioned economic analyses that have found exports will be a net benefit to the U.S. economy. It’s updating that study to estimate the impacts of exporting more than 12 billion cubic feet of gas a day. The department has approved applications to export more than 9 billion cubic feet of gas a day to countries without free-trade agreements.

The U.S. uses more than 60 billion cubic feet of gas a day.

Exports to countries with those trade deals are approved after a nominal review.

Companies such as Exxon Mobil Corp. (XOM:US) and Continental Resources Inc. (CLR:US) also want Congress to lift the ban on exports, saying it will encourage more domestic production, creating jobs and benefiting the economy. Congress isn’t considering legislation to lift that restriction.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann


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  • XOM
    (Exxon Mobil Corp)
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