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Cheniere Gulf Coast LNG Projects Clear Final Environmental Hurdle

FERC is cranking out its reviews of liquefied natural gas (LNG) projects at a fast clip. The agency on Friday gave final environmental nods to two Cheniere Energy Inc. LNG terminal projects and associated pipeline facilities along the Gulf Coast, after issuing favorable final environmental reviews for three LNG projects just a week ago -- Dominion Cove Point LP's proposed terminal expansion in Maryland, BP Energy affiliate Crown Landing LLC's terminal project in New Jersey and Sempra Energy's terminal project in Port Arthur, TX.

One of the two projects that received environmental approval Friday was Cheniere Energy's Creole Trail LNG LP terminal for Cameron Parish, LA, and an associated 118-mile, 3.3 Bcf/d pipeline to be constructed by affiliate Cheniere Creole Trail Pipeline. FERC also issued an environmental assessment to Cheniere's Sabine Pass LNG LP to expand the capacity of its LNG terminal project, also to be sited in Cameron Parish, from 2.6 Bcf/d to 4 Bcf/d.

The expansion is Phase II of the Sabine Pass terminal project [CP05-396], which when completed would make it one of the premiere LNG terminals in North America. Phase I was authorized by the agency in December 2004, and has been under construction since last April [CP04-47].

"We conclude that, with the use of Creole Trail's proposed mitigation and adoption of our recommended mitigation measures, construction and operation of the proposed facilities would have limited adverse environmental impact," FERC staff said in the final environmental impact statement (FEIS) on the Creole Trail terminal and pipeline projects [CP05-360, CP05-357].

In the draft EIS, which was issued in December, the Federal Energy Regulatory Commission staff directed Creole Trail LNG to reevaluate the potential for damage to the terminal from wind, storm surge, flooding and wave action in the wake of the two major hurricanes that hit the Gulf Coast last year. "Creole assessed the magnitude and likelihood of storm surge and wave action at the site, including the effects of Hurricane Rita which made landfall near the site in September 2005. Structural and mechanical elements have been designed into the LNG terminal facilities to withstand the effects of coastal flooding and storms which are likely to occur at the site," the FEIS said.

The Commission also approved the project as safe. "The likelihood of a cargo containment failure and subsequent LNG spill from a vessel casualty...is highly unlikely. For similar reasons, an accident involving the onshore LNG import terminal is unlikely to affect the public. As a result, the risk to the public from accidental causes should be considered negligible."

The Creole Trail terminal and associated pipeline are expected to cost $900 million. The project, which is only a step away from receiving a FERC certificate, is planned for service in 2009.

The Creole Trail terminal, to be located at the mouth of the Calcasieu Channel in Cameron Parish, would be equipped with two unloading docks capable of handling up to 250,000 cubic meter vessels, and four 160,000 cubic meter tanks with LNG storage capacity of 13.5 Bcfe. The Creole Trail Pipeline, which would have an initial design capacity of 3.3 Bcf/d, would originate at the LNG terminal site and extend 118 miles north-northeast through Cameron, Calcasieu, Beauregard, Allen, Jefferson Davis and Acadia Parishes in Louisiana, where it would terminate near Rayne. The proposed pipeline is expected to interconnect to interstate and intrastate pipelines with more than 12 Bcf/d of transportation capacity.

With respect to the Sabine Pass LNG project, FERC staff concluded that "approval of this proposal would not constitute a major federal action significantly affecting the quality of the human environment."

The Sabine Pass terminal was originally designed with regasification capacity of 2.6 Bcf/d, two unloading docks and three storage tanks capable of holding 10 Bcf of LNG. The expansion of the facility calls for the construction of three additional tanks with another 10 Bcf of storage and 1.4 Bcf/d of additional regasification capacity.

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