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FERC: Sabine Pass Export Modifications OK

June 8, 2009
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Cheniere Energy has won approval from FERC to modify its Sabine Pass terminal in Cameron Parish, LA, to allow for the reexport of liquefied natural gas (LNG). The company cited shifts in the global market for LNG that have made cargoes more valuable in other markets.

"Sabine Pass contends that its proposals will provide its customers the opportunity to purchase cargoes of LNG at current LNG world market prices with the intention of exporting LNG for redelivery to a foreign market at a later date in the event that U.S. market prices are lower than world market prices," the Federal Energy Regulatory Commission noted [CP04-47-001, CP05-396-001]. "Sabine Pass asserts that stored LNG would be readily available for U.S. consumption if U.S. prices 'were to rise to a level where domestic sale of the LNG held in storage were to become economically feasible...'"

FERC also noted that Sabine Pass marketing affiliate Cheniere Marketing Inc. has sought from the U.S. Department of Energy (DOE) blanket authorization to engage in short-term exports of as much as 64 Bcf of foreign-sourced LNG, cumulatively, for a two-year period beginning on the date of the authorization.

"The proposal will help ensure that the Sabine Pass facility remains in operation even when U.S. market prices are low and, to the extent that a domestic market for LNG does develop, the proposal will help ensure that a supply is present and available for delivery to domestic markets," FERC said.

Cheniere sought the approval last fall and had asked that the Commission act on its request by last December (see NGI, Oct. 27, 2008). Last fall the U.S. Coast Guard determined that the modifications sought by Sabine Pass should not change or exceed the waterway impacts considered in the original waterway suitability report issued in March 2006 (see NGI, Oct. 13, 2008).

"When we get DOE approval we will be in a position to look at exports," Cheniere CEO Charif Souki told Reuters last week. "Hopefully we will get that in the next few days."

The Sabine Pass approval follows a similar decision made by the Commission last month to allow Freeport LNG Development LP to build minor facilities to export LNG from its terminal on Quintana Island in Texas on a short-term basis (see NGI, May 11). "The ability to export foreign-sourced LNG will provide Freeport LNG with greater latitude to acquire LNG for maintenance and operation of its facilities during those periods when LNG deliveries for ultimate domestic use may not otherwise be adequate to maintain the terminal in a state of readiness to serve U.S. markets," the agency order said [CP03-75].

Imports of LNG to the United States are expected by many to increase as more liquefaction comes on-line around the globe now through 2011 (see NGI, June 1).

Also reflecting changes in the global LNG market, Kitimat LNG Inc. recently reconfigured its proposed terminal at Bish Cove, BC, to a liquefaction and export facility from a previously proposed regasification import terminal. The firm has agreements to send liquefied Canadian gas to Japan and Korea (see related story).

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