Responding to the lackluster market in the United States for liquefied natural gas (LNG) imports, Sabine Pass LNG LP last Thursday filed an application at FERC seeking authorization to operate its terminal for the additional purpose of exporting foreign-sourced LNG volumes.

Sabine Pass, a subsidiary of Cheniere LNG Inc. and operator of an LNG terminal in Cameron Parish, LA, has asked the Federal Energy Regulatory Commission (FERC) to act on its request by December.

"Increasing worldwide demand for LNG in European and Asian markets and relatively high prices [have] resulted in a decrease in deliveries of LNG in the U.S. Sabine Pass' proposal would provide customers of the Sabine Pass terminal the opportunity to purchase cargoes of LNG at current LNG world market prices that may be higher than prices in U.S. markets, with the intent that such LNG subsequently could be exported for redelivery to a foreign market at a later date," Sabine Pass LNG told the Commission [CP04-47, CP05-396].

"In the event that U.S. market prices were to rise to a point where domestic sale of the LNG held in storage were to become economically feasible, the LNG would then be readily available for U.S. consumption."

Granting Sabine Pass authorization to allow exports would provide two benefits, according to the company. "First, it would ensure that a continuous supply of LNG would arrive at the Sabine Pass facility, which in turn would help ensure that the Sabine Pass facility remains in operation even when U.S. market conditions may not otherwise support the sale of imported LNG," and second it would gurarantee ready availability of LNG at the terminal in the event U.S. market prices improve.

The Sabine Pass terminal currently has 2.6 Bcf/d of sendout capacity and currently is in the process of adding 1.4 Bcf/d more of capacity. The latter project is expected to be in service during the second quarter of 2009.

Sabine Pass LNG's request came about two weeks after FERC ruled that the company did not have to go through the mandatory pre-filing process for LNG facility modifications that are related to its request to export foreign-sourced LNG from its terminal in southwest Louisiana (see NGI, Oct. 13).

"The [FERC] staff has determined that this change of use of the [Sabine Pass] 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," the agency said earlier this month.

In August affiliate 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's request still is pending at the DOE, according to Sabine Pass.

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.

"Since Sabine Pass does not intend to use [its] proposed facilities to export LNG on its own behalf, but rather will operate the facilities in order to provide terminal services to third parties, Sabine is not required to obtain export authorization from DOE," Sabine Pass said.

In August Freeport LNG Development LP, in which Sabine Pass parent Cheniere LNG is a limited partner, asked DOE for permission to export up to 24 Bcf of LNG from its terminal on Quintana Island, TX, to markets in Europe and Asia (see NGI, Aug. 18). Both Freeport and Cheniere said worldwide demand and relatively low prices in the United States had prompted their export requests.

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