E&E 11/13/14
By Nick Juliano
The ongoing domestic energy boom is fueling an alliance between representatives of U.S. companies that produce natural gas and foreign governments that want to purchase it, documents and interviews show.
Intensified interest from foreign governments toward U.S. energy policy is one of the many outcomes of the massive growth in oil and gas from tight shale formations across the United States. A coalition launched earlier this year to bring together potential U.S.-based suppliers of liquefied natural gas with customers abroad demonstrates one of the ways in which other countries are expanding their presence in Washington, D.C.
LNG Allies Inc., a nonprofit research and advocacy organization, launched in March to encourage policies that would expand LNG exports, which it says would create a more liquid global gas market, expand fuel diversity and enhance energy security in the United States and among other friendly governments.
The group includes members from the embassies of Lithuania, Croatia and Slovakia, as well as the American Petroleum Institute and America’s Natural Gas Alliance, according to disclosure filings it was required to submit under the Lobbying Disclosure Act (LDA) and Foreign Agents Registration Act (FARA). It also has been supported by the Natural Gas Supply Association and Delfin LNG, according to Fred Hutchison, the group’s executive director.
LNG Allies’ mission took on added urgency after Russia’s annexation of Ukraine’s Crimea region in March, although its creation had been contemplated even before hostilities in that region intensified, Hutchison said in an interview.
The idea for such a coalition came back in October of 2013, at a House Energy and Commerce Committee forum in Washington, D.C., where Hutchison met the Lithuanian Embassy’s deputy chief of mission, who was touting Lithuania’s construction of a floating LNG terminal and wanted access to U.S. gas.
“And I thought, ‘Wow, that sounds like an opportunity for a lobbying assignment,'” Hutchison recalled this week. He said Lithuania and other governments in the region were receptive to the idea but didn’t have much money to put behind it, so he reached out to “others who have a stake in the issue” for additional funding.
Most of LNG Allies’ financial support comes from its industry members, he said, but the coalition voluntarily registered under FARA in case the embassies were to contribute more funding in the future.
The coalition held more than two dozen meetings and phone calls with aides to prominent members of Congress and the Obama administration, according to a recent filing under FARA, which requires lobbyists representing foreign governments to submit detailed accountings of their lobbying and fundraising activities that go far beyond what is required under LDA.
Participants in meetings included aides to Sen. John Hoeven (R-N.D.), whose LNG export bill will be marked up in committee today; Sen. Mark Udall (D-Colo.), who introduced a separate export bill earlier this year; the State Department; and the Department of Energy, according to the document. The group also frequently reached out via email to top congressional and administration officials; its first reported contact was a March 28 email to “transmit background information” to two senior aides to Energy and Natural Resources Chairwoman Mary Landrieu (D-La.), who had formally claimed the gavel six weeks earlier.
LNG Allies also publishes regular newsletters on its website and hosts public forums, such as an event last Friday featuring Adam Sieminski, head of the U.S. Energy Information Administration, who provided an overview of a recent EIA analysis of various LNG export scenarios, up to 20 billion cubic feet per day.
The study estimated that producer gas prices would rise 4 to 11 percent by 2040 compared with a reference case, but it also showed an overall boost to U.S. gross domestic product of 0.05 to 0.17 percent, which export proponents say would offset higher energy prices. Sieminski also noted that the model EIA used likely underestimated the total global economic boost from LNG exports, which would be expected to decrease gas prices elsewhere in the world.
“If higher levels of U.S. LNG make it into the world markets, it could put downward pressure on global natural gas prices, and that would lead to higher economic growth,” Sieminski told reporters after the event, recommending that policymakers consider other modeling exercises that take a closer look at those global macroeconomic effects.
Hutchison said that event was the first of a planned series of breakfasts and other events the coalition will convene this year to advance its goals. It also hosted a forum earlier this year featuring a keynote address from Udall. Next Wednesday, LNG Allies will host the ambassadors from Lithuania and Latvia for another breakfast event.
Among the attendees at the briefing last week was Giedrius Granickas, first secretary at the Lithuanian Embassy in Washington. He noted it was one of a number of events LNG Allies has hosted this year and provided a chance to network with stakeholders across the debate.
“It’s an opportunity to talk to people, to meet people, to establish direct links, and it’s not even very important that they share the same ideas,” Granickas said in a brief interview before the event. “Because that would be very boring, you know? To have everybody nodding, that’s boring. That’s not how democracy works.”
The embassy also pursues its goals through more traditional diplomatic channels. Granickas recalled an October visit by Lithuanian Prime Minister Algirdas Butkevicius, who met with senior officials including Vice President Joe Biden and Energy Secretary Ernest Moniz. He said the country’s energy minister is planning a visit early next year, which would likely include high-level meetings in Washington as well as a tour of oil-and-gas-producing states for meetings with industry representatives.
Lithuania last month opened its first LNG terminal, a floating facility named Independence that officials expect to be fully operational by January, Granickas said. That terminal is large enough to meet Lithuania’s entire gas demand as well as up to 90 percent of demand across the entire Baltic region, pending some reforms being pursued by neighboring countries, Granickas said. A fifth of its capacity is being provided under a contract with Statoil ASA, the Norwegian firm, and the rest will be purchased on the spot market.
While U.S. LNG exports are currently expected to flow largely to Asian markets, given the higher price LNG can fetch on energy markets in that region, Granickas said just increasing international supply would help to bring down prices for Europe.
In meetings with U.S. officials, Granickas said they stressed that once the Federal Energy Regulatory Commission and Department of Energy granted an export license, the company that received it would be largely free to decide to whom it would sell, and said that he respected the values inherent in a free-market economy. Still, he suggested there should be some way for the United States to encourage gas deliveries to European allies, given that they are being forced to pay higher prices by Russia for reasons unrelated to economics.
“That, from the economic logic, seems to be OK,” he said. “From the political terms, from the political logic, when we are on the front lines with Russia and we are paying the highest price because we are sticking together with Western Europe and the United States as NATO partner and as the E.U., it’s kind of probably not so true. So you know, you have to have that balance.”
He noted that European negotiations have pushed for a strong energy chapter to encourage U.S. exports as part of the ongoing negotiations of the Transatlantic Trade and Investment Partnership between the United States and European Union.
A draft European proposal, which leaked earlier this year, would have required the U.S. government to allow exports of crude oil and LNG to countries covered by the treaty. That alarmed Sens. Ed Markey (D-Mass.) and Barbara Boxer (D-Calif.), two of Capitol Hill’s leading export skeptics, who said international negotiations were an inappropriate forum to adjust U.S. trade policy.
LNG Allies does not take a position on where U.S. LNG should flow, as long as exports rise, Hutchison said. Because of the urgency of their supply predicament, the earliest public members all come from Eastern Europe, but the coalition also deals with countries in other parts of the world, including South America and Asia, he added.
“That’s up to the individual embassies, really, to decide what their objective is,” Hutchison said. “It’s fair to say that the coalition supports any action that will expedite U.S. gas to our global allies that need it.”
Bipartisan group of heavy hitters
LNG Allies is run out of the D.C.-based firm Cornerstone Government Affairs, which was paid $40,000 to lobby Congress and executive branch officials between the coalition’s launch in the spring and Sept. 30, the most recent date for which data are available, according to LDA and FARA documents. Hutchison was paid an additional $73,500 for “coalition management services,” according to the detailed statement Cornerstone had to file under FARA. It is not clear from the filings how much of that fee is paid by the foreign governments, versus contributions from API and ANGA, but Hutchison said in the interview that most of its support comes from the industry stakeholders.
LNG Allies spending amounts to relative peanuts compared with overall lobbying budgets at the oil and gas groups. API has spent more than $6.61 million on lobbying since the beginning of this year, both in-house and at a half-dozen outside firms; ANGA has spent about $1.1 million between its own lobbying and one outside firm.
The trade associations involved say the coalition offers a good opportunity to advance the interests they share with the foreign governments.
“LNG Allies is working to highlight the profound strategic importance of the American energy revolution, and we’re pleased to support that effort alongside other industry groups,” Zachary Cikanek, an API spokesman, said in an email. “LNG exports provide an opportunity to create American jobs and grow our economy while bolstering our allies and expanding U.S. geopolitical influence. The voices of America’s LNG Allies will help to demonstrate that strategic value to policymakers.”
ANGA spokesman Dan Whitten similarly noted the common interests between his members and the foreign governments.
“ANGA’s mission is to build demand for natural gas, and LNG Allies represents a group of countries that are interested in opening the door to greater use of American natural gas in a part of the world that would benefit greatly from access to energy supplies from a diverse set of sources,” Whitten said via email. “We hope that LNG Allies is successful in opening markets to Eastern European countries so that we and they may take advantage of the many economic and national security benefits that American natural gas offers.”
Cornerstone incurred more than $11,000 in expenses, according to the FARA document, more than $7,700 of which went to the law firm Perkins Coie for legal services relating to its establishment. The form also lists spending on taxis or parking for LNG Allies meetings on 72 different days over a nearly six-month span.
Five registered lobbyists worked on the group’s behalf, advocating for H.R. 6 and S. 2274, bills from Rep. Cory Gardner (R-Colo.) and Sen. Mark Udall (D-Colo.) that would have set deadlines for DOE to decide whether export licenses were in the national interest. Those bills are identified in two quarterly reports the group filed to comply with the LDA.
Among the lobbyists were former Capitol Hill staffers to members from both parties, according to the documents, their biographies on Cornerstone’s website or the LegiStorm congressional staff database: Eric Tober once worked for former Sen. Bennett Johnston (D-La.), a onetime Energy and Natural Resources chairman, until Johnston’s retirement from the Senate in 1997, and then at Johnston’s lobbying firm; Paul DiNino was deputy chief of staff to then-Senate Democratic Whip Harry Reid (Nev.) from 1999 to 2001; John Keast was chief of staff to then-Rep. Roger Wicker (R-Miss.) until he was elected to the Senate in 2006; and Joseph Barton was an aide to Speaker John Boehner (R-Ohio) from 2007 to 2011, when Boehner was still minority leader. The only listed lobbyist without Capitol Hill experience is Michael Smith, who worked on the 1996 and 2000 presidential campaigns of Bill Clinton and Al Gore and has served other roles within the party.
The FARA documents list two other individuals who are not registered to lobby for LNG Allies under LDA. They are Geoff Gonnella, the group’s president, whose biography does not indicate a background on Capitol Hill or in any presidential administrations, and Hutchison, its executive director, a onetime legislative aide to the late Sen. Frank Church (D-Idaho) who also lobbied for Eastman Chemical Co. and served as a communications consultant to the Gasification Technologies Council.
The advocates were active donors in this year’s elections, with the exception of Hutchison and Barton, according to the FARA document. In total, they gave more than $34,000 to Democrats and $19,500 to Republicans, according to an analysis of the disclosures.
Hutchison said he was almost always the one who contacted congressional staff or administration officials on behalf of LNG Allies; he made no political contributions.
Unlike LDA, which requires lobbyists to report how much they were paid and what general areas they worked on, FARA requires detailed accounting of whom lobbyists contact and when, as well as a list of political contributions they made during the time they represented a foreign client. That allows for a greater level of comparison between lobbying and fundraising activities, although it can also suggest correlations that may be subject to misinterpretation, given how common — and underreported — both activities are throughout Washington.
An analysis of the FARA record, which includes 70 donations made by other Cornerstone lobbyists listed as representing the group, does not reveal any obvious pattern connecting LNG Allies’ activities on the Hill and its political donations. The record also lists 92 contacts between the coalition and U.S. officials or journalists — 63 emails, 18 meetings, eight phone calls and two voicemails.
Two of the 70 donations came around the same time as developments on the LNG front. On June 19, the day after Udall introduced S. 2494, which cut the deadline in his earlier bill from 90 to 45 days, Smith gave $3,700 to the Colorado Senate Victory Fund, a joint fundraising committee supporting Udall and the Colorado Democratic Party. And on June 30, when someone affiliated with the group emailed “background information” to a top Landrieu aide, Smith donated $2,400 to the Democratic Senatorial Campaign Committee, which was aiding her and others in the party fighting for re-election this year.
Hutchison stressed that there was no link between lobbying activities and political contributions.
“As you well know, by law, you have to separate your participation in and your involvement in discussions at political events and what gets done as you conduct business,” he said.
Kenneth Gross, a FARA expert at the D.C. firm Skadden, Arps, Slate, Meagher & Flom LLP, said the coalition’s activities did not seem unusual. “It looks like a win-win situation and was set up in a transparent way,” he said in a brief interview last week.
But some supporters of aggressive action on climate change say efforts to expand fossil fuel exports are misguided in light of the steep and speedy reductions in greenhouse gas emissions that scientists say are needed to avoid catastrophic warming of the oceans and atmosphere, sea-level rise and more severe weather.
Michael Shank, a former Democratic congressional aide who now lobbies for the Friends Committee on National Legislation, a Quaker organization, said efforts to help U.S. allies free themselves from Russian influence should focus more heavily on renewable technologies and efficiency to maximize long-term security and environmental benefits.
“In prioritizing oil and gas once again, the U.S. is missing an opportunity to lead the democratization of energy worldwide, making renewables affordable and accessible for everyone, everywhere,” he said in an email, citing projections that China will claim 40 percent of renewable energy market growth by 2020 and Germany’s plan to become 100 percent powered by renewable energy by 2050. “The markets are looking for leadership, yet the U.S. stays stubbornly aligned with an increasingly fossilized notion of energy production. The time to lead is now.”
Granickas acknowledged the link between energy and climate change and pointed to aggressive targets set by his nation and others in Europe, which continues to advocate aggressive action in ongoing U.N. negotiations over a new international climate agreement. But he said the situation in the region and Russia’s ability to manipulate what its neighbors must pay for energy should remain a separate and more immediate focus.
“At the same time, we would like that energy, at least at the operational terms, would be different from climate talks,” he said, “because energy goals are a bit, you know, more tangible in terms of … achieving them.”