The government in the tiny Middle Eastern nation of Qatar acted to take advantage of the White House’s permitting pause on domestic LNG export approvals by announcing an expansion of its own export capacity. Reuters reports that Qatar’s new plans would create an additional 16 million metric tons per year, raising its total capacity to 142 mmtpy.
Qatar has long been among the leading exporters of liquefied natural gas, ranking with the US and Australia as the three nations with the highest capacity. It also comes amid an oversupplied market following a mild winter that has resulted in lower demand for natural gas in the northern hemisphere. That oversupply situation has in turn resulted in a collapsing price for the commodity.
Goldman Sachs responded to the Qatari announcement by extending its projections for a bearish market situation for LNG across the second half of this decade. Goldman’s analysts said in a note that the “oversupply will in our view lead to increasing risks, especially from 2026, when we expect the Qatari expansion to start to come online, that global gas prices decline to supply cash costs, potentially leading to the cancellation of U.S. LNG exports, much like in 2020.”
While President Biden’s permitting pause will slow the future expansion of US export capacity, it does not impact new projects already permitted. Those projects will result in a roughly 50% expansion in US capacity by the end of 2027 if all are completed on schedule. It remains to be seen whether the increased competition from Qatar will have an impact on the progress for any of these planned and permitted projects.
The White House has been taking criticism in recent weeks for its permitting delay, with congressional members in both parties questioning the justifications that have been offered. Of particular note are the criticisms coming from Pennsylvania US Senators Bob Casey and John Fetterman, both Democrats.
“Sen. Casey and I are very pro-energy, pro-job, pro-union and pro-American security,” Sen. Fetterman told Politico. “We stand with the president, but on this issue we happen to disagree. I am very clear. Natural gas is necessary right now. It’s a critical part of our nation’s energy stack.”
During a hearing of the Senate Energy Committee that he chairs in mid-February, West Virginia Democrat Joe Manchin said the White House pause should be “immediately reversed” given the lack of justification for the move. “Unfortunately, it seems the White House has already sided with climate activists determined to block any more LNG exports,” Manchin stated, adding, “I am deeply concerned the White House will put its thumb on the scale at DOE to get the political outcome they want.”
Of course, the political outcome desired by this White House has long been clear for all to see: Any outcome that pleases the major funders of Democrat party political campaigns in the climate alarm lobby is always in favor. Unfortunately, those outcomes tend to set the US domestic oil and gas business at a disadvantage to international competition.
This tendency at 1600 Pennsylvania Ave. becomes politically problematic in presidential swing states like Pennsylvania and Michigan, where labor union interests are as powerful in Democratic circles as those of the climate alarm sector. Senator Fetterman barely gave his state’s natural gas business lip service during his senatorial campaign in 2022 but seems to have suddenly had a change of heart now that union labor interests whose jobs are threatened by the White House’s anti-natural gas posturing have begun to speak out.
Jeff Nobers, a Democrat who heads the Builder’s Guild of Western Pennsylvania and endorsed Biden in 2020, told Politico that “[Biden] certainly hasn’t done anything to promote or facilitate the use of natural gas and it’s continued to be viewed as this evil thing.”
Words do matter, and words from the President of the United States and his senior appointees matter more than most. There is no question that the endless stream of negativism about natural gas and policy actions designed to inhibit the domestic industry are having an impact on a global scale. It should surprise no one that labor unions whose jobs are at stake are beginning to take notice and speak up. If that prods Democratic politicians into action, more the better.
David Blackmon on February 28, 2024
