US companies may turn to courts on US LNG sales push

US companies hoping to export natural gas are frustrated by lengthy delays and rule changes as they await US Department of Energy approval of their applications and may turn to the courts to speed up the process.

Both the slow pace of decisions on applications to ship US liquefied natural gas abroad and the process for making those decisions could be challenged, legal sources say, according to Reuters.

Potential strategies were proposed to be laid out before a House of Representatives panel, which will focus on the current impediments to US LNG exports.

The surge in shale gas production has helped make the US a leading natural gas-producing nation, and potentially a major exporter. The Obama administration has cautiously embraced the energy boom, while promising to protect the economy from major price spikes from gas exports.

LNG exports are allowed to only a few countries with free-trade agreements with the US. But others, including large consumers like Japan and India and those outside free-trade pacts, are keen to buy US gas if the DOE approves.

Over a dozen projects are awaiting Energy Department permission to export gas to all countries. Four have been in limbo for between 18 and 25 months.

One likely focus for legal challenges is the order in which the Energy Department rules on applications, a policy made in midstream that put some major players at a disadvantage.

The administration set up the queue in December 2012 based on when applications were filed with the department, as well as when project backers filed for a licence from the US Federal Energy Regulatory Commission.

Applying at the department costs about $20,000, but the FERC application can cost as much as $100mn. A FERC licence is required to begin construction of any gas export project.

Since criteria for the queue were revealed only in December, companies had no way of knowing that they would be ranked based on the timing of their application with FERC.

If the department waits about two months between each export decision, as Acting Assistant Secretary for Fossil Energy Christopher Smith has signalled, projects near the end of queue might not get a DOE permit before late 2015.

Golden Pass, a proposed ExxonMobil $10bn joint export venture with Qatar Petroleum, is one project near the end of the queue.

“I don’t want to start on this process if you tell me it’s going to take five years for you to get around to my application,” Exxon CEO Rex Tillerson said during an event in Washington last week. “It’s not like people are just going to stand at our door like panting dogs just waiting for us.”

Law experts say making a case for speeding up the DoE’s decision-making process will be difficult. But with multi-billion-dollar projects on the line, some firms may try.

The challenges might hang on proving that an extended delay by the department is tantamount to a denial.