According to Federal Energy Regulatory Commission (FERC) Chair Laura Swett, the bottleneck in the Strait of Hormuz has demonstrated the need for more U.S. infrastructure of every type and, more specifically, more pipeline infrastructure, which is a priority under President Trump’s January 2025 National Energy Emergency executive order. The need for infrastructure has been accelerated by the war in Iran, which has blocked 20% of the world’s daily supply of oil and liquefied natural gas (LNG) from leaving the Persian Gulf.
According to The Epoch Times, Qatar, the world’s second-largest LNG exporter, supplying nearly 20% of global demand, halted production once the Iranian conflict began, and it had 18% of its LNG export capability destroyed by an Iranian missile strike on March 18. According to state-owned QatarEnergy, it could take five years to restore that production capacity to pre-war levels. About 90% of Qatari LNG is purchased by buyers in Asia, including China, South Korea, Japan, India, and Pakistan. The New York Times reports that the blockade of the Strait of Hormuz, as well as repeated strikes on the world’s largest LNG export complex in Qatar, have reduced about 28 million tons of supply from the market this year, which represents nearly the entire global supply growth forecast for 2026.
The United States is the world’s largest LNG exporter, supplying 25% of global consumption. Nearly 70% is shipped to buyers in Europe, with Japanese and South Korean consumers also top importers. A primary physical restraint on domestic natural gas and LNG production is a lack of “spare capacity” within the nation’s 3.3-million-mile pipeline network.
The major problem is obtaining permits to build or expand energy infrastructure, which is held up by administrative delays and political gridlock. Environmental lawsuits have targeted projects, and so far, several bills in Congress for permitting reform have failed to pass. The current Middle East crisis, however, has upped the concern in Congress, and there appears to be bipartisan support for permitting reform.
According to FERC, the commission is examining a “blanket certificate” for three “existing projects that can expand or make revisions or take actions without having to come to FERC to go through a full-blown application process.” The blanket certificate is related to environmental impacts that have already been assessed. FERC is looking at legal ways to streamline processes for companies to quickly get energy onto the grid and to U.S. allies.
A study conducted by the INGAA Foundation, part of the Interstate Natural Gas Association of America, indicates the need for $1 trillion in capital for new pipeline infrastructure in the United States and Canada by 2052, averaging about $40-48 billion per year over the next 26 years. Their findings are based on rising electricity demand and continued growth in LNG exports. The $1 trillion in capital will cover about 37,000 miles of additional natural gas transmission pipelines, including approximately 33,800 miles within the United States, to move energy from producing regions to growing areas of demand, and approximately 103,000 miles of new natural gas gathering pipelines to connect upstream production to processing facilities and long-haul transmission systems.
FERC will also act on Energy Secretary Chris Wright’s March 13 order directing Sable Offshore Corp. to restore operations of the Santa Ynez Unit and Santa Ynez Pipeline System under the Defense Production Act, preempting California regulations “that have left the region and U.S. military forces dependent on foreign oil.” California is challenging the order in a lawsuit, arguing that the federal government has jurisdiction only over interstate pipelines.
LNG Exports
The U.S. LNG industry currently cannot significantly increase LNG exports to buffer Qatar’s loss because most of the U.S. LNG output is under long-term contract and facilities are operating at or above capacity. There are eight LNG export terminals on the U.S. Gulf and east coasts: four in Louisiana, two in Texas, and one each in Georgia and Maryland. A ninth — ExxonMobil’s Golden Pass on the Texas side of the Sabine Pass — began liquifying natural gas in February and will soon begin shipping LNG. There are seven more under construction, and nine more projects have been approved.
According to AFP, Europe increased its dependence on U.S. and Qatari LNG after Russia’s 2022 invasion of Ukraine. Europeans are worried that they may not be able to build up enough gas storage for next winter or may have to pay extremely high prices for the gas. Asian nations that rely more heavily on Middle East oil and gas have been implementing demand conservation measures and are switching to coal. Asia purchases 80% of its oil and 90% of its LNG from countries that need to transit the Strait of Hormuz.
Analysis
The need for additional natural gas pipeline capacity already existed due to rising U.S. electricity demand from artificial intelligence data centers and electrification. Now, the Iranian conflict has added even more urgency for building pipeline capacity — to move more natural gas from wells to liquefaction plants for export. Making it easier for export facilities to make their own decisions regarding how they operate is a positive step toward allowing the U.S. to help mitigate the natural gas supply shock caused by the war, and the Trump administration and Congress should look to go even further through comprehensive permitting reform.
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