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Sempra CEO: DOE Freeport OK is Mandate for LNG Exports
The recent approval of a second license to export domestic liquefied natural gas (LNG) to non-free trade agreement (FTA) nations includes language that supports the disputed exports as being in the public interest, Sempra Energy CEO Debra Reed said at an investor conference Thursday in New York City.
At the company’s annual meeting with financial analysts, Reed interpreted the U.S. Department of Energy’s (DOE) approval of the Freeport, TX, export project (see Daily GPI, May 20) to have put the burden of proof on opponents to demonstrate that proposals to export LNG, such as Sempra’s proposed Cameron, LA, project, are not in the public interest.
As expected, Reed and Sempra President Mark Snell talked bullishly about their prospects for having the $9-10 billion Cameron LNG export project operable by 2017; however, they fell short of the expectation that they would announce the selection of an engineering/construction firm, noting that bids are still being taken and the announcement will not come until later this year.
Snell offered the longer-term prospect that Sempra might pursue a small export capability at its Energia Costa Azul LNG project in North Baja California in Mexico, which is now fully subscribed as an import terminal. For now, however, Snell said the Cameron project is Sempra’s top priority.
Reed said the Freeport DOE decision was “very positive,” including key parts “that are absolutely important to us and how we view the future.
“In the Freeport decision, the DOE reaffirmed the 1934 Natural Gas Act, and that means they reaffirmed that the burden of proof to have these projects not go forward is on others,” she said. “[Opponents] have to show that it is not in the public interest [to export LNG], and further in the Freeport order they declare that these projects are in the public interest.
“It sets up the framework for long-term approval of exports, and we think that is very, very positive. And another part of the Freeport decision saw DOE address the 200,000 comments it had received on the export issue, so we see the Freeport order as being extremely constructive.”
Snell said the non-FTA permit from DOE is essential to ensure that the Cameron project is fully viable for the long term. “The Freeport decision was terrific,” said Snell. “Our analysis is really quite positive because of the reaffirming that this is in the public interest. Two big hurdles were met in the decision.”
Because DOE dealt with thousands of comments in the Freeport order, Snell said it should not take as long to get a decision on other projects, including Cameron. “There is nothing that we have heard from DOE that would lead us to believe that we will not get a permit by year-end; we’re very confident of that.”
In response to an analyst’s question on the Costa Azul LNG terminal in Mexico, Snell said there is only room for one liquefaction train there. “Keep in mind that this facility is fully subscribed (BP and Shell), but we’re looking at that possibility and we think it is real. It is probably politically a little trickier because Pemex is the only company in Mexico with the right to sell all petroleum products. We’re still optimistic on it [longer term], but right now Cameron is our first priority.”
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