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FERC Again Asked to Look Upstream When Weighing LNG Facilities

FERC has been called upon once again to consider the potential upstream effects of authorizing facilities to export liquefied domestic natural gas as it weighs the environmental impacts of another terminal project. But one energy analyst thinks this appeal, like those before it, will be a non-starter, too.

In comments on the draft environmental impact statement (DEIS) for Sempra Energy's Cameron liquefied natural gas (LNG) export project along the Calcasieu Channel in Hackberry, LA (see Daily GPI, Jan. 10), Region 6 of the U.S. Environmental Protection Agency (EPA) said the DEIS "...does not consider the potential for increased natural gas production as a result of the proposed export terminal, or the potential for environmental impacts associated with potential increases in natural gas production."

EPA said the Federal Energy Regulatory Commission should "...consider the extent to which implementation of the proposed project could increase the demand for domestic natural gas extraction, as well as potential environmental impacts associated with the potential increased production of natural gas." Gas supply was cited as a possible indirect effect. It came near the end of a list of EPA proposals for mitigation of the direct impact of the project on low income populations and wetlands, dust control and air emissions controls on engines used in construction.

The document -- which was filed March 3 but not posted to the FERC website until last Friday -- does not mention hydraulic fracturing. But that appears to be the subtext, as it was more than a year ago when EPA made a similar and unsuccessful appeal related to Dominion's Cove Point LNG export project (see Daily GPI, Nov. 21, 2012). And before that, the Commission rejected a similar argument from the Sierra Club related to Cheniere Energy's Sabine Pass export project (see Daily GPI, July 30, 2012).

EPA also recommended that FERC "...quantify and consider the lifecycle GHG [greenhouse gas] emissions associated with the proposed action [project approval]. The methodologies for conducting that analysis are available and well developed; FERC could draw on good examples of lifecycle GHG emissions done in NEPA analyses by other federal agencies."

In its filing EPA gave Cameron LNG a rating of "EC-2," which is a better "grade" than the agency gave the Keystone XL Pipeline, said analysts at ClearView Energy Partners LLC in a note Wednesday. "EPA's rating is unlikely to hold back the project," the analysts said, adding that Cameron got a rating akin to a "B" or "B+" while Keystone received "a gentleman's C."

"We anticipate that the FERC will find EPA's requests outside of the scope of its environmental review, notwithstanding the EPA's reference to 'good examples of lifecycle GHG emissions by other federal agencies.' The EPA did not specify what other federal agencies had approaches worth emulating."

FERC is unlikely to change its approach to evaluating GHG emissions unless the Council on Environmental Quality changes the regulations governing the National Environmental Policy Act, ClearView said.

As far as whether the export project would increase demand for natural gas extraction, "FERC has been here before and prevailed in court when it rejected similar protests (and a rehearing request) from the Sierra Club in the 2012 approval of the Sabine Pass LNG export project," ClearView said.

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