The deal, which includes the export of other commodities from the U.S. to China, was signed about a month after President Donald Trump met with Chinese President Xi Jinping. Much of the LNG in this deal will move across a recently expanded Panama Canal, offering a fast-track route to Asia for larger vessels, an expansion for which the oil and gas industry lobbied.
A DeSmog investigation has revealed that expanding the Panama Canal was part of a two-part process, which included an oil and gas industry push to deepen ports in the Gulf of Mexico as well. Emails obtained under the Texas Public Records Act show that lobbyists for ExxonMobil were leading this effort.
In an interview with Fox Business Network, U.S. Secretary of Commerce Wilbur Ross touted the deal with China and its implications for the global LNG market.
“We have worked out a new regime for LNG exports. As you probably know, China is the world's number one importer of LNG [and] we're just in the early days of exporting,” Ross told Neil Cavuto. “LNG prices have been languishing for quite a little while because, frankly, we have a good deal of oversupply. So it seemed weird, we have too much of it, it’s much cleaner than coal would be, and yet we weren’t really doing a big job of exporting it to China.”
Not long after the deal was signed, Cheniere, a top U.S. exporter of LNG, also declared that it may soon be shipping more of its product to China. However, without Congress taking legislative action back in 2014, pushed by Exxon's lobbyists, the U.S.-China LNG export deal may have never existed at all.
Art of LNG Deal
In 2014, Congress passed the Water Resources Reform and Development Act (H.R. 3080/S. 601), which gave U.S. ports like the Sabine-Neches Navigation District in Texas the legal authority to deepen their waters.
Deepening ports allows them to receive bigger and heavier tankers that sit lower in the water column, such as those carrying LNG or larger shipments of oil. For ports on the East Coast and Gulf of Mexico, it opens up possibilities for these larger tankers and container ships to pass through the now expanded Panama Canal. Marine commerce is seeing a rise in such “megaships” and ports are rushing to accommodate them.
“As more of the world’s cargo is transported on these massive ships, we’ve got to make sure that we’ve got bridges high enough and ports that are big enough to hold them and accommodate them so that our businesses can keep selling goods made in America to the rest of the world,” Obama said as he signed the bill.
According to lobbying disclosure forms, companies such as ExxonMobil, BP, Sempra Energy, BG Group (now owned by Shell), Chevron, Koch Industries, and others all lobbied for H.R. 3080/S. 601. Section 2106 of the bill, the “Energy Transfer Port” section, calls for a $50 million per year subsidy for ports maintaining 25 percent of business activity related to the energy industry and carrying at least 40 million tons of cargo for this industry as well.
The Sabine-Neches Navigation District deployed lobbyist Milam Mabry to advocate for the cause of deepening this key port and LNG export hub, which is home to both Cheniere's Sabine Pass LNG terminal and ExxonMobil and Qatar Petroleum's Golden Pass LNG facility.
Months after successfully lobbying for the bill, which President Obama signed into law in June 2014, Mabry agreed to begin lobbying for Golden Pass Products, the owner of the Golden Pass LNG facility.
Golden Pass received a permit to export LNG from the Department of Energy (DOE) on April 25, 2017. The DOE's authorization letter for Golden Pass LNG cites congressional letters of support for the project, which as DeSmog revealed in April 2015, were actually ghost-written by lobbyists for Golden Pass from the firm Harris, DeVille & Associates.
Mabry, who formerly served as a congressional staffer for Sen. Phil Gramm (R-TX) and Sen. Kay Bailey Hutchinson (R-TX), still lobbies for both the Sabine-Neches Navigation District and Exxon and Quatar Petroleum's Golden Pass Products.
Back in 2014, however, emails obtained from the navigation district show that Mabry worked alongside the Golden Pass Products lobbyists from Harris, DeVille & Associates as the Water Resources Reform and Development Act moved through Congress. The district's goal was two-pronged: to get its desired language inserted into the bill and secure federal funding under the bill's legislative mandate (the latter being the reason the district is still employing Mabry's lobbying services).
Emails show the strategy revolved around Mabry working his network, with an open line of communications to the Office of Texas Governor Greg Abbott, the Obama White House, the Office of U.S. Rep. Ted Poe (R-TX), fellow Exxon lobbyist Kathleen Jackson, and others. Jackson sits on the Texas Water Development Board, and was inititally appointed by former Texas Governor Rick Perry, who currently serves as U.S. Secretary of Energy.
In a February 2014 email to the navigation district's leadership, Exxon's Jackson explained how the district could best make its case to Congressional leadership drafting the bill, saying that the soon-to-be-expanded Panama Canal should be part of the pitch.
“We need the large channel users to embrace the work effort, commit their top resources and think creatively so we can capture all possible benefits. And we need an industry champion to coordinate the effort,” wrote Jackson. “[Sabine-Neches Waterway] is uniquely positioned to capture the benefits of the Panama Canal expansion.”
Paul Beard, president of Sabine Universal Products and chair of the navigation district's board, was also regularly looped into emails about the bill's progress and strategy around its passage. Sabine Universal describes itself as a “distributor of specialized products for the commercial marine and offshore rig industries,” which deals with “offshore drilling contractors, inland tug and barge operators, shipyards, and offshore supply boat companies.”
While nudging members of Congress to get the bill passed, the Harris, DeVille & Associates team and Mabry launched a local advertising campaign in support of the legislation's passage. This included designing and placing billboards, emailing local government bodies about the signs, writing talking points for the media, and pushing LNG as a central pillar in bill discussions.
“In developing the billboards, we focused on two key themes,” Michelle Hultberg of Harris, DeVille & Associates wrote in a February 2014 email to navigation district leadership. “First, as indicated in our previous Facebook ad campaign and as we are also seeing in the ongoing digital ad campaign, our audience responds well to 'jobs' messaging. So, we’ll continue to weave that theme throughout our materials. Second, we want to introduce a 'Dig it' message that can be used in several ways ('Let’s dig it,' 'We dig it,' 'I dig it') and would be a great way for [Sabine-Neches Navigation District] to get our supporters involved.”
The billboard and accompanying social media campaign included both a pre-bill passage and post-bill passage component, with graphics and talking points prepared for both.
The navigation district also put together and disseminated a fact sheet, discussing how the district serves as a key national hub for oil and gas pipeline infrastructure, including LNG.
After the bill passed in Congress, PR specialist Hultberg drafted a press release celebrating its passage on behalf of the navigation district.
“So many of our local, state and federal leaders and past [Sabine-Neches Navigation District] leaders and staff deserve a huge thanks,” Beard said in the release, “It’s been a pleasure to help lead this once-in-a-lifetime project to this point. Now it’s time to get out there and start digging!”
Traversing Panama Canal
The centerpiece of this particular port deepening project, as the navigation district points out, was ensuring the port could cater to a widened Panama Canal capable of handling LNG tanker traffic.
“A huge benefit to the LNG producers is that it will cut transit time to the Orient from something like 63 days to 47 days, very significant,” wrote Beard in a December 2015 email. “If ever we are allowed to export crude oil again it would provide the same advantage for oil going to the West Coast or the Orient.”
Cheniere was the first company to ship LNG across the Panama Canal and into China. The expanded canal is expected to see 550 LNG ships cross per year by 2021, according to the U.S. Energy Information Administration.
Signaling the expanded canal's importance to the oil and gas industry, the Texas Department of Transportation created a Panama Canal Stakeholder Working Group in 2012, which involved contributions from several industry representatives.
The working group had an official member from the Texas Oil and Gas Association, and briefed or received testimony from ExxonMobil, Koch Industries, Chesapeake Energy, and Halliburton, among others. The Sabine-Neches Navigation District was also involved in the working group, which culminated with a report pointing to the business opportunities for the LNG industry from an expanded Panama Canal.
“Currently LNG vessels are not able to use the Panama Canal due to the width limitations in the locks. The new locks will accommodate LNG vessels, thus opening the Asian market to LNG from Texas,” the working group wrote in its November 2012 report. “Cheniere, Golden Pass Products LLC, and other companies are making major investments in LNG plants along the Texas and Louisiana coast, focusing on exporting LNG.”
Half a decade later, it appears that vision has become reality.