The Gas Co. LLC’s (TGC) plans to operate facilities in Hawaii to receive liquefied natural gas (LNG) sourced from natural gas produced in the continental U.S. do not include “an LNG terminal as envisioned under NGA [the Natural Gas Act]” and therefore do not require FERC authorization, the Commission said Thursday.

In a consent vote taken during the Federal Energy Regulatory Commission’s (FERC) monthly meeting in Washington, DC, FERC dismissed TGC’s request for LNG import authorization, saying the company’s plans involve domestic supplies and not foreign gas, as NGA envisions. In addition, the proposed facilities and operations do not constitute an LNG terminal as defined in NGA, FERC said.

“…[W]e conclude that there is no call for the Commission to fill any regulatory gap since the facilities and operations would be subject to safety and environmental provisions of other federal entities, principally the Department of Transportation and the Coast Guard,” FERC said.

The Macquarie Infrastructure Co. (MIC) subsidiary, which does business as Hawaii Gas for select products and services, is the state’s only government-franchised full-service gas company.

TGC said it expects to be prepared to receive a first container of LNG in as little as 60 days, subject to having obtained required approvals from state and local authorities.

“The FERC’s decision not to assert jurisdiction over the proposed transportation of LNG to Hawaii is a positive step for both the company and the Hawaiian economy,” said MIC CEO James Hooke. “The decision should hasten the implementation of the LNG program at Hawai’i Gas and opens the door to reducing the cost of energy in Hawaii.”

Last year, Honolulu-based TGC filed an application at FERC seeking authorization to operate facilities that “will be used to receive, unload, load, store, transport, gasify or process natural gas that is sourced on the continental U.S. and transported by waterborne vessel to Hawaii.” The application applied to the first phase of what would be a three-phase project. At the time, TGC said it would seek authorizations for Phase II and Phase III facilities in subsequent applications at FERC.

Phase I of the project would include a fleet of up to 20 40-foot cryogenic intermodal containers that would be transported to Hawaii on common carrier cargo vessels, existing facilities or secured lots on the company’s premises that would be used to store containers for short periods of time, and mobile LNG vaporization/regasification units that would be used to inject gas into the company’s distribution pipeline or directly into an end-use customer’s facilities.

The objective of the three-phase LNG strategy is to develop the facilities necessary to supply gas for up to 75% of TGC customers’ requirements, and to provide fuel for up to 400 MW of power generation facilities and for industrial and other commercial applications, TGC said.

Environmental groups had protested TGC’s application (see NGI, Oct. 29, 2012). Sierra Club, which has filed objections to several LNG projects pending before FERC, asked the Commission to prepare an environmental impact statement on all phases of the proposal.

LNG imports could cut residential and business oil-based energy bills in Hawaii substantially during the next 20 years, according to a recent University of Hawaii study (see NGI, Jan. 14). On Oahu, which includes Honolulu, natural gas would cost about half of what oil would through 2030, according to the report, which pegged Hawaii’s total potential annual demand for LNG at 1-2 million tonnes per annum between 2015 and 2035.

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