FERC paved the way for a significant increase in liquefied natural gas (LNG) imports Thursday by approving two new import terminals and associated pipelines in Mississippi, authorizing an expansion of the Creole Trail pipeline in Louisiana and approving an expansion of the Maritimes & Northeast pipeline to accommodate LNG from the Canaport LNG project in Canada.

FERC Chairman Joseph T. Kelliher said greater LNG imports are needed because existing gas supply is no longer sufficient to meet demand. “These are significant import projects, with a combined capacity nearly equal to the projected capacity of an Alaskan gas pipeline,” he said regarding the two Mississippi terminals. “More importantly, we find that these projects meet our high safety standards.”

Kelliher noted that there are significant concerns about supply adequacy, high prices and price volatility. This new gas infrastructure will help address those concerns, he said. “If energy infrastructure is inadequate, the predictable result is higher prices and greater price volatility. Of course, that does not mean all proposed energy infrastructure projects must be approved. It does suggest, however, that uniform opposition to energy infrastructure proposals may come at a cost, in the form of higher energy prices and greater volatility.”

Commissioner Suedeen Kelly responded to Kelliher’s comments by noting that some opposition is necessary. Many people have valid concerns about the security and safety of LNG and the environmental consequences of building LNG import terminals. However, she expressed confidence that FERC’s expert staff would ensure these LNG projects will be constructed with appropriate mitigation and safety requirements.

The two proposed Mississippi LNG terminals, both of which are located in Pascagoula, MS, in Jackson County, could boost LNG imports by 3.1 Bcf/d. They are only the latest in a long string of LNG projects approved by the Commission, and many more are on the way. The two newly approved projects are the 1.6 Bcf/d Casotte Landing LNG terminal proposed by Chevron near its Pascagoula refinery on Bayou Casotte and the 1.5 Bcf/d LNG Clean Energy Project proposed by Gulf LNG Energy LLC.

Chevron’s Casotte Landing project would send regasified LNG into the interstate pipeline grid through interconnections with five pipelines and would supply Chevron’s existing oil refinery. The project also would include three storage tanks with 480,000 cubic meters of capacity.

Gulf LNG Energy LLC’s $450 million LNG terminal would provide vaporized gas to the interstate grid through a new pipeline that would connect with two interstate pipelines and a gas processing plant owned by BP. The terminal also would include two storage tanks with capacity for 320,000 cubic meters of LNG.

The two projects bring the number of new FERC-approved LNG import projects to 13, excluding two expansions. Currently there are five operating U.S. LNG import terminals with 5.8 Bcf/d of sendout capability. The 500 MMcf/d Altamira LNG project also recently started operations on the Gulf Coast of northeastern Mexico. There are an additional four U.S. LNG import terminals under construction and one under expansion that have a combined potential of delivering an additional 9.8 Bcf/d of regasified LNG.

There also are two other North American LNG projects under construction: the 1 Bcf/d Canaport LNG terminal in New Brunswick, Canada, and the 1 Bcf/d Energy Costa Azul terminal in Baja California, Mexico. In addition, FERC has authorized another seven LNG import projects and two expansions totaling 16.7 Bcf/d of additional capacity. Many more are awaiting FERC’s orders.

On Thursday, the Commission also authorized a $101.7 million expansion of a pipeline associated with the recently authorized Creole Trail LNG project in Louisiana in order to access and transport 2 Bcf/d day of previously authorized regasified LNG originating from the Sabine Pass LNG terminal. The Commission amended its previous authorization of the Creole Trail pipeline and approved the construction of an additional 18.1 miles of 42-inch diameter pipeline in Cameron Parish, LA, that will connect with another recently approved project proposed by Cheniere Sabine Pass Pipeline LP. The amended proposal would extend Creole Trail’s 116.8 mile pipeline westward from the Creole Trail’s LNG terminal to interconnect with the terminus of the Sabine Pass pipeline system, located at Johnson’s Bayou in Cameron Parish.

In addition, the Commission authorized Maritimes & Northeast to expand its existing system to 833,317 Dth/d from 418,000 Dth/d to accommodate regasified LNG from the 1 Bcf/d Canaport LNG import terminal being built by Irving Oil and Repsol in New Brunswick to supply the U.S. Northeast. The $321.3 million Phase IV expansion project includes an additional 1.7 miles of 30-inch diameter pipeline looping that will extend from the St. Croix River at the U.S.-Canada border to Maritimes’ Baileyville, ME, compressor station. In addition, Maritimes proposes to construct five new compressor station units (89,864 horsepower) at Woodchopping Ridge, Brewer, Searsmont, Westbrook and Eliot, ME, along with either new or upgraded metering stations located along its route in Maine. The Commission also approved Maritimes’ request to amend its Presidential Permit to permit increased volumes.

In another LNG proceeding on Thursday, the Commission dismissed a complaint alleging that FERC staff violated ex parte contact prohibition rules by attending a Dec. 14, 2006 meeting on environmental issues relating to Northern Star Energy LLC’s proposed Bradwood Landing LNG Project, currently under FERC staff review. Complainants alleged staff should have avoided the meeting that included representatives from Bradwood Landing, Northern Star, the U.S. Army Corps of Engineers, the U.S. Coast Guard and other agencies and tribal groups. Northern Star filed an application on June 5, 2006 to construct an onshore LNG terminal and pipeline that would deliver 1 Bcf/d of regasified LNG to Northwest Pipeline in Oregon.

FERC found that staff “properly adhered to procedures and followed FERC regulations” that permits off-the-record communications for the purpose of preparing an environmental impact statement (EIS) as long as a summary of the communications is promptly placed in the public record.

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