Sabine Pass LNG LP does not have to go through the mandatory pre-filing process for liquefied natural gas (LNG) facility modifications that are related to its request to export foreign-sourced LNG from its terminal in southwest Louisiana, FERC said last Wednesday.

Federal Energy Regulatory Commission (FERC) staff determined “that this change of use of the facility does not appear to involve significant safety considerations that have not been previously addressed. In addition, the project would not involve [more] LNG storage tanks, would not increase the throughput of the facility and would not require additional tanker arrivals or the use of larger vessels,” wrote J. Mark Robinson, director of FERC’s Office of Energy Projects, in a letter order.

In further support of Sabine Pass LNG’s request, U.S. Coast Guard Lt. Byran Markland of Port Arthur, TX, has determined that the modifications should not change or exceed the waterway impacts considered in the original waterway suitability report issued in March 2006. The Sabine Pass terminal plans to seek Section 3 Natural Gas Act authorization to make any retrofit changes.

In August Cheniere Marketing Inc. — the principal owner of LNG at Sabine Pass — requested the Department of Energy’s (DOE) authorization to export on a spot market basis over a two-year period up to 64 Bcf of LNG that has been imported and stored at the Sabine Pass terminal (see NGI, Sept. 1).

Cheniere expects to export the LNG to 17 countries in Europe, Asia, Central America and South America, including Mexico, China and India. Cheniere said it also anticipates loading LNG for delivery to Puerto Rico. Cheniere did not request authorization to export domestically produced natural gas or LNG.

Cheniere’s request was similar to one filed by Freeport LNG Development LP, which asked DOE to permit it to export up to 24 Bcf of LNG to markets in Europe and Asia (see NGI, Aug. 18). Cheniere is one of Freeport’s limited partners.

Like Freeport, Cheniere said worldwide demand and relatively low prices in the United States had prompted it to seek approval to export LNG.

“Blanket export authorization would afford [Cheniere] the ability to purchase cargoes of LNG at current LNG prices with the intent that such LNG subsequently would be exported to a foreign market at a later date,” Cheniere wrote in its application. “In the event that U.S. market prices were to rise to a point where domestic sale of the LNG held in storage was economic, the LNG would then be readily available for U.S. consumption.”

Assuming regulatory approval, preparing the Sabine Pass or Freeport facilities for export operations would require little more than a $10,000 retrofit, according to Houston-based consultancy Waterborne Energy Inc.

The Kenai LNG terminal in Alaska is currently the only facility in North America permitted to export LNG. Kenai has been liquefying and exporting LNG from the Alaska coast for nearly 40 years. The state of Alaska could add another LNG export terminal as part of development to commercialize its North Slope gas reserves (see related story). Neither Sabine Pass nor Freeport currently have liquefaction facilities and would only be able to serve as LNG storage and transit stations.

DOE in June granted Kenai a two-year extension of its LNG export permit (see NGI, June 9). With the extension, which lasts from April 1, 2009 until March 31, 2011, ConocoPhillips and Marathon Oil Corp.’s may export up to 98 Bcf to Japan and other countries on either side of the Pacific Rim. The Japanese have been importing LNG from the Kenai terminal since 1969 and some in Alaska believe additional LNG liquefaction and exports to thirsty Asian markets should be included in the state’s plans to commercialize its vast North Slope gas reserves.

Chesapeake Energy CEO Aubrey McClendon has said his company is considering investing in LNG export facilities (see NGI, Sept. 29a; Aug. 4).

Kitimat LNG Inc. recently revised its plans for an LNG import terminal to instead construct an export terminal on the Bish Cove near Kitimat, British Columbia (see NGI, Sept. 29b).

In a report issued in June, the Energy Information Administration said LNG imports to the United States through the first half of 2008 were roughly 60% below the amount received during the first six months of 2007. LNG imports in the second half of the year have not fared any better, the EIA said in its combined Short-Term Energy and Winter Fuels Outlook issued last week (see related story).

“U.S. imports of…LNG remain below year-ago levels with third quarter imported cargoes less than half of what they were last year. Demand growth in Europe and Asia combined with limited global supply increases to date continue to weigh on the market,” the EIA said.

“LNG imports to the United States are no longer expected to increase during the remainder of 2008, and import growth in 2009 remains vulnerable to additional delays in new capacity and unexpected maintenance on existing capacity. For the year, LNG imports are expect to total about 350 Bcf and about 450 Bcf in 2009 as the global LNG capacity is expected to be brought on-line.”

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