FERC on Thursday put its final stamp on Freeport LNG Development LP's request to modify its existing terminal facilities in Texas for liquefied natural gas (LNG) exports, denying a request by two environmental groups for rehearing of the agency's initial decision.
And moving right along, the next day the Department of Energy (DOE) announced it has issued two final authorizations for Freeport to export domestically-produced LNG to countries that do not have free trade agreements (FTA) with the United States.
Last July, the Federal Energy Regulatory Commission (FERC) authorized Freeport to site, construct, and operate facilities to liquefy and export domestic natural gas from its existing LNG import terminal at Quintana Island, in Brazoria County near Freeport, TX (see Daily GPI, July 31).
The Sierra Club and the Galveston Baykeeper had asked for a rehearing on several grounds, among them that FERC should have considered "induced natural gas production" as an indirect effect of the Freeport LNG project, and that regulators should have considered the cumulative impacts of existing and proposed LNG export projects.
"Contrary to [the] Sierra Club's suggestion, the commission has never affirmatively asserted that LNG exports will not induce natural gas production in the United States," FERC said in its decision Thursday.
"However, even if the commission could reasonably determine how much, if any, of the export volumes associated with the Freeport LNG Projects will derive from increased gas production, we have consistently found under the circumstances presented to date that the impacts from additional production are not reasonably foreseeable, as it is unknown where, or when, such production would occur."
FERC added that a cumulative impact analysis was not practical.
"The existing and pending LNG export projects that Sierra Club insists must be considered in the cumulative impact analysis cover a vast geographic scope consisting of tens of thousands of square miles, and neither the CEQ [Council on Environmental Quality] guidance nor case law requires such an analysis," FERC said.
Freeport had filed two applications to export LNG -- the first for up to the equivalent of 1.4 Bcf/d of natural gas, and the second for 0.4 Bcf/d, for a total volume of 1.8 Bcf/d -- for a period of 20 years.
“The Energy Department conducted an extensive, careful review of the Freeport LNG applications,” DOE said Friday. “Among other factors, the department considered the economic, energy security, and environmental impacts and determined that exports at a rate of up to 1.4 Bcf/d and 0.4 Bcf/d for a period of 20 years was not inconsistent with the public interest.”
U.S. Sen. Lisa Murkowski (R-AK), the top Republican on the Senate Energy Committee, has urged the DOE and its secretary, Ernest Moniz, to expedite approval of LNG exports (see Daily GPI, Jan. 7). In a statement Friday, she applauded the department’s decision.
“I applaud Secretary Moniz’s efforts to expedite this process,” Murkowski said. "Going into the next Congress, I look forward to working with the secretary and my colleagues on the Energy and Natural Resources Committee to provide even greater certainty to DOE’s LNG export application process so that our nation can act before this narrow window of opportunity closes."
America’s Natural Gas Alliance (ANGA) also welcomed the approvals. “The Department of Energy's decision to grant final approval to the Freeport liquefied natural gas export terminal is another positive step toward strengthening America's energy security," said Frank Macchiarola, executive vice president of government affairs for ANGA. "This approval, which clears the way for Freeport LNG's facility to export up to 1.8 Bcf/d, comes on the heels of a recent EIA analysis finding that increased shale production is poised to meet increased demand from added LNG exports. Furthermore, there is a growing chorus of experts, public and private, who agree that increased LNG exports will provide significant benefits to our nation." Macchiarola added that ANGA urges swift approval for the remaining terminals that are still under review.
DOE’s action brings the total volume of final authorizations for the export of LNG to non-FTA destinations to 5.74 Bcf/d.
In a note Friday, analysts at ClearView Energy Partners LLC took note of the double dose of good news for Freeport.
“Given that FERC only acted upon rehearing for the project yesterday evening, today’s action would seem to suggest that DOE had been working on the [Freeport] non-FTA authorization while the FERC addressed the Sierra Club’s rehearing request, enabling today’s rapid turnaround,” ClearView said.
“As we noted in our flash blast to clients yesterday afternoon, brisk action seemed likely in the face of ongoing pressure from the Senate Energy and Natural Resources Committee to pass legislation that would expedite DOE approvals, though we could not have guessed it would be quite so brisk.”
Last month, Freeport LNG said it had nailed down $3.85 billion of financing from Japanese lenders for the first train at its export terminal proposed for Quintana Island (see Daily GPI, Oct. 30).
DOE has approved nine non-FTA export projects, while 26 remain under review (see Daily GPI, Sept. 10). In May, the DOE modified its procedure for reviewing applications by taking a backseat to FERC until it completes its environmental reviews, a process that is more time-consuming and costly than the DOE review (see Daily GPI, May 29).