FERC is expected to take up the construction application for the Sabine Pass Liquefaction LLC project at its open meeting Thursday. The facility already has export authorization from the Department of Energy and customers lined up for most of its liquefied natural gas (LNG) capacity.
Houston-based Cheniere Energy Partners LP, parent of Sabine Pass Liquefaction, had pressed the Federal Energy Regulatory Commission (FERC) to approve the project by March 15, but FERC had said it was under no statutory deadline to issue a decision.
“We expect the project to be approved [next Thursday], with conditions. We don’t know whether any conditions would constitute a requirement that could potentially delay the start of construction,” said energy analyst Christine Tezak of Robert W. Baird & Co. Inc.
Before FERC can approve the project, it will have to address a protest filed in late January by the Sierra Club. The environmental group argued that the agency should have done a full environmental impact statement on the project rather than an environmental assessment (EA) (see Daily GPI, Feb. 1). Sierra Club’s intervention “was filed almost 11 months beyond the intervention deadline of March 4, 2011, and approximately 15 months after Sierra Club’s public acknowledgment of the project,” Sabine Pass countered.
“We do not think the Sierra Club’s argument that the Commission should have executed a full environmental impact statement versus an EA poses a significant obstacle to the Commission’s ultimate approval of the project,” Tezak said previously (see Daily GPI, March 28). The liquefaction plant would be built on the site of Sabine’s already vetted and currently operating Gulf Coast LNG import and gasification facility.
The Sierra Club is not the export project’s only opposition. Speaking at a conference in Houston, LNG lawyer David Wochner, a partner with Sutherland, Asbill & Brennan LLP, said last month that Cheniere is facing headwinds created by a group called the Gulf Coast Environmental Labor Coalition (GCELC), which isn’t quite what its name would suggest.
“My own sense, and this is I would say is a highly educated guess, is that they are funded by opposition to Cheniere,” Wochner said of GCELC (see Daily GPI, March 27). “They have filed pleadings [CP11-72-000] that are extremely well written pleadings — expensive lawyers. They have done significant environmental analysis. They have been really, really bird dogging Cheniere on these air issues, and this is not just a fly-by-night Gulf Coast environmental group that has a few dollars to throw. These folks are going to go the distance on this issue. I don’t think they really care about the air permit issues. I think they’re trying to slow Cheniere down.”
On the contracting front, though, Cheniere has been making steady progress. It has inked four contracts to supply LNG to units of BG Group, Spain’s Gas Natural Fenosa, Korea Gas Corp. (Kogas) and Gail (India) Ltd. for a total of 16 million metric tons per year capacity of the 18 being developed at the terminal (see Daily GPI, Jan. 31). One or two of these parties might have buyer’s remorse as in making haste to sign up with Cheniere they left too much on the table, Wochner suggested.
“Kogas and Gail of India signed contracts with Cheniere with basically no exit provisions in those contracts,” Wochner said. “They could have literally taken the BG contract, which was in the public domain, and started with that and said, ‘We’d at least like what BG got.’ Instead, they signed a contract because of this rush mentality — and this view, I think, of some of the foreign utilities of securing supply — and entered into agreements with Cheniere that I think are going to cause them real problems later on.”
The Sabine Pass liquefaction project would be capable of processing an average of 2.2 Bcf/d of pipeline-quality natural gas from the Creole Trail Pipeline, which interconnects with the Sabine Pass terminal [CP11-72].
The FERC authorization is sought for construction of the facilities. The Department of Energy (DOE) already has approved plans for Sabine Pass Liquefaction to export 2.2 Bcf/d to countries that have a free trade agreement (FTA) with the United States and also to non-FTA countries (see Daily GPI, Nov. 22, 2011). Sabine Pass is the only U.S. project that has been approved to export to non-FTA countries. Other export applicants are on hold while DOE studies the possible impact of exports on the domestic price of natural gas.
On Thursday the Commission also is expected to take up rehearing of the certificate approving the Jordan Cove LNG import terminal project in Oregon. Both the state of Oregon and the U.S. Fish and Wildlife Service protested the certificate approving the terminal, which would provide up to 1 Bcf/d of regasified LNG to customers in the Pacific Northwest and California. Plans call for it to be constructed at the international port of Coos Bay on the Pacific Coast. The sponsors already have indicated they will try to turn the project into an export facility, making preliminary filings with both FERC and DOE.
The Canadian government already has licensed two liquefaction facilities at Kitimat, British Columbia on the West Coast to export up to 1.65 Bcf/d of LNG (see Daily GPI, April 13).
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