Obama Administration OKs Second Natural Gas Export Terminal

Commodities Reuters

The Obama administration on Friday approved a second U.S. terminal to export liquefied natural gas (LNG) to non-free trade agreement countries, further expanding the nation's role in international gas trade.

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The approval of natural gas exports from Freeport LNG's Quintana Island, Texas, terminal ends nearly a two-year pause in the Energy Department's review of export applications, as the administration sought to address concerns that sending U.S. gas abroad could harm U.S. manufacturers.

"It is an historic moment for the United States," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "From a price standpoint this is definitely going to put some upward pressure on prices, further out in 2015 to 2018."

Since the department signed off on exports from Cheniere's Sabine Pass terminal in 2011, a fierce debate over the future of America's natural gas bounty has swept through Washington and elsewhere.

Rapid growth in shale gas output has placed the United States in a position to be major gas exporter, upending years of expectations that the nation would have to rely increasingly on imports of gas.

More than a dozen projects have been proposed to export natural gas, but a vocal contingent led by Dow Chemical have argued that allowing unlimited exports could raise prices and hinder a resurgence in U.S. manufacturing.

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Energy Department authorization is required for gas exports to all but a handful of countries with free-trade agreements. Without approval to export to major gas consumers without such agreements, including Japan and India, multi-billion dollar LNG export facilities would likely not be economically feasible.

The department's approval of the Freeport terminal will allow the company to export up to 1.4 billion cubic feet of natural gas a day for 20 years.

The announcement came a day after Ernest Moniz was confirmed by the U.S. Senate as the new Secretary of Energy, replacing Steven Chu. Moniz has not been sworn in.