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LaFleur Quizzed About Differences in Freeport LNG Applications

Acting FERC Chair Cheryl LaFleur was put on the hot seat Thursday when she was questioned about whether the Commission and the U.S. Department of Energy (DOE) collaborate on natural gas export cases.

"We primarily work in our own lane, which is to review [the] environment and safety" of facilities, LaFleur said during a hearing of the House Subcommittee on Energy and Power on the Federal Energy Regulatory Commission’s (FERC) role in a changing energy landscape. DOE reviews the national security interests of the export of the commodity.

"I think our staffs communicate so we understand what our mutual statuses are, but we don't, to my knowledge, actually collaborate on the cases," she said under questioning by Rep. Joe Barton (R-TX).

Barton said his interest stemmed from DOE's recent order for Freeport LNG Expansion LP and FLNG Liquefaction LLC (collectively known as FLEX) to export up to 0.4 Bcf/d when FLEX had been seeking approval to export 1.4 Bcf/d in addition to a previously authorized 1.4 Bcf/d from its proposed terminal on Quintana Island in Texas (see Daily GPI, Nov. 21).

In the order, DOE “stated that since the permit request at FERC was for one volume of natural gas daily that was less than what [the company was] asking for at DOE, they only approved the [lower] volume pending at your agency," Barton said. The facilities information is publicly available in filings at FERC.

There currently are 13 applications pending at the Commission to build LNG liquefaction facilities. While DOE has authorized global exports to four projects, only one, Sabine Pass Liquefaction LLC and Sabine Pass LNG LP, has received site and facilities approval from FERC and is now under construction (see Daily GPI, April 17, 2012).

Critics contend that FERC is moving at a snail's pace. "I'm not aware of any undue delays in our process, but we always welcome Congressional guidance if we can do it better," LaFleur said. "I hesitate to comment on anything that's directed at the DOE process."

The House has proposed a bill that would require FERC to act on border-crossing pipeline applications for gas exports within 120 days of their filing unless it finds that the project is not in the national security interests of the United States. If amended, LaFleur said she could live with the legislation (H.R. 3301). Rep. Gene Green (D-TX), one of the sponsors of the bill, proposed amending Sections 3 and 7 of the Natural Gas Act to win LaFleur's support. The bill would apply to border-crossing facilities between the United States, Canada and Mexico.

FERC Commissioner Tony Clark, a former regulator in North Dakota, focused on the shale revolution in the industry. "One of the areas where the FERC is seeing an impact on our operations as a result of these activities is with regard to pipelines...In recent years, the Commission has seen a shift in this type of work as industry responds to the burgeoning shale plays. Shale basin pipeline projects that are either in-service or in some state of FERC permitting total 3,427 miles of pipe, delivering 31.4 Bcf/d of capacity, with a total investment of over $18 billion," Clark said. Because of the changing dynamics of the energy industry, he further noted that pipelines have revised their tariffs or sought to repurpose entire segments of underutilized pipeline.

"The large amount of natural gas in the U.S. is also creating an impetus for something that was previously nearly unimaginable, LNG export, as opposed to import terminals. This is an area of significant workload increase for the Commission."

Pending in the House is legislation by Rep. Mike Pompeo (R-KS) to establish a set deadline for federal and state agencies to expedite the approval of natural gas pipeline applications. "The legislation in terms of timelines has some positive accountability aspects, but [you] also have to be careful...that you don't force a timeline that results in a 'no'" vote on a project, said Commissioner Philip Moeller. The Obama White House has threatened to veto the bill.

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