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Authorized Non-FTA Exports Near 20 Bcf/d With Golden Pass Approval

Golden Pass Products LLC (GPP) has been approved to export up to 2.21 Bcf/d of liquefied natural gas (LNG) to non-free trade agreement (FTA) countries, bringing to 19.2 Bcf/d the total of non-FTA exports authorized by the U.S. Department of Energy (DOE).

Golden Pass is jointly owned by Qatar Petroleum (70%) and ExxonMobil (30%). The Golden Pass terminal is near Sabine Pass in Jefferson County, TX. The authorization was granted for 20 years [12-156-LNG]. Exports are not to exceed the 15.6 million tons per annum (mtpa) approved by FERC in its December order authorizing the project, DOE said. The project will preserve the terminal’s capability to import LNG.

GPP had requested a 25-year export authorization. “However, consistent with our prior non-FTA authorizations to date, we believe that caution recommends limiting this authorization to no longer than a 20-year term beginning from the date of first export,” DOE said. “...We find that a 20-year term is likely sufficient to achieve [project financing].”

DOE non-FTA export authorizations so far have been issued for other terminals in Texas, Louisiana, Florida, Georgia and Maryland. “These projects, if built, would position the United States to be the dominant LNG exporter in the world,” DOE said Tuesday.

“This announcement is another example of President Trump’s leadership in making the United States an energy dominant force,” said U.S. Secretary of Energy Rick Perry. “This is not only good for our economy and American jobs but also assists other countries with their energy security.”

DOE said domestic natural gas production is expected to continue increasing, with theU.S. Energy Information Administration’s Short Term Energy Outlook projecting an average dry natural gas production rate of 73.1 Bcf/d in 2017, the second-highest on record.

Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA, the Natural Gas Act directs DOE to allow exports unless it finds that the proposed exports “will not be consistent with the public interest.”

DOE considered the economic, energy security, and environmental impacts of Golden Pass exports, including macroeconomic studies that showed positive benefits to the U.S. economy in scenarios with LNG exports up to 28 Bcf/d, the agency said.

Exports to current and future FTA countries from the Golden Pass terminal were previously authorized by DOE’s Department of Fossil Energy (FE). That order [12-88-LNG] authorized export of 740 Bcf/year of natural gas (2.03 Bcf/d) to FTA countries. The previously authorized FTA volumes and the newly authorized non-FTA volumes are not additive, DOE said in its latest order.

“After years of effort to secure the necessary regulatory permits, this milestone is the latest example of how the LNG industry can flourish in the United States when government regulators work with industry to process permits quickly and efficiently,” said Center for Liquefied Natural Gas Executive Director Charlie Riedl.

“As numerous studies have demonstrated, including one by the Department of Energy from 2015, increased LNG exports will result in overall economic benefits to the United States upwards of $20 billion in average annual GDP growth through 2040. The approval granted today is critical for the United States to fully recognize the potential benefits of its vast natural gas resources.”

While much has been made of the length of time it takes for LNG export projects to secure the necessary approvals from DOE and the Federal Energy Regulatory Commission, projects have lately been held up not in Washington but by economic factors, analysts at Raymond James & Associates Inc. said in a note Monday.

Golden Pass intends to export LNG on its own behalf and operate the terminal as a tolling facility. “According to GPP, customers contracting with GPP for tolling services will be responsible for procuring their own supplies of natural gas and holding title to the natural gas that they will deliver to GPP for liquefaction,” the DOE order said. “Additionally, the customers will be responsible for arranging the delivery of the natural gas to the terminal.”

The terminal is near onshore Gulf Coast and offshore Gulf of Mexico production, as well as supplies coming from the Midcontinent. The associated Golden Pass Pipeline (GPPL) is connected with the interstate systems of Florida Gas Transmission Co. LLC; Golden Triangle Storage Inc.; Natural Gas Pipeline Company of America; Tennessee Gas Pipeline Co. LLC; Texas Eastern Transmission LP; and Transcontinental Gas Pipeline Co. LLC.

“According to GPP, each of these pipelines has interconnections with a larger network of pipelines traversing the Gulf Coast region,” DOE said. “These pipelines will enable GPP to receive natural gas from the onshore Gulf Coast, the offshore Gulf of Mexico and the Midcontinent areas, and possibly other production areas as well.”

At the end of 2016, FERC authorized the addition of liquefaction and export facilities at the existing Golden Pass LNG import terminal. “According to GPP, existing facilities at the Golden Pass LNG terminal that may be utilized for the GPP export project include insulated LNG and natural gas piping, ship berthing facilities, and the five LNG storage tanks and control systems,” DOE said in its order.

New facilities to be constructed to enable liquefaction and export include three liquefaction trains (5.2 mtpa capacity each); related liquefaction facilities, including a truck loading and unloading facility, refrigerant make-up and condensate product storage, safety and control systems, and associated infrastructure; a supply dock and alternate marine delivery facilities; 2.6 miles of 24-inch diameter pipeline loop adjacent to the existing GPPL pipeline; and three compressor stations; as well as five pipeline interconnections and modifications at existing interconnections.

The Golden Pass approval came over the objections of the Sierra Club and the American Public Gas Association. The order included lengthy discussion of their objections and an affirmation of FERC’s reasoning in approving the project last year.

Including Golden Pass, DOE said it has issued 25 authorizations for export to non-FTA countries totaling 7.01 Tcf of natural gas per year.

The authorizations are:

  • Sabine Pass Liquefaction LLC (2.2 Bcf/d)
  • Carib Energy (USA) LLC (0.04 Bcf/d)
  • Cameron LNG, LLC (1.7 Bcf/d)
  • FLEX I (1.4 Bcf/d)
  • FLEX II (0.4 Bcf/d)
  • Dominion Cove Point LNG LP (0.77 Bcf/d)
  • Cheniere Marketing LLC and Corpus Christi Liquefaction LLC (2.1 Bcf/d)
  • Sabine Pass Liquefaction LLC Expansion Project (1.38 Bcf/d)
  • American Marketing LLC (0.008 Bcf/d)
  • Emera CNG, LLC (0.008 Bcf/d)
  • Floridian Natural Gas Storage Co. LLC (containerized exports)
  • Air Flow North American Corp. (0.002 Bcf/d)
  • Bear Head LNG Corp. and Bear Head LNG (USA) LLC (0.81 Bcf/d)
  • Pieridae Energy (USA) Ltd. (exports via Canadian terminal)
  • Sabine Pass Liquefaction LLC Design Increase (0.56 Bcf/d)
  • Cameron LNG LLC Design Increase (0.42 Bcf/d)
  • Flint Hills Resources LP (0.01 Bcf/d)
  • Cameron LNG LLC Expansion Project (1.41 Bcf/d)
  • Lake Charles Exports LLC (2.0 Bcf/d)
  • Lake Charles LNG Export (2.0 Bcf/d)
  • Carib Energy (USA) LLC (0.004)
  • Magnolia LNG LLC (1.08 Bcf/d)
  • Southern LNG Co. L.L.C. (0.36 Bcf/d)
  • FLEX Design Increase (0.34 Bcf/d)
  • Golden Pass Products LLC (2.21 Bcf/d)

“We note that the volumes authorized for export in the Lake Charles Exports order and Lake Charles LNG Export are both 730 Bcf/yr (2.0 Bcf/d) yet are not additive to one another because the source of LNG approved under both orders is from the Lake Charles Terminal. Likewise, the Carib and Floridian orders are both 14.6 Bcf/yr of natural gas (0.04 Bcf/d) yet are not additive to one another because the source of LNG approved under both orders is from the Floridian Facility,” DOE said.

“Additionally, the volumes authorized for export in the Bear Head and Pieridae U.S. orders are not additive; together, they are limited to a maximum of 0.81 Bcf/d to reflect the current capacity of the Maritimes Northeast Pipeline at the U.S.-Canadian border.”

The total export volume authorized is “within the range of scenarios analyzed” in LNG export studies conducted published in 2014 and 2015, DOE said. “The 2015 Study found that in all such scenarios -- assuming LNG export volumes totaling 12 Bcf/d up to 20 Bcf/d of natural gas -- the United States would experience net economic benefits...

“DOE/FE will continue taking a measured approach in reviewing the other pending applications to export domestically produced LNG,” it said. “Specifically, DOE/FE will continue to assess the cumulative impacts of each succeeding request for export authorization on the public interest with due regard to the effect on domestic natural gas supply and demand fundamentals.”

The American Petroleum Institute (API) said it welcomed the Golden Pass approval. “Numerous LNG export facilities still await approval, and giving the green light to Golden Pass is a positive step toward expanding U.S. energy leadership,” said Marty Durbin, API chief strategy officer.

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