The Department of Energy (DOE) Thursday approved Cheniere Energy Partners LP's request to export liquefied natural gas (LNG) from a proposed new liquefaction plant at the site of its LNG import facility in Cameron Parish, LA. It is the first authorization to export U.S.-produced natural gas as LNG from a terminal in the Lower 48.

Cheniere Energy subsidiary Sabine Pass Liquefaction LLC received clearance to export approximately 803 Bcf annually for a 30-year term to any nation with the capacity to import LNG and with which the United States currently has, or in the future enters into, a Free Trade Agreement, including Canada, Mexico, Oman, Peru , Australia and Costa Rica. The first export is to occur no later than 10 years from the date of the DOE approval (Sept. 7, 2020), the department said.

This would make the Sabine Pass LNG terminal a bi-directional facility and the only permanent LNG export facility in the Lower 48, tapping into supplies from the nation's burgeoning shale gas plays. While other Gulf Coast terminals have been authorized to re-export LNG that has been imported from other countries, this is the first which will export U.S. natural gas.

The cost to build the proposed liquefaction and export facility will be more than $1.6 billion, Sabine Pass Liquefaction said in a draft resource report filed with the Federal Energy Regulatory Commission (FERC).

Sabine Pass said its proposal, which was filed at DOE on Aug. 11, is the first part of a two-phase export authorization request. It filed a second proposal last Thursday to export the same amount (803 Bcf) of LNG to World Trade Organization (WTO) and non-WTO countries for a 20-year period. Sabine Pass is requesting that the first export in the phase-two project be authorized to occur within five years of the date it is approved. Sabine expects this second application to be subject to more rigorous public interest review and analysis by DOE.

Sabine Pass said it was seeking the two-phase export authorization from DOE in conjunction with its development of the liquefaction project, which currently is under review by FERC (see Daily GPI, Aug. 20).

Most of the gas supply underlying the long-term LNG contracts will come from the historically prolific Gulf Coast gas fields, including the Permian, Anadarko and Hugoton basins; and the unconventional gas plays in the Barnett, Haynesville, Eagle Ford, Fayetteville, Woodford and Bossier shales. Exports will bolster flagging domestic demand which has undercut prices, Sabine Pass said.

The addition of liquefaction capability at the Sabine Pass terminal "will facilitate the development of unconventional, and particularly shale, gas-bearing formations in the U.S.," Cheniere said. When completed, the project would be capable of processing an average of approximately 2.6 Bcf/d of pipeline-quality natural gas (including fuel and inerts) from the Creole Trail Pipeline, the company said.

Sabine Pass is seeking FERC authorization no later than December 2011 to site, construct and operate the liquefaction project. It anticipates requesting authorization to begin construction in January 2012. Stage 1 of the two-phased project would include two ConocoPhillips LNG process trains. Stage 2, which would include two essentially identical LNG trains, would be built "after sufficient commercial justification is achieved," according to Cheniere's FERC filing. Sabine Pass expects the Stage 1 LNG Train to be complete and ready for export in January 2015; and the Stage 2 LNG Train in July 2015.

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. Apache Corp.'s Canadian subsidiary and the Canadian arm of Houston's EOG Resources Inc. are partnering on a proposed LNG export terminal at Bish Cove, BC (see Daily GPI, May 19).

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