LNG Exports

The Obama administration, which must approve exports of liquefied natural gas, or LNG, to all but a handful of countries with free trade agreements, has approved one terminal for exports, Cheniere Energy's Sabine Pass. It has delayed decisions on about eight applications for terminals from other companies, including Dominion Resources and Southern Company.

In March the Department of Energy delayed an LNG exports study on which it will base the terminal decisions until later this summer. A public comment period will follow the study, which means a decision runs the risk of being delayed until after the election.

Recently refined drilling technologies, including hydraulic fracturing, or fracking, have led to a boom in U.S. natural gas production. Just years ago the country was looking at having to import massive amounts of the fuel, but now it could become a major exporter.

Many of the export terminals could be added to the more than 10 existing LNG ports, such as Cheneire's Sabine Pass, that were built to import the fuel before the fracking boom.

But many U.S. manufacturers worry a big expansion in U.S. exports could raise the price for businesses and consumers.

Proposed U.S. export terminals

The U.S. has several LNG receiving and storage facilities but none of the liquefaction equipment required to prepare natural gas for export. Many proposed U.S. export terminals are at existing gas import terminals. By December 2011, six existing LNG import facilities were seeking export licenses.
The Obama administration has said it supports in principle US exports of liquefied natural gas, though specific new guidelines on exports await completion of a study by the Department of Energy. The DOE is required by law to quickly approve LNG export applications to countries with which the US has free-trade agreements, which constitute the bulk of the pending requests. But the DOE is delaying decisions on LNG exports to non-FTA countries -- including China -- until it completes two studies on the domestic impacts of the exports.

Cameron LNG

Cameron LNG is a wholly owned subsidiary of Sempra Energy (SRE), a California-based natural gas distribution and marketing company. It is a liquefied natural gas (LNG) receipt terminal situated on a 260-acre industrial-zoned site along the Calcasieu Channel in Hackberry, Louisiana. It is located 18 miles from the Gulf of Mexico and within 35 miles of five major interstate pipelines that serve nearly two-thirds of all U.S. natural gas markets. Construction at Cameron LNG started in August 2005 and commercial operations began in July 2008.

On January 17, 2012, the U.S. Department of Energy authorized Cameron LNG to export liquefied natural gas. The permit allows Cameron to ship up to 1.7 billion cubic feet a day of LNG to countries possessing free-trade agreements with the U.S. The permit is valid for 20 years after the first export shipment.

Corpus Christi LNG

Corpus Christi LNG was originally planned as an LNG Import Terminal and 23 miles of 48-inch pipeline, approved by FERC in April 2005.

On December 16, 2011, Cheniere Energy, Inc. announced that its wholly owned subsidiary, Corpus Christi Liquefaction, LLC, was developing an LNG export terminal at the site, which was previously permitted for a regasification terminal. The LNG export terminal site is located on the La Quinta Channel in San Patricio County, Texas, and it is anticipated that the terminal would be primarily supplied by reserves from the Eagle Ford Shale, located approximately sixty miles northwest of Corpus Christi, Texas. The proposed liquefaction project (Corpus Christi Project) is being designed for up to 13.5 million tonnes per annum (mtpa). The company plans for the first "trains," or facilities where gas will be liquefied, to be in operation in 2018.

Cove Point LNG

Dominion Cove Point LNG is located on the Chesapeake Bay in Lusby, Maryland, south of Baltimore. It is one of the nation's largest liquefied natural gas (LNG) import facilities. Dominion acquired Cove Point from energy infrastructure company  Williams on September 5, 2002, and began receiving ships in the summer of 2003. In 2009, Dominion finished an expansion project that increased Cove Point's storage and production capacity by nearly 80 percent.

Dominion Cove Point received authorization on October 7, 2011, from the Department of Energy to enter into contracts to export liquefied natural gas. Under the authorization, Dominion is permitted to enter into multi-year contracts for up to 25 years with companies wishing to export natural gas to countries with free trade agreements. The authorization is for up to 1 billion cubic feet per day. Dominion would have to add liquefaction equipment at its Cove Point facility to convert natural gas into liquefied natural gas.

The Sierra Club is opposing the terminal conversion: the Sierra Club and Maryland Conservation Council challenged construction of the Cove Point LNG import terminal more than four decades ago. They say their 1972 settlement with then owner Columbia Gas System Inc. bound Columbia and any future owners of the terminal to LNG imports for use of the land, and requires approval of the environmental groups for expansions.

Freeport LNG

Freeport LNG Development, L.P. designed, built and operates the Freeport LNG receiving and regasification terminal in Freeport, Texas. Conoco Phillips has bought two-thirds of the capacity of Freeport LNG and Dow Chemical the remaining third. Construction began in 2005 and was originally planned for LNG import, but is shifting to exports.

Freeport LNG filed two DOE applications, each for 511 Bcf/year, in December 2010 and 2011, and received approval from DOE to export LNG to Free Trade Agreement countries in February 2011 and 2012. In December 2010, Freeport LNG also submitted a pre-filing request with FERC to begin the environmental review of the liquefaction project.

Freeport LNG intends to file its formal application pursuant to Section 3 of the Natural Gas Act (NGA) by August 2012 and will request that FERC issue an order authorizing the siting, construction and operation of the liquefaction project no later than the second quarter of 2013. Freeport LNG plans to file its initial Project Implementation Plan soon afterwards and request authorization to commence construction in the third quarter of 2013. Freeport LNG anticipates a construction schedule of approximately three to four years to completion and start-up of the liquefaction project, which is currently envisaged to occur in early 2017.

Jordan Cove LNG

In 2009, FERC approved the Jordan Cove LNG import terminal proposed near Coos Bay, Oregon. Environmental groups suggested import made little sense, given plans to build a natural gas pipeline delivering gas from Wyoming to Oregon. In September 2011, acknowledging little import market existed, the Jordan Cove project filed an application for an export license with the Department of Energy. Ohio Attorney General Kroger responded by asking FERC to set aside the license it gave Jordan Cove for an import facility and pipeline, saying an import-export project has the potential to harm Oregon’s environment and economy.

In December 2011, the Department of Energy granted the Jordan Cove and Pacific Connector Pipeline project a license to export liquified natural gas, making Jordan Cove the first project in 40 years in which developers proposed a new pipeline and terminal primarily to export natural gas. A 230 mile pipeline would stretch from the Klamath Basin to Coos Bay, crossing hundreds of streams and rivers, protected federal forestland, and private property. Developer Jordan Cove filed a preliminary application with FERC in February 2012 seeking pre-filing status to explore the feasibility of a liquefaction export project that would be built and operated at the same site. FERC granted that status.

On April 16, 2012, FERC vacated authorization of the proposed Jordan Cove LNG terminal, as well as the certificate to construct the pipeline, concluding that an export facility serves a different purpose than an import facility, and requires its own full analysis of environmental and economic impacts. Those federal approvals are now void. Jordan Cove said they are working on getting their export application ready by 2013.

Sabine Pass LNG

On April 16, 2012, the Federal Energy Regulatory Commission granted approval for Houston-based Cheniere Energy Partners to build the first liquefied natural gas (LNG) export terminal in the lower 48 United States. The $5 billion Sabine Pass LNG project to be located at an existing import terminal in Cameron Parish, Louisiana, along the Gulf Coast.

Construction is expected to begin in 2012, with LNG exports to begin in 2015. Cheniere has signed a contract with Bechtel Oil, Gas and Chemicals Inc. to build the facilities. Cheniere said it has signed LNG supply contracts with utilities in the United Kingdom, Spain, South Korea, and India -- Cheniere has Energy Department license to ship domestic gas to nations that are not U.S. free-trade partners. U.S. gas producers will have the capacity to export up to 18 million tons of LNG annually, worth about $1.7 billion at current prices. It was FERC’s first authorization of a project of this kind.

In its Sabine Pass order, FERC settled on the DOE's earlier findings that increased LNG exports "will result in increased production that could be used for domestic requirements if market conditions warrant such use, and this will tend to enhance U.S. domestic energy security." FERC also dismissed charges by the Sierra Club and the Gulf Coast Environmental Labor Coalition that the commission shortchanged its environmental and safety reviews, citing conditions that Cheniere comply with the federal Clean Air Act, including rules governing greenhouse gas emissions and the use of "best available" pollution control technology.

After securing a $2 billion investment in a February 2012 deal with private equity firm Blackstone Group, Cheniere is searching for an additional $3 billion to $4 billion to start construction. Cheniere is working with eight financial institutions to secure the additional financing: Bank of Tokyo-Mitsubishi UFJ Ltd., Credit Agricole Corporate and Investment Bank, Credit Suisse Securities LLC, HSBC, J.P. Morgan Securities LLC, Morgan Stanley, RBC Capital Markets and SG Americas Securities LLC.  (Reuters, 7/11/2012, Sourcewatch)