Biden’s LNG Export ‘Pause’ Could Derail Southeast Texas Economic Development Plans: Local Officials

California-based Sempra Infrastructure's computer rendition of the Port Arthur LNG facility in Southeast Texas. Courtesy of Sempra Infrastructure

The impacts of President Joe Biden’s LNG export permit freeze has reverberated across the nation’s oil/gas industry. But nowhere are its impacts felt more acutely than in southeast Texas, where as many as 24 job-generating petrochemical infrastructure projects, including several already under way, are now in limbo.

The uncertainty fostered by the Biden administration’s Jan. 26 implementation of a “temporary pause” in LNG export permits most notably threatens to derail economic development in Port Arthur and Beaumont, two port cities where billions in planned job-generating investments by private industries have been tailored to benefit local residents and redress long standing community environmental concerns.

Local officials outlined how the LNG permit freeze has paralyzed economic development across southeast Texas during a 90-minute April 8 congressional field hearing at Lamar State College in Port Arthur.

The administration’s “stopping or suspending LNG exports has an obvious and direct impact on maritime commerce and the jobs it supports” in the region, Port of Port Arthur Port Director/CEO Larry Kelley told the House Energy & Commerce Committee’s Energy, Climate & Grid Security Subcommittee.

“Our waterways are the lifeblood of our region,” and one of its specialties is handling LNG and other fuels, Mr. Kelley said, noting “most of the nation’s jet fuel and military fuel comes from our waterway.”

Port Arthur and Beaumont are linked by petrochemical plants, pipelines, and railroad/truck depots on the Sabine-Neches Waterway, the nation’s fourth largest petrochemical export ship channel that generates $10 billion in annual economic impact, he said.

The Port of Port Arthur is anchored by three oil refineries, including Saudi Aramco’s Motiva refinery, the largest oil refinery in North America. There is an ExxonMobil oil refinery in Beaumont, less than 20 miles away.

The port at Port Arthur handles breakbulk, liquid energy, and dry bulk cargoes, Mr. Kelley said. In addition to its classification as a Foreign Trade Zone for international commerce, the port and its neighboring Port of Beaumont are designated “strategic seaports” for military sealift roll-on/roll-off cargo by the U.S. Maritime Administration (MARAD), he said.

The port of Port Arthur also includes San Diego-based Sempra’s Port Arthur LNG—a natural gas liquefaction and export terminal that employs 2,000 in producing up to 13.5 million tons a year of LNG.

In 2015, Sempra announced a $13 billion Port Arthur LNG expansion as part of its planned Port Arthur Energy Hub to be anchored by a proposed Port Arthur Pipeline Texas Connector, a proposed Port Arthur Pipeline Louisiana Connector, and development of a proposed Titan Carbon Sequestration project on 38,000 acres it purchased near Port Arthur LNG.

The project would be built in two phases, with Port Arthur Phase 1 adding two natural gas liquefaction plants and up to three LNG storage tanks. In 2019, the Federal Energy Regulatory Commission (FERC) gave Sempra the green-light to proceed with Phase 1 of its project.

The five-year construction project broke ground in March 2023 and is expected to become operational in 2027. Despite the permit freeze, the company is continuing on with Phase 1, with 9,000 workers needed for the project.

Freeport LNG's natural gas facilities in Quintana Island, is also among Southeast Texas LNG terminals. Google Maps screenshot via The Epoch Times

Uncertainty Fosters Paralysis

Sempra’s Phase 2, however, which was set to begin this year, could be in limbo if the Biden administration does not end its “temporary pause,” local officials told the panel. The project would require hiring 2,500 more workers and be operational by 2028.

That would be devastating for Port Arthur, a city of about 56,000 not far from the seminal 1901 SpindleTop well that ignited Texas’s modern petroleum industry but has, nevertheless, not benefited from its proximity and association with the gas industry.

“The ‘Rush-to-Green’ concept as it is being applied to [LNG suppliers] will have a negative impact on the economic growth and stability of Port Arthur,” Mayor Thurman Bill Bartie testified.

“The jobs Port Arthurans have during this construction phase will be compromised negatively if the permitting is continued to be disallowed,” he said. “The economic impact to businesses suppling materials and goods during this operation will harm families’ abilities to continue with specific qualities of life.

“The negative impact will then spread to the region and ill-effect thousands of workers and their families,” Mr. Bartie said.

“Jobs and the creation of opportunities for families to thrive is the life blood of any community,” he continued. “Port Arthur, like any other community, has an obligation to offer this to its citizens. This opportunity is made real with supporting those entities bringing about the possibility for a better quality of life.”

Noting Port Arthur LNG and Golden Pass LNG “provide thousands of direct jobs and billions of dollars back into our great community,” Rep. Ready Weber (R-Texas) said the pause has suspended hiring of “upwards of 6,000 jobs with more than 100 contracts with local vendors for construction valued at $180 million” since it was announced in January.

“When the ban was announced, they were actually in the process of applying for the permits and approvals for Phase Two,” Mr. Weber said. “Now, they’re not sure they can continue with Phase Two because it’s been put on hold, which is an expansion that would help future demand for U.S. LNG supplies for Europe, Asia, as well as other global markets. This abrupt, what I consider to be politically motivated, ban brings that project to a screeching halt. Their investors are now encountering a lot of uncertainty.”

Rep. Randy Weber (R-Texas) speaks at a press conference, alongside members of the Second Amendment Caucus, outside the U.S. Capitol Building in Washington, on March 8, 2022. Anna Moneymaker/Getty Images

Boon to a Backwater

Lamar State College Port Arthur President Dr. Betty Reynard testified that “the impact of the LNG industry cannot be understated” in southeast Texas, and unless lifted soon, the permitting pause will devastate “one of the most urban and economically disadvantaged communities in Texas.”

Ms. Reynard said with a per capita income of $24,065, more than a quarter of Port Arthur residents live below the poverty level. Only 11.4 percent of residents have bachelor’s degrees or higher, far below the national average is 34.3 percent, she said.

Lamar State College offers a conduit to area industry jobs and provides the skilled labor force employers need, she said. More than 11,500 will be working on the two LNG plant construction sites and the plant operators training contract with the college to “result in full-time positions that pay from $64,250 to $109,540.”

“The new construction and the expansion on those sites contribute to the local and national economy by creating new jobs and generating revenue through employment opportunities, tax revenues, and investments in infrastructure,” Ms. Reynard said.

It also benefits the college, which benefits residents, she said. “Each LNG plant in the region, for example, funds scholarships. Overall, the LNG industries in the region have dedicated hundreds of thousands of dollars to provide scholarships, equipment, internships, grant support, and training programs.”

A sustained suspension would derail a program gaining momentum in providing family-wage jobs, a key draw for the college’s 4,000 students, Ms. Reynard said.

“I frequently describe those challenges by reminding the public that [Lamar State College] students are ‘one flat tire’ away from ‘dropping out’ or ‘stopping out’ of college,” she said.

Mr. Weber said the pause threatens to derail progress made by “our great Lamar State College” in establishing programs “to teach and equip the next generation of LNG workers. These LNG companies have donated money, given scholarships, and partnered with, not only local colleges, but local high schools as well.”

Health, ‘Economic Justice’ Concerns

The irony, several witnesses noted, is that the LNG permit approvals come with increased environmental regulation under the 2021 Bipartisan Infrastructure Law and 2022 Inflation Reduction Act, and enacts “environmental justice” provisions encoded in permitting regulation since they were first introduced under the Clinton administration more than 30 years ago.

While Mr. Weber characterized those who support the pause as “demonizing American LNG without any regard for its countless benefits,” Port Arthur Community Action Network Founder/CEO John Beard, Jr., a former Port Arthur city commissioner and refinery worker, testified that Port Arthur has historically been “a sacrifice zone,” where industry demonized anyone who raised concerns about glaring health impacts on local residents.

There’s ample data to support longstanding concerns about the environmental and health impacts that the petrochemical industry imposes on the region, meaning any expansion should engender expansive scrutiny, he said.

According to the U.S. Environmental Protection Agency (EPA), the 28 largest emitters in Jefferson County emitted more than 27 million metric tons of greenhouse gasses in 2022, Mr. Beard said.

Much of the Port Arthur area is in the 90th percentile or above for incidence of heart disease and the 90th percentile for asthma, Mr. Beard said. “Furthermore, cancer rates among African Americans living in Jefferson County are 16 percent higher than that of the average Texan.”

Meanwhile, the economic benefits touted by supporters have failed to manifest in Port Arthur, Mr. Beard said. “Nearly 29 percent of Port Arthur’s residents have no health care coverage, making it nearly impossible to receive the treatment they need,” he said.

Therefore, Mr. Beard said, many in Port Arthur support a pause “to understand the full impacts of these projects on communities like Port Arthur and make a more informed public interest determination.”

Mr. Bartie said long standing environmental and health issues are part of the permit review and that the city and Jefferson County have good “relational interactions” with the Texas Commission on Environmental Quality and the U.S. EPA.

The vast majority of Port Arthur residents support the industry, he said. “However, we want this facility to comply with federal and state authorities on emissions and other regulated occurrences at the facility. Doing so, the possibilities of economic stability for the citizens increase.”

Mr. Bartie called for compromise in finding a middle ground between “environmental wellness and economic stability and growth.”

“Committee, I implore you to seek an amicable resolve to the present position by agencies, which have authority to bring about the compromise needed to continue the economic growth for our fair city and provide a life-sustaining, environmentally friendly co-existence” between industry and residents, he said.

That compromise is not possible if permit reviews are suspended, Mr. Bartie said. “I, in no way, am here to bash or discredit the Biden-Harris administration on its position on the matter of permitting. However, I do appeal to the administration to reconsider, and subsequently abandon, its present course of discontinuance or disallowing the permitting process to go forward.”

Mr. Beard suggested a good working environment for regulators to find that compromise. Come live and work in Port Arthur, he said, and breathe the same air that those most affected by their decisions breathe.

”I, and members of my community here in the audience today, live in the shadow of these massive dirty energy facilities,” Mr. Beard said. “When the members of Congress leave here today, it is us—the community of Port Arthur—that are left to breathe in this toxic air day in and day out.”