While reiterating that brownfield liquefied natural gas (LNG) export projects are likely to get U.S. regulatory approvals, Sempra Energy senior executives told financial analysts Thursday that the company’s natural gas storage infrastructure in the Gulf of Mexico (GOM) region is going to be more valuable when the export facilities start operating.
Sempra’s U.S. Gas & Power unit has 30.5 Bcf of gas storage working capacity in two facilities in Mississippi and Alabama, and it is developing 24 Bcf in Louisiana near its Cameron LNG terminal, for which it is seeking federal approvals to build a multi-billion-dollar joint venture liquefaction facility for exporting LNG supplies starting in 2017.
CEO Debra Reed said that in a meeting she attended earlier this year, Obama administration officials “were quite favorable on exporting natural gas if there are appropriate measures in place to deal with the environmental issues surrounding fracking.”
Reed said Sempra is very bullish about the storage assets as LNG export projects develop around the GOM.
“We have done our engineering on turning the flow around at Cameron [the existing LNG import facility]; we are looking at other pipeline developments in the region to allow us to more easily move gas around; and our [developing] Louisiana storage is the closest developable storage to our facility and the [proposed] Cheniere and Freeport export facilities,” said Sempra President Mark Snell. “That storage will become increasingly more important as these plants start operating.
“We’re excited about the opportunities [in the GOM] and for us to become gas managers, helping people make sure these export facilities can run most efficiently, which is continuously without interruption, so having readily available gas storage is a real plus and we’re well positioned to do that.”
In terms of Sempra’s applications with the Federal Energy Regulatory Commission to build an export facility and with the Department of Energy (DOE) for approval to export to countries that are not parties to free trade agreements with the United States, Reed and Snell are optimistic that they will have one of the approved projects.
“All of the feedback we’re getting out of Washington makes us believe that our project and the other brownfield ones are likely to be approved,” Snell said. “There is nothing on the record at DOE that indicates they shouldn’t approve these projects, and I think that is an important point to remember. I would suspect they are going to get approved.”
Reed cited recent remarks by DOE Secretary-designate Ernest Moniz at his Senate confirmation hearing in which he indicated that as the Natural Gas Act stands, the argument can be made that opponents need to make a case why the projects should not be approved.
“The burden of proof is on the other parties,” Reed said. “What we’re saying is someone has to come in and make a case for why these projects are not in the public good. Everything that has come out has shown that these projects are in the public good, and Moniz commented on that at his hearing.”
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