The staff of the Federal Energy Regulatory Commission has given preliminary environmental clearance to Dynegy’s proposed Hackberry liquefied natural gas (LNG) terminal in Louisiana — the first new LNG terminal scheduled for construction in the United States in 25 years.

“We concluded that, with the use of Hackberry LNG’s proposed mitigation and adoption of our recommended mitigation measures, construction and operation of the proposed facilities would have limited adverse environmental impact,” staff said in a draft environmental impact statement (DEIS) on the terminal project [CP02-376].

Some of the mitigation measures are aimed at addressing critics’ concerns about potential ship traffic congestion that could result from the LNG project.

The draft environmental clearance comes a little more than three months after the Commission issued a preliminary determination (PD) on non-environmental issues for the Hackberry facility, and less than a year after Dynegy subsidiary Hackberry LNG Terminal LLC filed its application (see NGI, Dec. 23, 2002). The LNG project still must receive final environmental clearance and a certificate before construction can begin.

Hackberry would operate under market-based rates and have the capacity to receive and vaporize 750 MMcf/d of imported LNG initially and be expanded to 1.5 Bcf/d later. The proposed terminal is targeted for operation in 2006.

The project calls for Hackberry LNG to build a ship unloading slip with two berths; three LNG storage tanks, each with the capacity to hold 3.5 Bcf of gas equivalent; a 35-mile, 36-inch diameter sendout natural gas pipeline; and associated facilities.

Dynegy first announced plans to proceed with the Hackberry LNG terminal in July 2001. The planned facilities will be located on the site of the company’s existing liquefied petroleum gas terminal in Hackberry, LA, adjacent to the Calcasieu Ship Channel, which feeds into the Calcasieu River.

As part of the PD on the Hackberry terminal, FERC announced that in the future it will treat LNG facilities as the functional equivalent of natural gas production facilities, over which it has no open-access jurisdiction, and will allow them to charge market-based rates for terminal services. The significant policy shift was intended to promote construction of more LNG facilities in the United States, which the Commission believes will be critical to meeting future gas demand.

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