[Federal Register Volume 77, Number 206 (Wednesday, October 24, 2012)]
[Notices]
[Pages 64964-64967]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26191]
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DEPARTMENT OF ENERGY
[FE Docket No. 12-97-LNG]
Cheniere Marketing, LLC; Application for Long-Term Authorization
To Export Liquefied Natural Gas Produced From Domestic Natural Gas
Resources to Non-Free Trade Agreement Countries for a 22-Year Period
AGENCY: Office of Fossil Energy, DOE.
ACTION: Notice of application.
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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice of receipt of an application (Application) filed on
August 31, 2012, by Cheniere Marketing, LLC (CMI), requesting long-
term, multi-contract authorization to export up to 782 million MMBtu
per year of LNG, equivalent to approximately 767 Bcf per year of
natural gas, for a period of 22 years beginning on the earlier of the
date of first export or eight years from the date the authorization is
granted by DOE/FE. The LNG would be exported from the proposed Corpus
Christi Liquefaction Project (CCL Project) to be located near Corpus
Christi, Texas, to any country with which the United States does not
have now or in the future has a free trade agreement (FTA) requiring
national treatment for trade in natural gas and LNG; that has, or in
the future develops, the capacity to import LNG; and with which trade
is not prohibited by U.S. law or policy. On October 10, 2012, in a
letter to DOE/FE, CMI clarified that it is requesting this
authorization to export LNG both on its own behalf and as agent for
other parties who hold title to the LNG at the point of export. The
Application was filed under section 3 of the Natural Gas Act (NGA).
Protests, motions to intervene, notices of intervention, and written
comments are invited.
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 no later than 4:30 p.m., eastern time, December 24,
2012.
ADDRESSES:
Electronic Filing by email: [email protected].
Regular Mail: U.S. Department of Energy (FE-34), Office of Natural
Gas Regulatory Activities, Office of Fossil
[[Page 64965]]
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 Natural Gas Regulatory Activities, 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 Ave. SW., Washington, DC 20585, (202)
586-3397.
SUPPLEMENTARY INFORMATION:
Background
CMI, a Delaware limited liability company with its principal place
of business in Houston, Texas, is affiliated with Corpus Christi
Liquefaction, LLC (CCL) and Cheniere Corpus Christi Pipeline, L.P.
(CCP), the developers of the CCL Project. CMI is an indirect subsidiary
of Cheniere Energy, Inc. (Cheniere Energy), a Delaware corporation with
its primary place of business in Houston, Texas. Cheniere Energy is a
developer of LNG terminals and natural gas pipelines on the Gulf Coast,
including the CCL Project. CMI is authorized to do business in the
States of Texas and Louisiana.
CMI states that it is filing this Application in conjunction with
the CCL Project being developed by CMI's affiliates, CCL and CCP, at
the site of the previously authorized CCLNG import terminal and
associated pipeline in San Patricia and Nueces Counties Texas.\1\ CMI
states that, concurrent with this Application, CCL is filing an
application with the Federal Energy Regulatory Commission (FERC) for
authorization pursuant to Section 3(a) of the NGA to site, construct,
and operate the CCL Terminal facilities (CCL Terminal). In addition,
CCP is filing an application with the FERC pursuant to Section 7(c) of
the NGA to construct, own, and operate the Corpus Christi Pipeline
(Pipeline) to connect the CCL Terminal facilities to interstate and
intrastate natural gas supplies and markets.
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\1\ The CCL Project is being developed at the same general
locations proposed for in the previously authorized Corpus Christi
LNG, L.P. import terminal and associated pipeline. See Corpus
Christi LNG, L.P. and Cheniere Corpus Christi Pipeline Company,
Order Granting Authority Under Section 3 of the Natural Gas Act and
Issuing Certificates, 111 FERC ] 61,081 (2005).
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On August 31, 2012, in FE Docket No. 12-99-LNG, CMI filed with DOE/
FE a separate application for long-term multi-contract authorization to
engage in the export of LNG in an amount up to 782 million MMBtu per
year, to any country with which the U.S. does not now or in the future
will have an FTA requiring the national treatment for trade in natural
gas and LNG; that has developed, or in the future develops, the
capacity to import LNG; and with which trade is not prohibited by U.S.
law or policy. DOE/FE subsequently issued an order in FE Docket No 12-
99-LNG granting long-term export authorization to FTA countries from
the CCL Project.\2\
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\2\ Cheniere Marketing, LLC, Order Granting Long-Term Multi-
Contract Authorization to Export Liquefied Natural Gas by Vessel
from the Proposed Corpus Christi Liquefaction Project to Free Trade
Agreement Nations, DOE/FE Order No. 3164, October 16, 2012 (FE
Docket No 12-99-LNG).
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Current Application
In the instant Application, CMI seeks long-term, multi-contract
authorization to export up to 782 million MMBtu per year of LNG,
equivalent to approximately 767 Bcf per year of natural gas, for a
period of 22 years beginning on the earlier of the date of first export
or eight years from the date the authorization is granted by DOE/FE.
CMI requests authorization to export LNG to any country with which the
United States does not have an FTA requiring national treatment for
trade in natural gas, that has, or in the future develops, the capacity
to import LNG, and with which trade is not prohibited by U.S. law or
policy.
CMI states that the CCL Project will be located on the northern
shore of the La Quinta Channel north and east of the City of Corpus
Christi, Texas. CMI states that the CCL Project will include three
ConocoPhillips Optimized Cascade\SM\ LNG trains, each with a nominal
liquefaction capacity of approximately five million metric tons per
year. CMI states that the CCL Project will be designed to export 782
million MMBtu of LNG per year and to import up to 400,000 MMBtu of LNG
per day. CMI states that at the CCL Project site, natural gas will be
liquefied into LNG and stored in three 160,000 cubic meters full-
containment LNG storage tanks. CMI further states that the LNG will be
exported on LNG carriers that will arrive at the CCL Terminal through
the La Quinta Channel in the Corpus Christi Bay.
CMI states that concurrent with this Application, CCL is filing an
application with the Federal Energy Regulatory Commission (FERC) for
authorization pursuant to Section 3(a) of the NGA to site, construct
and operate the CCL Terminal, and CCP is filing an application with
FERC pursuant to Section 7(c) of the NGA to construct, own and operate
the Corpus Christi Pipeline to connect the CCL Terminal facilities to
interstate and intrastate natural gas supplies and markets.\3\ DOE/FE
will act as a cooperating agency in the FERC's environmental review
process for the CCL Project and in the preparation of an environmental
assessment (EA) or environmental impact statement (EIS) to satisfy DOE/
FE's NEPA responsibilities.
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\3\ CMI stated that CCL commenced the FERC's mandatory National
Environmental Policy Act (NEPA), 42 U.S.C. 4321, et seq., prefiling
process for the CCL Project on December 22, 2011 in Docket No. PF12-
3-000. Through a May 31, 2012, filing, CCL and CCP formally notified
the Commission of the inclusion of CCP in the NEPA prefiling process
in Docket No. PF 12-3-000.
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CMI states that it proposes to source natural gas to be used as
feedstock for LNG production at the CCL Project from the interstate and
intrastate grid at points of interconnection with other pipelines and
points of liquidity both upstream and downstream of the Pipeline. CMI
notes that through the Pipeline's interconnects with various interstate
and intrastate pipeline systems, the CCL Project will have access to
virtually any point on the U.S. interstate pipeline system through
direct delivery or by displacement.
CMI states that it currently is engaged in commercial discussions
with CCL to obtain all the available liquefaction capacity at the CCL
Terminal. CMI states that either CMI or the CCL Project will bear the
responsibility for sourcing gas supplies for delivery to the CCL
Terminal. CMI states that CCL will commence negotiations with CCP for
transportation capacity on the Pipeline once commercial discussion
between CCL and CMI progress.
CMI states that it will comply with all DOE/FE requirements for
exporters and agents, including the registration requirements as first
established in Freeport LNG Development, L.P., DOE/FE Order No. 2913
and most recently set forth in Excelerate Liquefaction Solutions I,
LLC, DOE/FE Order No. 3128.\4\
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\4\ Freeport LNG Development, L.P., Order Granting Long-Term
Authorization to Export Liquefied Natural Gas from Freeport LNG
Terminal to Free Trade Nations, FE Docket No. 10-160-LNG, DOE/FE
Order No. 2913 (February 10, 2011); Excelerate Liquefaction
Solutions I, LLC, FE Docket No. 12-61-LNG, DOE/FE Order No. 3128
(August 9, 2012).
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[[Page 64966]]
CMI states that it has not yet entered into any long-term gas
supply or long-term export contracts with regards to this Application.
CMI states that, accordingly, it is not submitting transaction-specific
information (e.g., long-term supply agreements and long-term export
agreements) at this time and requests that DOE/FE make a similar
finding to that made in Sabine Pass Liquefaction, LLC, DOE/FE Order No.
2961, issued on May 20, 2011, in Docket No. 10-111-LNG, with regard to
the transaction-specific information requested in Section 590.202(b) of
the DOE regulations. CMI states that it is cognizant of the DOE/FE
Policy Guidelines (of 1984) and expects to enter into export
transactions that are responsive to the relative level of natural gas
prices in the United States, similar to those entered into in
connection with the Sabine Pass liquefaction and export project (DOE/FE
Docket No. 10-111-LNG), thereby creating supply to mitigate price
impacts if the U.S. market is in greater need of natural gas than would
otherwise be exported.
Lastly, CMI requests that DOE/FE issue a conditional Order
authorizing the export of domestically produced LNG as requested in
this Application by February 2013, followed by issuance of a final
order immediately upon completion of the environmental review of the
CCL Project by the FERC.
Public Interest Considerations
CMI states that it proposed the project in part due to the improved
outlook for domestic natural gas production, owing to drilling
productivity gains that have enabled rapid growth in new supplies in
South Texas and elsewhere in the United States. CMI contends that
improvements in drilling and extraction technologies have coincided
with a rapid diffusion of knowledge in the natural gas industry of the
resource base and best practices in drilling and resource development.
CMI notes that these changes have rendered obsolete once prominent
concerns of declining future domestic natural gas production. CMI
maintains that authorizing exports of LNG will further the responsible
development of these emerging sources of domestic natural gas,
providing a positive market solution that will:
(1) Raise domestic natural gas productive capacity and promote
stability in domestic natural gas pricing,
(2) Stimulate the regional, state, and national economy through job
creation and increased economic activity,
(3) Promote the liberalization of contract structures in global LNG
markets by lowering the cost of energy in foreign nations, thereby
fostering economic growth abroad and creating demand for U.S.-sourced
goods and services,
(4) Expand economic activity and job creation in the domestic
natural gas and petrochemicals sectors,
(5) Promote greater national security by expanding American
influence in international energy markets while enabling greater
production in domestic petroleum basins,
(6) Improve the U.S. balance of payments between $5.88 billion and
$9.52 billion annually through the exportation of natural gas and the
displacement of imports of other petroleum liquids, and
(7) Increase economic trade and ties with foreign trading partners
and hemispheric allies, and displace environmentally damaging fuels in
those countries.
In support of its Application, CMI commissioned a report from
Advanced Resources International (ARI), titled U.S. Natural Gas
Resources and Productive Capacity: Mid-2012 (ARI Resource Report), to
assess the scope of domestic natural gas resources and their potential
for future recovery. CMI states that the ARI Resource Report, as well
as publicly available information, demonstrates that the U.S. has
significant natural gas resources available to meet projected future
domestic needs, including the quantities contemplated for export under
this Application. CMI also states that the ARI Resource Report
establishes that the availability of new natural gas reserves is likely
to continue expanding into the future as new unconventional formations
are discovered and the oil and gas industry continues to improve
drilling and extraction techniques. CMI further states that the ARI
Resource Report also shows that the incremental price impact of such
exports is modest in comparison to the benefits garnered by the CCL
Project, and when compared to the normal year-to-year price volatility
in the natural gas market, is statistically insignificant.
In support of its Application, CMI also commissioned a report from
the Perryman Group, titled The Anticipated Impact of Cheniere's
Proposed Corpus Christi Liquefaction Facility on Business Activity in
Corpus Christi, Texas, and the US (Perryman Report). Based on this
report, CMI presents the following reasons why the CCL Project is in
the public interest:
First, with respect to economic activity, the Perryman Report
estimates that the cumulative beneficial direct impact to business
activity and tax receipts due to the construction and operation of the
CCL project over 25 years will range from $9.9 billion to $11.2 billion
to the regional economy, $19.6 billion to $23.5 billion to the Texas
economy, and $25.5 billion to $31.1 billion to the U.S. economy.
Second, the Perryman Report estimates that the total indirect
benefits due to enhanced natural gas exploration and production
investments over 25 years made possible by the CCL Project will be
$13.8 billion to the regional economy, $101.0 billion to the Texas
economy, and $111.4 billion to the U.S. economy.
Third, with respect to job creation, the Perryman Report estimates
the construction and operation of the CCL Project over 25 years will
create between 39,823 and 52,613 jobs nationwide, and that an
additional 44,341 jobs will be indirectly generated owing to stimulus
in the E&P sector.
Fourth, CMI states that another indirect benefit of the CCL Project
will be captured by the chemical industry, which CMI says will be
advantageously impacted by the additional production of NGLs, such as
ethane, made possible through LNG exports. CMI states that the economic
benefits due to the construction of new chemical manufacturing
facilities supported by exports from the CCL Project will be $1.1
billion to the regional economy, $2.1 billion to the Texas economy, and
$3.0 billion to the U.S. economy.
CMI states that these as well as other benefits enumerated in this
Application compellingly demonstrate that the export of LNG and the
approval of this Application are in the public interest.
Further details can be found in the Application, which has been
posted at http://www.fe.doe.gov/programs/gasregulation/index.html.
Environmental Impact
CMI states that the potential environment impacts of the Project
will be reviewed by the FERC under the National Environmental Policy
Act (NEPA). CMI notes that DOE/FE has agreed to act as a cooperating
agency in the environmental review process for the CCL project,
including the preparation of an EA or EIS, which will satisfy the NEPA
responsibilities associated with the LNG exports as proposed in the
Application. Accordingly, CMI requests that DOE/FE issue a conditional
order authorizing the export of LNG as requested in the Application,
conditioned on completion of the environmental review of the CCL
Project by the FERC.
[[Page 64967]]
DOE/FE Evaluation
The Application will be reviewed pursuant to section 3 of the NGA,
as amended, and the authority contained in DOE Delegation Order No. 00-
002.00L (April 29, 2011) and DOE Redelegation Order No. 00-002.04E
(April 29, 2011). In reviewing this LNG export Application, DOE will
consider any issues required by law or policy. To the extent determined
to be relevant 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 for export, adequacy of domestic natural gas supply,
U.S. energy security, and any other issues, including the impact on the
U.S. economy (GDP), consumers, and industry, job creation, U.S. balance
of trade, international considerations, and 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 environmental
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 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)
emailing the filing to [email protected] with FE Docket No. 12-97-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. The filing must include a reference to FE
Docket No. 12-97-LNG; or (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. The filing must include
a reference to FE Docket No. 12-97-LNG.
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 CMI 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 8:00 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.
Issued in Washington, DC, on October 18, 2012.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2012-26191 Filed 10-23-12; 8:45 am]
BILLING CODE 6450-01-P