FERC issued a draft order Wednesday granting a certificate for development and operation of the $750 million Sabine Pass LNG terminal in Cameron Parish, LA. With a proposed peak sendout of 2.6 Bcf/d of regasified LNG, Cheniere LNG’s Sabine Pass terminal will be the largest of the three proposed and four existing U.S. LNG terminals with FERC certificates.

While granting Sabine Pass a certificate, the Commission told Cheniere that the design for “levelized initial” transportation rates for service from the terminal will have to be modified to be “consistent with its firm shipper contracts” or be redesigned using “conventional ratemaking practices.”

“[It] was a hard-nosed review, but with a fair and timely outcome and that is what the government is all about,” said FERC Chairman Pat Wood, who also noted that the terminal will be located directly across the lake from his childhood home. He said the project “should be displayed as a very good place to site an LNG plant, quite frankly.

“I think it is a good day for the country when we can address the supply needs for this important resource in a manner that is based on good sound environmental review, obviously from the company’s perspective good economics, and a good location,” said Wood.

“I know we have more [LNG projects to come]. And I appreciate the timeliness,” Wood told FERC staff. “I don’t know how many more winters we can handle [with $8+/MMBtu gas prices]. I’d love for us to be drilling domestic supplies, but until we get some of those artificial barriers to entry removed on that front, we have to do our part here at FERC.”

The Sabine Pass LNG project includes will include three 160,000-cubic-meter storage tanks (10.1 Bcf of storage space) and a 16-mile 42-inch diameter pipeline that will link the terminal to Natural Gas Pipeline Co. of America (NGPL) in Johnson’s Bayou, LA. From there, the pipeline will extend to another connection with NGPL and to connections with Transcontinental Gas Pipe Line, Texas Gas Transmission, Louisiana Resources Pipeline Co. and others pipelines in the Gulf Coast region.

After calling off talks to take an ownership stake in the project, an affiliate of ChevronTexaco Global Gas said on Monday that it had finalized a 20-year agreement for 700 MMcf/d of reserved regasification capacity at Sabine Pass LNG. The agreement also includes options to reduce or expand capacity to 500 MMcf/d or 1 Bcf/d, respectively (see Daily GPI, Dec. 14). Sabine’s other large capacity holder is Total LNG USA with a reservation for 1 Bcf/d for 20 years starting in April 2009 (see Daily GPI, Nov. 10). Cheniere LNG will retain the balance of the capacity.

This is Cheniere’s second FERC-certificated LNG project; its first is Freeport LNG in Brazoria County, TX, which it owns with ConocoPhillips, Contango and Dow Chemical. Cheniere also has filed an application at FERC for a terminal in Corpus Christi, TX, and has plans for terminals in Brownsville, TX, Mobile Bay, AL, and another location in Cameron Parish, LA.

It expects to begin the regulatory process next month on the second Cameron Parish terminal, called Creole Trail LNG, which will be located at the mouth of the Calcasieu Channel.

Dozens of other LNG projects have been proposed in North America because of the high cost of natural gas and the need for greater gas supply to meet ever-growing demand particularly from the power generation sector. In addition to the three proposed terminals with FERC certificates (Sabine Pass, Freeport LNG and Sempra Energy’s Cameron LNG), two pipelines to proposed LNG terminals in the Bahamas have FERC certificates (Tractebel’s Calypso project and the AES Ocean Express pipeline).

The Coast Guard also has approved Excelerate’s Louisiana Energy Bridge and ChevronTexaco’s Port Pelican offshore terminals in the Gulf of Mexico. Mexico has approved two proposed LNG terminals: Shell’s Altamira project on the Gulf Coast and Sempra and Shell’s Energy Costa Azul LNG terminal in Baja California. And Canada so far has approved one terminal, Irving Oil and Repsol’s Canaport facility in St. John, NB. For more details on proposed terminals see NGI’s LNG terminal list at https://intelligencepress.com/features/lng/terminals/lng_terminals.html.

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