Three separate congressional meetings held this week showed broad support that could result in legislative action to expedite the export of liquefied-natural-gas approvals as a geopolitical tool.

Importantly, easing regulatory constraints could have a significant impact on the financing and final investment decisions on liquefied-natural-gas (LNG) developments supporting engineering and construction awards.

We are supportive of Ciber (ticker: CBR), Fluor (FLR) and KBR (KBR).

Discussions focused on pending LNG applications and scenarios to speed up approvals for two-dozen pending export applications. Meetings included the Senate Committee on Energy and Natural Resources, the House Energy & Commerce Committee and the House Committee on Foreign Affairs. Expert witnesses included research consultants from institutes (including NERA Economic Consulting and Brookings Institution), representatives from Lithuania, the oil and gas industry (including billionaire Harold Hamm) and nonpartisan think tanks focused on energy security, environment and climate change. The cases made around increasing U.S. 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 general consensus among witnesses appeared pro-LNG export including eases in the regulatory environment and encouraging production. In the near term, direct geopolitical impacts could be limited; however, the immediate signal could deter Russia and accelerate financing for both U.S. export and European import terminals. Dissenting arguments included the opinion that Europe could help itself through structural reform and pipeline reconfigurations. Other contentions against LNG exports included natural-gas intensive industries and coalitions who believe that increasing gas prices from exportation could limit new manufacturing and chemical development. However, so far government-sponsored research has not concluded that prices would rise significantly from LNG exports.

As expected, interests from congressmen divided some by party lines, interests and geographies represented. Chairman of the House Committee of Foreign Affairs Ed Royce (R.,Calif.) remains specifically supportive of LNG export acceleration as a geopolitical tool. Eliot Engel (D., N.Y.) argued that the impact of LNG export to Europe remains unclear given our costs to export to Europe and Russia’s proximity and large reserves. Brad Sherman (D., Calif.) contended that LNG exports could mean higher costs for U.S. consumers and manufacturers and that far more jobs could be added in the energy sector by keeping resources in the U.S.

Arguments for export of both LNG and crude oil included the view that U.S. producers could eventually slow output if prices remain low, undermining both global energy security and U.S. supply to consumers and manufacturers. Keystone [of Canada] approval and lifting the ban on crude-oil-export issues emerged several times. Oil-industry representatives argued that exporting crude oil would make an immediate impact because building infrastructure would not be necessary to start exporting raw crude. The argument against crude exports contends that Europe can already buy oil from several sources so it would not make a strong geopolitical tool against Russia.

Source: http://online.barrons.com/article/SB50001424053111903536004579465393778528908.html?mod=BOL_da_is