With the federal government continuing to drag its feet on applications for exporting domestic liquefied natural gas (LNG) — and President Obama’s nominee to head the Department of Energy (DOE) hedging his bets on the issue — some industry officials contend that regulatory agencies may not be the best place to decide how many of those facilities should operate.
“We think that the marketplace is the best determiner,” said Southwestern Energy’s Jim Tramuto, vice president, governmental and regulatory strategies, who spoke at the LDC Gas Forum in Atlanta. “I think there are a number of projects that will be approved…but the United States is not going to capture all of that [international] market. There are competitors out there.”
DOE has slow-walked permits for LNG exports to countries with which the U.S. does not have free trade agreements (FTA). Cheniere Energy Inc. is the only company to have so far secured DOE authorization to export domestically sourced LNG to both FTA and non-FTA countries, from its Sabine Pass LNG export project in Louisiana (see NGI, April 18, 2012).
Numerous projects have received permission to export to FTA countries, a process that is virtually automatic by virtue of the trade agreement. Most of the FTA countries are small and have little need or no receiving terminals for LNG. Recently, however, Japan has lobbied the U.S. to grant it FTA status in regards to LNG deliveries, which it sorely needs. To date Japanese companies have signed to buy LNG from Sempra Energy’s Cameron LNG project in Louisiana and Dominion’s Cove Point project in Maryland.
“We would hope and believe that the strength of commercial agreements with the developers of projects, with offtakers of projects, with the ability to raise funding as needed, and with associated upstream commitments and the downstream need, would have some relevance in the decision-making process, as opposed to simply a scheme with a number of projects, much as we did on the LNG regas side,” said Jeff Welch, head of North American gas for EDF Trading North America. “We had 38 projects that were filed for regasification status — some that got their permits, some that didn’t — and some never stood a chance.”
As for what the market will bear, nobody in Atlanta was ready to be too specific (see related story).
“It won’t be the maximum amount that it’s in the applied-for export queue; it will be something less than that,” said Mark Stultz, senior vice president, regulatory policy and communications for BP Energy Co. “There are a lot of moving pieces associated with that, and I don’t know exactly where that economic ceiling might be on the amount of exports.”
The total capacity of the eight projects that are first in line for consideration if DOE decides to allow LNG exports to the world market is 12.3 Bcf/d, equal to about 18% of U.S. consumption. Those are the projects that already had filed with the Federal Energy Regulatory Commission for terminal facility site approval on Dec. 5 when DOE announced its latest review of the export question (see NGI, Dec. 10, 2012). At the time, DOE said those projects would rate first consideration.
Four of those projects currently are enmeshed in the certification process, awaiting environmental impact statements, which could take another three to six months. These include Cameron and Cove Point, as well as Freeport LNG and Corpus Christi LNG, both in Texas. Four others are in the pre-filing process which attempts to iron out issues before the project files for certification. These include an export project at Lake Charles, LA and a floating liquefaction facility out of Lavaca Bay, TX. Two others planned for the Oregon coast have run into strong local resistance.
At his confirmation hearing last week, DOE secretary-designate Ernest J. Moniz committed to review the department’s study of natural gas exports, which relied on what some have said is outdated information which failed to examine the regional impacts of exporting LNG (see related story and NGI, April 15a). Moniz, acknowledged his prior support for natural gas exports, but did not indicate whether he would step up the permitting of applications to export LNG to world markets if he is confirmed by the Senate.
Canadian regulators are also considering a growing list of applications to export LNG (see NGI, April 15b).
Â©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |