Article courtesy of Susan L.Sakmar, Visiting Assistant Law Professor, University of Houston Law Center
Last week, US voters took the world by surprise by electing Donald Trump to be the next US President. As the dust settles, people are trying to sort out what President Trump might mean for US energy policy in general, and more specifically for LNG and natural gas.
Earlier this year, it was reported that a coal executive asked Mr. Trump whether he would allow more US LNG export terminals to be built. In response, Mr. Trump replied, “What’s LNG?” One can assume that Mr. Trump will quickly learn that shale gas has put the US on the path to becoming one of the world’s top three LNG exporters, with Cheniere’s Sabine Pass facility being the first LNG exporter to start up in February and more on the way in the coming years. Mr. Trump may also be surprised to learn that in recent years, the US has exported record amounts of natural gas via pipeline to Mexico.
While Mr. Trump has yet to release a detailed energy policy or any specifics on what he might do, he made several broad statements during the campaign trail indicating he thinks American businesses are over-regulated and the federal government should back off, especially when it comes to environmental regulations and climate change.
Mr. Trump has also voiced support for more US oil and gas production as a means of enhancing energy security and promoting middle-class jobs and has vowed to
“bring back the coal industry,” a promise that could also breath new life into clean coal technologies.
From what can be gleaned from Mr. Trump’s statements on the campaign trail, the energy industry as a whole stands to benefit from Mr. Trump’s pro-business, anti-regulation stance. While Mr. Trump’s support of coal could pose a challenge for the natural gas industry since both fuels compete for power generation market share, it’s also possible for both to win under Mr. Trump.
As LNG exports increase in the coming years and natural gas prices rise, there could be a shift to use more coal for power generation. Whether this would impact any planned coal retirements in the coming years is an open issue, as is Trump’s support for renewables. It is worth noting, however, that renewables often have bi-partisan support and many US states have already adopted renewable portfolio standards. Moreover, even traditional oil and gas producing states support renewables with Texas having the most installed wind capacity of any state.
In terms of whether Mr. Trump will allow more LNG export facilities to be built, for now, the current LNG export review process seems to be working and there appears to be no need to either expedite or slow-down the process. However, there are many planned LNG export projects so it’s possible that over time, the Trump administration will need to revisit the review process.
In the coming weeks, we are likely to get more details about Mr. Trump’s views on energy as he begins to make key cabinet positions, including a new Secretary of Energy.
For now, there seems to be renewed optimism on the part of US oil and gas producers that President Trump will be a pro-business leader who will try to roll back many of the Obama administration’s environmental regulations aimed at the oil and gas industry, such as the Clean Power Plan and methane emissions rules. While this won’t help the industry in terms of the price of oil, it will reduce the cost of business and likely open up more areas in the US to drilling.