The Federal Energy Regulatory Commission Tuesday vacated Creole Trail LNG LP’s Section 3 authorization to build a liquefied natural gas (LNG) terminal in Cameron Parish, LA, citing the company’s failure to meet the agency-ordered deadline for being in service.

The terminal project, which FERC approved in June 2006, was to be placed into service by mid-2010. It failed to make the deadline and requested an extension until June 15 of this year, which the Commission granted.

However, “since Creole Trail LNG did not construct and place the LNG terminal into service as required by June 15, this authorization has expired,” the order said [CP05-360]. Thus “the authorization issued to Creole Trail LNG in the June, 15, 2006 order to site, construct and operate an LNG terminal under NGA [Natural Gas Act] Section 3 is vacated,” it noted..

The project, if it had been constructed, would have had the capability of storing 13.5 Bcf and sending out a maximum of 3.3 Bcf/d, according to Creole Trail, a unit of Houston-based Cheniere Energy Inc. And it was expected to received as many as 400 LNG vessels each year.

Creole Trail is the latest LNG import project to bite the dust. Earlier this month Southern LNG Co. LLC asked FERC to vacate part of an order that authorized the second phase of the expansion of the Elba Island LNG import terminal in Georgia (see Daily GPI, Aug. 3).

In the motion seeking to vacate a portion of the September 2007 order approving the project, the El Paso Corp. subsidiary said BG LNG Services LLC, which was expected to subscribe to the expansion capacity, did not intend to do so, making the expansion no longer necessary. Southern LNG’s request still is pending at the Commission.

Besides scaling back projects, companies are turning to the more lucrative LNG export market. Recently a joint venture formed by Houston-based Southern Union and BG LNG Services, a subsidiary of BG Group plc — Lake Charles Exports LLC — received approval from the U.S. Department of Energy to export LNG to countries with which the United States has a free trade agreement (see Daily GPI, Aug. 8).

Before it can export LNG, the company will have to construct liquefaction facilities, according to Southern Union. The joint venture plans to export approximately 2 Bcf/d over a 25-year period.

U.S. LNG imports were once thought to be the future of the natural gas market, and that thinking spurred a regasification terminal construction craze. But the import potential has dimmed with the advent of Marcellus and other shale gas supplies, as well as the disparity in the price of LNG between the United States and world markets. These factors have led to a plentiful and inexpensive supply of natural gas in the U.S. and higher demand and prices for LNG elsewhere.

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