The U.S. Department of Energy’s (DOE) decision to approve a second license to allow liquefied natural gas (LNG) exports to non-free trade agreement (FTA) nations includes language that supports the exports as being in the public interest, Sempra Energy CEO Debra Reed said last week.
At the company’s annual analyst meeting in New York City, Reed said she interpreted the DOE approval of the Freeport, TX, export project as having put the burden of proof now on LNG opponents to demonstrate that proposals to export LNG, such as Sempra’s Cameron, LA, LNG project, as not in the public interest.
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.”
Sempra President Mark 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. 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.”
The executives talked bullishly about prospects for the $9-10 billion proposed Cameron LNG export project to be in operation by 2017. Bids are still being taken on the engineering and construction firm and an announcement isn’t expected until later this year.
Sempra sees a lot of opportunity in Mexico, where the company has a lot of business. A longer-term prospect that Sempra might pursue is 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.
Snell said there is only room for one liquefaction train there. “Keep in mind that this facility is fully subscribed [BP plc and Royal Dutch Shell plc], but we’re looking at that possibility and we think it is real. It is probably politically a little trickier because Pemex [state-owned Petroleos Mexicanos] is the only company in Mexico with the right to sell all petroleum products. We’re still optimistic on it, but right now Cameron is our first priority.”
“Natural gas is clearly developing faster than anyone would have anticipated, with more than 100 years of supply” in the United States, said Reed. “That is greatly beneficial to our export business, and it is also greatly beneficial longer term to our storage business. Third-parties are going to need a place to store gas before export.”
The supply surge is also helping Sempra’s infrastructure business, particularly south of the border. “Mexico is moving from an oil economy to a natural gas economy, and we are the second largest energy company in Mexico.”
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