Shale Daily / NGI All News Access

Environmental Group Slams FERC on LNG Exports Review

Looking for a back door into the dispute over exports of liquefied natural gas (LNG), the Sierra Club has attacked FERC's environmental review of the proposed Sabine Pass Liquefaction LLC facilities, saying it failed to consider the impact on shale development and domestic gas prices.

The environmental assessment (EA), which was issued by the Federal Energy Regulatory Commission (FERC) in December, "unlawfully looks only at the impacts of construction and operation of the export facilities, ignoring the [environmental] effects of export itself and failing to take a hard look at whether LNG export is in the public interest," the environmental group said.

Sierra said the exports would "induce additional shale gas extraction, increase domestic gas prices, induce additional coal consumption for electricity generations, and increase greenhouse gas [GHG] emissions and global warming." The environmental group particularly hit on hydraulic fracturing (fracking) of shale and the liquefaction process as resulting in higher air emissions.

The primary agency charged with approving U.S. exports, the Energy Department's Office of Fossil Energy, issued an order last May authorizing Cheniere Energy Partners LP's Sabine facility to export LNG to non-free trade agreement (FTA) countries (see Daily GPI, May 23, 2011). The order was conditional on FERC's siting and facilities approval.

Sabine currently is operating an LNG import, storage and regasification facility approved by FERC and has requested permission to install liquefaction trains at the same site.

The authorization for Sabine is the only non-FTA export license granted by DOE so far, although it has received a number of similar export applications totaling 12.51 Bcf/d as the industry seeks outlets for the abundance of shale gas flooding the North American market and driving down prices.

A report by another branch of DOE, the Energy Information Administration (EIA), released last week showed LNG exports could increase domestic gas prices by 3%-9%, depending on the size of the exports and how fast the build-up of exports occurred (see Daily GPI, Jan. 20). The Senate Energy and Natural Resources Committee is expected to hear testimony Tuesday on the EIA report.

Cheniere on Monday announced a fourth contract for exports from the proposed Sabine Pass terminal, this one with Korea Gas Corp (see Daily GPI, Jan. 31). The company now has sold 16 million metric tons per year of capacity of the 18 being developed at the terminal.

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