FERC misunderstood the limits of its jurisdiction and failed to "engage in reasonable forecasting" when it did not consider whether liquefied natural gas (LNG) exports would induce increased gas production, the Sierra Club said in a newly filed challenge to the Commission's approval of Cameron LNG LLC's Louisiana export terminal.

Sierra Club and other environmental organizations have filed a request for rehearing and a stay on the Cameron approval, which was issued last month (see Daily GPI, June 19). The theme of their principal objection is the same as previous environmental challenges to LNG exports: that growing the market for gas would stimulate more domestic production, including that from hydraulically fractured wells, which would be bad for the environment. Sierra Club and others argue that the Federal Energy Regulatory Commission (FERC) must weigh this as part of its review under the National Environmental Policy Act (NEPA).

"Movants' most fundamental disagreement with FERC concerns FERC's refusal to include effects of induced gas production within the scope of the NEPA and Natural Gas Act [NGA] analyses," the filing said. "NEPA requires a hard look at 'indirect effects,' which are 'caused by the action' but are later in time or farther removed in distance [than direct effects], but are still reasonably foreseeable..."

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They also argued that FERC must "take a hard look at cumulative impacts." The filing quotes NEPA, which said these are "the impact on the environment, which results from the incremental impact of the action when added to other past, present and reasonably foreseeable future actions, regardless of what agency (federal or non-federal) or person undertakes such actions."

Sierra Club and the other groups said "...induced gas production is plainly an indirect effect of the proposed project, and the increases in production that would result from this and other projects must also be considered in the cumulative effects analysis."

Additionally, the filing said the Commission should have considered the effects of the project on domestic power production, suggesting that it would cause generators to shift from gas-fueled plants to coal-fired generators. FERC also "...erred by failing to take a hard look at the effects of various design alternatives with regard to air pollution impacts.” And the FERC analysis of the project's wetlands impact fell short in concluding that one type of wetland could be substituted for the loss of another type, according to the filing.

In 2011 Cameron LNG proposed adding liquefaction and export facilities to its existing import terminal in Hackberry, LA. The project is expected to cost $9-10 billion and would use many of the existing facilities. Cameron has approval from the U.S. Department of Energy (DOE) for exports up to its full capacity to all free trade agreement (FTA) countries. Its conditional authorization to export to non-FTA countries was granted by DOE on Feb. 11 (see Daily GPI, Feb. 11). The conditions on the authorization likely won’t be lifted by DOE until after FERC acts on the Sierra Club rehearing request, according to analysts at ClearView Energy Partners LLC.

“At first blush, the shortcomings alleged by the Sierra Club do not suggest to us that the FERC will revisit its decision to extend an NGA Section 3 authorization to Cameron LNG,” ClearView said in a note Tuesday. “It is more difficult to ascertain how long the FERC may require to issue an order on rehearing that likely rejects the errors Sierra Club suggests have been made here.”

If FERC moves as quickly as it did with Cheniere Energy Inc.’s Sabine Pass authorization, an order on rehearing could be forthcoming in early fall, ClearView said.