First things first. As always when RBN ventures into the legal and regulatory arena, we need to define what the heck everyone’s talking about. If you're not a regulatory junkie, the issues surrounding the Oberlin case can be confusing. Two parts of the Natural Gas Act of 1938 (NGA) are involved: Section 3 and Section 7. Section 3 deals with the import and export of natural gas. It’s jointly administered by the Department of Energy (DOE) and FERC. DOE decides whether an export is in the public interest and FERC decides whether to authorize an LNG export terminal. Section 7, in turn, deals with the construction of interstate natural gas pipelines. It's exclusively administered by FERC.
One of the most important differences between the two sections is that Section 7 includes a grant of eminent domain (added to the NGA in 1947), so that if a pipeline developer cannot get a landowner to negotiate for right of way, it can petition a court for condemnation. This helps a lot in keeping pipelines straighter and cheaper than they otherwise would be. Section 3, however, does not include an eminent domain provision. Also, a Section 7 pipeline can transport interstate gas for any shipper, not just the LNG terminal. A Section 3 pipeline can’t — it’s just treated as a piece of the terminal. So, for a pipeline needed to feed gas to an LNG export terminal, it’s a big deal whether the pipeline is authorized under Section 3 or Section 7.
As we said earlier, Sierra Club and others have argued that Oberlin I means that a pipeline feeding an LNG terminal is not benefiting the U.S. public and thus cannot be justified under Section 7 of the NGA. But Oberlin II says, “Au contraire.” As FERC explained when the court's Oberlin I decision remanded the matter back to the commission, volumes other than those bound for the export market also can flow through the pipeline — in NEXUS's case, 42% of the pipeline’s capacity was for U.S.-only transportation. Further, FERC said, the exports involved were to a nation (Canada) with which the U.S. has a free-trade agreement (FTA), and that exports to FTA partners were defined as being in the public interest.
There was also helpful language in Oberlin II as to the benefit to U.S. natural gas producers (as part of the public) from having a market outlet for their production, benefits to the balance of trade, and benefits generally from the addition of pipeline-network flexibility and optionality into the future — in the case of NEXUS, the role of the Dawn Hub in moving gas all over the broader Northeast, including not only eastern Canada, but also New York and New England.
Clearly, the DC Circuit's favorable view regarding the public benefits of gas exports is a step forward for LNG developers and their suppliers. Pretty much all LNG export facilities require new, purpose-built pipelines to move gas from the existing pipeline network to their plants, and these new pipelines share a lot of the characteristics that the DC Circuit found helpful in confirming FERC's NEXUS approval. Sometimes the pipelines are owned by the LNG developers themselves or by an affiliate. Sometimes they’re not, but instead are constructed by a third-party pipeline company. For a significant chunk of the LNG export business — the South Texas terminals supplied with Permian-sourced gas, for example — none of this matters much, since the pipelines feeding them are largely Texas intrastates, not subject to FERC jurisdiction. But for the East Texas and Louisiana terminals that rely on the vast network of pipelines supplying natural gas from as far away as Pennsylvania, this is a big deal.
There are some nuanced differences from the NEXUS situation, however. The major active LNG export terminals have all received DOE permission to export to non-FTA countries as well as FTA ones, so the FTA-related justification in Oberlin II only goes so far. Also, unlike Oberlin II’s recitation of the Dawn Hub's interaction with U.S. consumption markets, U.S. LNG exports cannot come back to U.S. consumers, since the Jones Act prohibits the tankers from going to U.S. destinations. But on the other hand, unlike NEXUS and other export pipelines, the lines carrying the feedgas to U.S. LNG terminals do not cross an international boundary. Instead, these pipes feed gas into multibillion-dollar export liquefaction facilities that convert it to its supercooled liquid form, an upgrade that makes the LNG as much of a separate product as any petrochemical output from a natural gas feedstock.
LNG feeder pipelines have other factors strongly in their favor. First, when they come forward under Section 7, they typically include the open-access provisions fundamental to the interstate natural gas industry for the last three decades. This means that they move domestic gas freely as needed by other shippers, as long as there’s open capacity. And at least on the Gulf Coast, most of the feeder pipelines interconnect with other interstate systems, adding to the reliability and optionality of the pipeline grid — a clear benefit to the public in terms of sourcing of supplies or markets.
Second, there is the very dramatic role LNG is currently playing in geopolitics. By providing the U.S. with the ability to help Europe shed its reliance on Russian natural gas — and thus blunt the pointy end of Putin’s use of energy as an economic weapon — there is a national security aspect to enabling LNG export growth that cannot be ignored. By incorporating the U.S.'s natural gas abundance into the world market, it will be more and more difficult for anyone to hold another country hostage over energy reliability. And in the many instances where circumstances have forced a reemergence of coal-fired generation with its major contribution to greenhouse gas emissions, getting more U.S. LNG out there to displace that coal can be a major benefit in addressing global carbon-emission goals.
It's good news that the DC Circuit is now convinced of the public benefits of (1) providing an outlet for U.S. gas producers, (2) generally adding more gas to the overall mix available to the market, and (3) providing supply to the U.S.'s FTA partners. As the developers of LNG export terminals try to advance their projects to final investment decisions (FIDs) and construction, they surely will welcome any legal and regulatory tailwinds in getting their feedgas pipelines approved.
We should note, however, that other elements of the approval processes for LNG terminals and feedgas pipelines have been getting tougher, not easier — see our Climb That Hill blog series for more on two "statements of policy" that FERC issued back in February (and that are now going through the public-comment process) regarding the certification of new pipelines and the assessment of greenhouse gas (GHG) impacts. The bottom line is that steering new natural-gas-related projects through the regulatory process is a more complicated task than ever. And for LNG-related pipelines in particular, clearing the hurdle of showing “need” requires a much broader and more sophisticated perspective than it used to.
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"We Gotta Get Out of This Place" was written by the husband/wife songwriting team of Barry Mann and Cynthia Weil. It was originally intended for The Righteous Brothers to cover, but when Barry Mann got a solo recording deal with Red Bird Records, they wanted him to release it first. That didn’t happen –– a demo made its way to English hit record producer Mickie Most, and he immediately recorded it with The Animals, who released it in July 1965, beating Mann to the punch. The song reached #13 on the U.S. pop singles chart, and #2 on the UK pop singles chart, whose #1 position was held by The Beatles with "Help!"
“We Gotta Get Out of This Place” appears on the album Animal Tracks, which The Animals released in the fall of 1965. It is also included in the hits collection Best of The Animals, released in 1966. The song begins with a bass intro by Animals bassist Chas Chandler, who would later go on to be the man who discovered, managed and produced Jimi Hendrix. "We Gotta Get Out of This Place" became a favorite song at high school graduations and proms, and would become hugely popular with American G.I.s serving in the Vietnam War.
Scores of artists have covered "We Gotta Get Out of This Place" over the years. At the 2012 SXSW Festival in Austin, TX, Bruce Springsteen recited the lyrics to the song at his keynote speech, stating "that's every song I've ever written" in testimony to the tune’s power.
The Animals were formed in Newcastle, England, in the early 1960s. They hit it big with the release of their second single, "House Of the Rising Sun," which went to the top of the charts in June 1964. Eric Burden has always been the vocalist with the band, with various members drifting in and out. The version of The Animals on this recording was the longest lasting and most popular. Then, they consisted of Eric Burden (vocals), Chas Chandler (bass), Hilton Valentine (guitar), John Steel (drums) and Dave Rowberry (organ).
The Animals recorded 13 studio albums over the years. The group was inducted into the Rock & Roll Hall of Fame in 1994. "We Gotta Get Out of This Place" ranked #233 on Rolling Stone Magazine's 500 Greatest Songs of All Time. Eric Burden and The Animals’ guitarist Hilton Valentine still tour and play individually. Chas Chandler passed away in 1996. Jimi Hendrix's last public performance was playing guitar with his friend Eric Burden & War at Ronnie Scott's Jazz Club in London, jamming on the tune "Tobacco Road."