The push toward the United States becoming a prominent LNG exporter moved forward Friday. The U.S. Department of Energy (DOE) approved only the second facility to export LNG to countries without a free trade agreement with the United States.
The Obama administration gave the thumbs up (a 20-year approval) to the Freeport LNG project in Texas. It is owned 50/50 by ConocoPhillips (NYSE: COP) and Michael Smith, the founder, chairman and CEO of Basin Exploration (later sold to Stone Energy).
Freeport has already signed deals to export natural gas to Britain's BP PLC and two major Japanese utilities, Osaka Gas and Chubu Electric Power. Freeport has been given the go ahead to sell up to 511 billion cubic feet annually to overseas buyers. Exports should begin sometime in 2017.
The DOE said in its news release, "The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country."
Not a surprising statement in the light of the Energy Information Administration's forecast that production of natural gas will reach a record 69.3 billion cubic feet a day this year.
Cheniere Energy's Sabine Pass facility in Louisiana was given the government okay about two years ago.
More Approvals to Come for Natural Gas Companies?
Of course, this approval does not mean the Obama administration is yet fully behind the push to make exporting LNG a major industry.
Investors should recall that there are still 25 projects awaiting approval and the pace of approvals by the Department of Energy is still up in the air.
Minoko Manabe, a senior credit officer for Moody's, told Bloomberg News, "We don't think [this approval] is going to open the floodgates" for the department's approval of other applications.