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EIA: U.S. LNG Re-Exports Set Record in January

Re-exports of foreign-sourced liquefied natural gas (LNG) reached their highest level in January since the service began in the United States in December 2009, the Energy Information Administration (EIA) said Monday.

Re-exports of foreign-sourced LNG from U.S. LNG import terminals exceeded 12 Bcf in January, equivalent to about 30% of the U.S. import volumes during that month.

The majority of the January re-exports -- nearly 10 Bcf -- came from Cheniere Energy Partners LP's Sabine LNG terminal in Cameron Parish, LA, and a little more than 2 Bcf came from Freeport LNG Development LP's terminal in Brazoria County, TX. The EIA reported that there were no re-export LNG volumes for Sempra Energy's Cameron LNG terminal in Hackberry, LA, as of March. These are the only U.S. terminals that have been approved to re-export LNG.

Foreign LNG suppliers use U.S. terminals as a stopover because of the available above-ground storage facilities, which allows them to wait for more favorable price signals before re-exporting the LNG to other countries.

U.S. LNG imports and deliveries from terminals to the domestic natural gas market are depressed due to bulging gas supplies, particularly from the development of shale formations, and cratering U.S. spot gas prices, which are well below levels in other major gas markets with the capability to import LNG, the agency said.

"Typically low utilization at these terminals has created available LNG storage capacity in the terminals' storage tanks. Re-exportation of LNG lets marketers and suppliers store gas while waiting for price signals before delivering their LNG to the higher-paying markets in Asia, Europe and South America," EIA said.

In May 2009 the Federal Energy Regulatory Commission granted Freeport LNG Development's request to re-export LNG (see Daily GPI, May 11, 2009). Shortly thereafter, Cheniere Energy received FERC approval to re-export LNG from its Sabine Pass terminal in June 2009.

And most recently the Commission approved Sempra Energy's application to begin re-exporting LNG from its Cameron import terminal in Hackberry (see Daily GPI, March 4).

In a related development last month, the Department of Energy (DOE) approved a request by Cheniere Energy Partners unit Sabine Pass Liquefaction LLC to liquefy and export homegrown natural gas from the Sabine Pass LNG terminal to any country that has or develops import capacity (see Daily GPI, May 23). The DOE decision, however, gives the department the authorization to essentially pull the rug out from under Cheniere Energy if the LNG exports should threaten the stability of the domestic gas market.

Specifically, the language in the DOE decision reads: "We intend to monitor those conditions in the future to ensure that the exports of LNG authorized herein and in any future authorizations of natural gas exports do not subsequently lead to a reduction in the supply of natural gas needed to meet essential domestic needs. The cumulative impact of these export authorizations could pose a threat to the public interest. DOE is authorized, after opportunity for a hearing and for good cause shown, to take action as is necessary or appropriate should circumstances warrant it."

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