[Federal Register Volume 76, Number 113 (Monday, June 13, 2011)]
[Notices]
[Pages 34212-34215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14554]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
[FE Docket No. 11-59-LNG]
Lake Charles Exports, LLC; Application for Long-Term
Authorization To Export Liquefied Natural Gas
AGENCY: Office of Fossil Energy, DOE.
ACTION: Notice of application.
-----------------------------------------------------------------------
SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice of receipt of an application (Application), filed on
May 6, 2011, and amended on May 26, 2011, by Lake Charles Exports, LLC
(LCE), requesting long-term, multi-contract authorization to export up
to 15 million metric tons per annum (mmtpa) of domestic natural gas as
liquefied natural gas (LNG) for a 25-year period, commencing the
earlier of the date of first export or ten years from the date of
issuance of the requested authorization. LCE seeks authorization to
export LNG from the terminal in Lake Charles, Louisiana (``Lake Charles
Terminal'') \1\ to: (1) Any country with which the United States
currently has, or in the future may enter into, a free trade agreement
(FTA) requiring national treatment for trade in natural gas; \2\ and
(2) any country with which the United States does not have an FTA
requiring national treatment for trade in natural gas with which trade
is not prohibited by United States law or policy. The Application was
filed under Section 3 of the Natural Gas Act, as amended by section 201
of the Energy Policy Act of 1992 (NGA). Protests, motions to intervene,
notices of intervention, and written comments are invited.
---------------------------------------------------------------------------
\1\ The Lake Charles Terminal is an existing LNG import facility
located in Cameron Parish, Louisiana, that is owned by Trunkline LNG
Company, LLC (Trunkline LNG), a wholly-owned subsidiary of Southern
Union Company.
\2\ The United States currently has FTAs requiring national
treatment for trade in natural gas with Australia, Bahrain, Canada,
Chile, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan,
Nicaragua, Mexico, Morocco, Oman, Peru, and Singapore.
DATES: Protests, motions to intervene or notices of intervention, as
applicable, requests for additional procedures, and written comments
are to be filed using procedures detailed in the Public Comment
Procedures section of this notice no later than 4:30 p.m., eastern
---------------------------------------------------------------------------
time, August 12, 2011.
ADDRESSES:
Electronic Filing
E-mail: [email protected].
Regular Mail
U.S. Department of Energy (FE-34), Office of Natural Gas Regulatory
Activities, Office of Fossil Energy, P.O. Box 44375, Washington, DC
20026-4375.
Hand Delivery or Private Delivery Services (e.g., FedEx, UPS, etc.)
U.S. Department of Energy (FE-34), Office of Natural Gas Regulatory
Activities, Office of Fossil Energy, Forrestal Building, Room 3E-042,
1000 Independence Avenue, SW., Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT:
Larine Moore or Lisa Tracy, U.S. Department of Energy (FE-34), Office
of Oil and Gas Global Security and Supply, Office of Fossil Energy,
Forrestal Building, Room 3E-042, 1000 Independence Avenue, SW.,
Washington, DC 20585, (202) 586-9478; (202) 586-4523.
Edward Myers, U.S. Department of Energy, Office of the Assistant
General Counsel for Electricity and Fossil Energy, Forrestal Building,
Room 6B-256, 1000 Independence Avenue, SW., Washington, DC 20585, (202)
586-3397.
SUPPLEMENTARY INFORMATION:
[[Page 34213]]
Background
LCE is a Delaware limited liability company and a jointly-owned
subsidiary of BG Group plc (BG) and Southern Union Company (SUG), with
its principal place of business in Houston, Texas. BG LNG Services, LLC
(BGLS), an affiliate of LCE, is an importer of LNG into the United
States. BGLS and Trunkline LNG, a subsidiary of SUG, are jointly
developing plans to install liquefaction facilities to enable export of
domestically produced LNG at the Lake Charles Terminal.
The Lake Charles Terminal was certificated by the Federal Energy
Regulatory Commission (FERC or Commission) in 1977, and original
construction was completed in July 1981. In 2001, BGLS entered into a
firm terminalling services agreement under which it subscribed all of
the capacity of the Lake Charles Terminal to receive, store, and
vaporize LNG. In cooperation with BGLS, Trunkline LNG has expanded and
enhanced the terminal through the construction of additional storage
capacity, additional gas-fired vaporization capacity, an additional
marine berth, ambient air vaporization equipment, and natural gas
liquids extraction capability. At present, the terminal has a firm
sustained sendout capacity of 1.8 billion cubic feet per day (Bcf/d)
(13.7 mmtpa) and a peak sendout capacity of 2.1 Bcf/d. The terminal has
four LNG storage tanks with a combined capacity of approximately 2.7
million barrels (425,000 cubic meters) of LNG, or approximately 9.0 Bcf
of gas. In addition, the terminal's natural gas liquids processing
facilities allow the extraction of ethane and other heavier
hydrocarbons from the LNG stream.
Existing Long-Term and Blanket Authorizations
LCE's affiliate, BGLS, currently holds nine active long-term and
blanket authorizations from DOE to import LNG at the Lake Charles
Terminal and the LNG terminal at Elba Island, Georgia, including: DOE/
FE Order No. 2917 (issued February 17, 2011); DOE/FE Order No. 2756
(issued March 8, 2010); DOE/FE Order No. 2527 (issued August 14, 2008);
DOE/FE Order No. 2288 (issued November 17, 2006); DOE/FE Order No. 2285
(issued November 17, 2006); DOE/FE Order No. 2199 (issued May 22,
2006); DOE/FE Order No. 1977-B (issued May 22, 2006); DOE/FE Order No.
2286 (issued November 17, 2006); and DOE/FE Order No. 1932 (issued
December 30, 2003).
Current Application
In the instant Application, as amended, LCE seeks long-term
authorization to export up to 15 mmtpa of LNG for a 25-year period,
commencing the earlier of the date of first export or ten years from
the date of issuance of the requested authorization. LCE seeks
authorization to export LNG from the Lake Charles Terminal to: (1) Any
country with which the United States currently has, or in the future
may enter into, a free trade agreement (FTA) requiring national
treatment for trade in natural gas; and (2) any country with which the
United States does not have an FTA requiring national treatment for
trade in natural gas with which trade is not prohibited by United
States law or policy.
Trunkline LNG and BGLS are currently developing plans to: (1)
Modify the existing facilities at the Lake Charles Terminal to permit
LNG to be loaded from the terminal's storage tanks onto vessels berthed
at the existing marine facility; and (2) install liquefaction
facilities that would permit gas to be received by pipeline at the
terminal and liquefied for subsequent export. The liquefaction and
export facilities would be subject to an additional services agreement
between Trunkline LNG and BGLS. LCE states that it would purchase LNG
produced by the proposed liquefaction facility at the Lake Charles
Terminal from BGLS prior to export. LCE notes that any modifications to
the Lake Charles Terminal would be subject to FERC approval and that,
following the modifications, the Lake Charles Terminal would be bi-
directional, and its peak and sustained sendout capabilities will not
be affected.
LCE stated in the Application that it will enter into a long-term
export contract with BGLS on a date that is closer to the date of first
export. LCE also stated in the Application that the export contract
would have a 20 year term and that it will purchase LNG from BGLS at
the point of export at the Lake Charles Terminal for delivery to
markets around the world.
In the Amendment to the Application, filed on May 26, 2011, LCE
revised its request by specifying that it seeks authority to export LNG
on its own behalf or as agent for BGLS. The Amendment also clarified
that LCE intends that its long-term LNG export agreement with BGLS will
run for 25 years concurrent with the export authority sought in the
original Application. Also in the Amendment, LCE stated that it prefers
to take title to the LNG destined for export from BGLS at the point of
export and that it seeks a waiver by DOE/FE of the non-binding policy
announced in The Dow Chemical Company, DOE/FE Order No. 2859 (Oct. 5,
2010), which requires the authorization holder to have title of gas at
the time of export. In the event that DOE/FE declines to grant a waiver
of the non-binding policy, LCE intends to use the requested export
authorization on behalf of BGLS.
LCE plans to export natural gas sourced from the Texas and
Louisiana producing regions as well as other producing regions in the
Lower 48 States.
Public Interest Considerations
LCE contends that the authorization would not be inconsistent with
the public interest and should be granted by DOE/FE under the
individual statutory provisions that apply separately to exporting LNG
to FTA and non-FTA countries. LCE asserts that the portion of the
Application that seeks authorization to export LNG to FTA countries
should be reviewed pursuant to the public interest standard in Section
3(c) of the Natural Gas Act (NGA).\3\
---------------------------------------------------------------------------
\3\ 15 U.S.C. 717b(c).
---------------------------------------------------------------------------
With regard to exports of LNG to non-FTA countries, LCE states that
Section 3(a) of the NGA sets forth the general standard for review
applicable to such export applications \4\ and that DOE has
consistently ruled that Section 3(a) of the NGA creates a rebuttable
presumption that proposed exports of natural gas are in the public
interest.\5\ LCE asserts that to overcome this rebuttable presumption,
an opponent must affirmatively demonstrate that the proposal is
inconsistent with the public interest.\6\ Furthermore, the focus of
DOE/FE's public interest analysis, according to LCE, is the projected
domestic need for the gas to be exported.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 717b(a).
\5\ Sabine Pass Liquefaction, LLC, FE Docket 10-111-LNG, Opinion
and Order Denying Request for Review Under Section 3(c) of the NGA
(Oct. 21, 2010) (Sabine Section 3(c) Order)
\6\ Application at 7.
---------------------------------------------------------------------------
In this regard, LCE states that the portion of its Application to
export domestically produced LNG to non-FTA countries is not
inconsistent with the public interest as demonstrated by the following:
First, LCE contends that recoverable natural gas resources in the
United States are abundant, cheap and sufficient to meet long-term
demand for both domestic consumption and LCE's proposed LNG exports.
LCE asserts that recent improvements in natural gas exploration and
production technology
[[Page 34214]]
have changed the outlook for the U.S. natural gas market. LCE states
that technical and efficiency improvements in horizontal drilling and
hydraulic fracturing have combined to reduce the cost of producing
natural gas from shale resources, making shale gas economically viable.
LCE asserts that shale gas reached 23% of U.S. total natural gas
production in 2010 and that the share of shale gas production is
expected to double to 46% by 2035. LCE also contends that the export of
domestic LNG, as proposed by LCE, should be considered to be in the
public interest since U.S. natural gas available for supply far exceeds
demand.
Based on an internal analysis of potential exports of domestically
produced LNG from various U.S. LNG terminals that could have
liquefaction capacity installed, LCE estimated both the impact of the
proposed exports and also the effect of other U.S. LNG exports from
2015 through 2035. LCE prepared two scenarios. In a base export case,
LCE shows the impact of LNG reaching a total of 6 Bcf/d; in a high
(stress) export case, it reaches a total of 12 Bcf/d. LCE asserts that
EIA's current estimate of 2,251 trillion cubic feet of technically
recoverable dry gas resources in the Lower 48 States indicates that
recoverable resources are more than adequate in the long run to meet
domestic demand as well as LNG exports as high as 12 Bcf/d. LCE
concludes that the natural gas to be exported pursuant to this
Application will not be needed to meet U.S. demand, and its permitting
would not be inconsistent with the public interest.
Second, LCE states that its analysis shows that the proposed
export, as well as the likely level of total LNG exports during the
term of the proposed authorization, will not have a significant impact
on domestic natural gas prices. LCE states that the surge in shale gas
production and recoverable resource estimates has had a bearish effect
on domestic natural gas prices over the last two years. LCE considers
LNG exports from the United States as an additional demand element in
the market. To fully understand the impact of future long-term gas
prices, LCE performed internal and external assessments that examined
the recoverable resource potential and production costs of natural gas
for 2011 through 2035.\7\ LCE's conclusion is that the LNG exports in
the requested authorization will not have a material impact on domestic
natural gas prices, and that accordingly, the proposed export is not
inconsistent with the public interest.
---------------------------------------------------------------------------
\7\ Application at 16.
---------------------------------------------------------------------------
Third, LCE contends that the requested authorization will benefit
local, regional, and national economies, and is in the public interest.
LCE asserts that the development of new resources creates new jobs and
new opportunities for American workers and is consistent with President
Obama's National Export Initiative signed in 2010.\8\ LCE asserts that
the construction of modifications to the terminal would directly
benefit the local economy by supporting high paying construction and
engineering jobs. LCE asserts that granting the requested authorization
would also positively impact the U.S. balance of trade and would help
to improve economic trade and ties between the United States and the
destination countries, which could include key industrialized nations
in Europe and Asia as well as developing nations in Asia, South
America, the Middle East and the Caribbean. LCE contends that it would
be inconsistent with U.S. obligations under World Trade Organization
Agreements to restrict exports of LNG to other WTO countries except in
certain narrow circumstances not applicable here.
---------------------------------------------------------------------------
\8\ Executive Order No. 13534, 75 FR 12433 (March 11, 2010).
---------------------------------------------------------------------------
Fourth, LCE contends that LNG exports can have significant
environmental benefits due to the cleaner burning qualities of natural
gas, and that an increased supply of natural gas made possible through
LNG export can help countries break their dependence on less
environmentally friendly fuels.
Environmental Impact
LCE states that, currently, the Lake Charles Terminal is equipped
for and authorized only to receive imports of LNG. LCE further states
that Trunkline LNG will file an application with FERC for authorization
to modify the existing authorized facilities for exports in accordance
with NGA Section 3 and subpart B of part 153 of the Commission's
Regulations, 18 CFR Sec. 153.4, et seq. Regarding the proposed exports
to FTA countries, LCE notes that these exports fall within NGA Section
3(c), as amended, and therefore, must be granted without delay or
modification. With regard to the proposed export to non-FTA countries,
LCE requests that DOE/FE issue the authorization conditioned on FERC's
review under the National Energy Policy Act (NEPA) and approval of the
facility construction.
DOE/FE Evaluation
Pursuant to NGA Section 3(a), the portion of the Application
seeking authorization to export LNG to countries that have entered into
FTAs with the United States calling for national treatment of trade in
natural gas is deemed to be in the public interest and, as requested by
LCE, shall be granted without modification or delay. A separate order
shall be issued to this end.
The balance of the export Application, which seeks authorization to
export LNG to non-FTA nations, will be reviewed pursuant to Section
3(c) of the Natural Gas Act, as amended; DOE Delegation Order No. 00-
002.00L (Apr. 29, 2011); and DOE Redelegation Order No. 00-002.04E
(Apr. 29, 2011). In reviewing this non-FTA portion of the Application,
DOE will consider any issues required by law or policy. To the extent
determined to be necessary or appropriate, these issues will include
the impact of LNG exports associated with this Application, and the
cumulative impact of any other application(s) previously approved, on
domestic need for the gas proposed to be exported, energy security, and
any other issues, including the impact on U.S. gross domestic product,
consumers, industry, U.S. balance of trade, jobs creation, as well as
whether the arrangement is consistent with DOE's policy of promoting
competition in the marketplace by allowing commercial parties to freely
negotiate their own trade arrangements. Parties that may oppose this
Application should comment in their responses on these issues, as well
as any other issues deemed relevant to the Application.
NEPA requires DOE to give appropriate consideration to the
environmental effects of its proposed decisions. No final decision will
be issued in this proceeding until DOE has met its NEPA
responsibilities.
Due to the complexity of the issues raised by the Applicants,
interested persons will be provided 60 days from the date of
publication of this Notice in which to submit comments, protests,
motions to intervene, notices of intervention, or motions for
additional procedures.
Public Comment Procedures
In response to this notice, any person may file a protest,
comments, or a motion to intervene or notice of intervention, as
applicable. Any person wishing to become a party to the proceeding must
file a motion to intervene or notice of intervention, as applicable.
The filing of comments or a
[[Page 34215]]
protest with respect to the Application will not serve to make the
commenter or protestant a party to the proceeding, although protests
and comments received from persons who are not parties will be
considered in determining the appropriate action to be taken on the
Application. All protests, comments, motions to intervene or notices of
intervention must meet the requirements specified by the regulations in
10 CFR part 590.
Filings may be submitted using one of the following methods: (1) E-
mailing the filing to [email protected], with FE Docket No. 11-59-LNG
in the title line; (2) mailing an original and three paper copies of
the filing to the Office Natural Gas Regulatory Activities at the
address listed in ADDRESSES; (3) hand delivering an original and three
paper copies of the filing to the Office of Natural Gas Regulatory
Activities at the address listed in ADDRESSES; or (4) submitting
comments in electronic form on the Federal eRulemaking Portal at http://www.regulations.gov, by following the on-line instructions and
submitting such comments under FE Docket No. 11-59-LNG. DOE/FE suggests
that electronic filers carefully review information provided in their
submissions and include only information that is intended to be
publicly disclosed.
A decisional record on the Application will be developed through
responses to this notice by parties, including the parties' written
comments and replies thereto. Additional procedures will be used as
necessary to achieve a complete understanding of the facts and issues.
A party seeking intervention may request that additional procedures be
provided, such as additional written comments, an oral presentation, a
conference, or trial-type hearing. Any request to file additional
written comments should explain why they are necessary. Any request for
an oral presentation should identify the substantial question of fact,
law, or policy at issue, show that it is material and relevant to a
decision in the proceeding, and demonstrate why an oral presentation is
needed. Any request for a conference should demonstrate why the
conference would materially advance the proceeding. Any request for a
trial-type hearing must show that there are factual issues genuinely in
dispute that are relevant and material to a decision and that a trial-
type hearing is necessary for a full and true disclosure of the facts.
If an additional procedure is scheduled, notice will be provided to
all parties. If no party requests additional procedures, a final
Opinion and Order may be issued based on the official record, including
the Application and responses filed by parties pursuant to this notice,
in accordance with 10 CFR 590.316.
The Application filed by LCE is available for inspection and
copying in the Office of Natural Gas Regulatory Activities docket room,
Room 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585. The
docket room is open between the hours of 8 a.m. and 4:30 p.m., Monday
through Friday, except Federal holidays. The Application and any filed
protests, motions to intervene or notice of interventions, and comments
will also be available electronically by going to the following DOE/FE
Web address: http://www.fe.doe.gov/programs/gasregulation/index.html.
In addition, any electronic comments filed will also be available at:
http://www.regulations.gov.
Issued in Washington, DC, on June 7, 2011.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2011-14554 Filed 6-10-11; 8:45 am]
BILLING CODE 6450-01-P