U.S. LNG Exports Being Seriously Considered


Based on recent developments in both the private and pubic sectors, some analysts are projecting that the U.S. will be sending LNG exports abroad within just a few years. A Sterne Agee industry report published today, March 27th, focuses on the importance of loosening federal regulations to expedite the process of developing the infrastructure for large-scale LNG exports.

Sterne Agee analysts Michael S. Dudas and Patrick Uotila outline their arguments below. “Three separate congressional meetings held this week showed broad support that could result in legislative action to expedite the export of Liquefied Natural Gas (LNG) approvals as a geopolitical tool. Importantly, easing regulatory constraints could have a significant impact on the financing and final investment decisions on LNG developments supporting engineering & construction awards.”

Pending LNG export applications

The SA report highlights that more than two dozen pending LNG export applications have been filed with the Department of Energy, a handful having been under consideration for more than three years.

The analysts said the congressional hearings all appeared constructive and that they felt things were moving in the right direction. “The cases made around increasing US LNG export development appear to be gaining momentum. In general, it appeared more Senate and House members of the committees appeared open to the idea of accelerating LNG export approvals versus those that do not. Proposals include House Bill H.R. 6 which could change how the Department of Energy (DOE) grants approvals to export LNG to non-free trade agreement countries.”

The Russia factor

The importance of developing the U.S. LNG industry to counter Russia’s leverage over Europe was a hot topic during the congressional hearings. Dudas and Uotila said, not surprisingly, that support for the idea broke down largely by party and regional lines, with Republicans and those from energy-exporting states favoring the idea and Democrats expressing environmental and economic concerns. Dissenters also offered the opinion that Europe could significantly reduce its dependance on Russia through structural reform and pipeline re-configurations.

Recommended stocks

The report highlights Chicago Bridge & Iron Company N.V. (NYSE:CBI), Fluor Corporation (NEW) (NYSE:FLR) and KBR, Inc. (NYSE:KBR) as three stocks likely to benefit by an increased push to loosen government regulations on LNG exports. Sterne Agee rate CBI and FLR as a Buy and KBR as Neutral.

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