US LNG exports increasing, proposed

Tuesday, August 22, 2017

The developer of a proposed Louisiana liquefied natural gas (LNG) export project has asked U.S. regulators for approval to begin a "pre-filing review" of its project.  Part of a boom of interest in LNG exports, the Fourchon LNG pre-filing request highlights the regulatory process -- and broader policy considerations -- associated with increased exports of natural gas from the U.S.

Energy World (USA) Incorporated subsidiary Fourchon LNG LLC proposes to site, construct, own, and operate a LNG liquefaction facility with a peak capacity of approximately five million metric tons of LNG per annum (MTPA) and a ship berth on Belle Pass in Louisiana.  According to the company's filing, the project would be developed in phases.  The first phase will have a capacity of 2 MTPA, to be followed by subsequent phases and additional LNG trains to reach a total capacity of 5 MTPA. The project, which will utilize domestic sources of natural gas, will receive, liquefy, store, and deliver LNG to LNG carriers (LNGCs) for export in overseas markets and domestic markets.  According to the developer, the first 0.5 MTPA of LNG will be made on a preferred, but non-exclusive basis for domestic LNG uses, including for LNG-fueled marine vessels; other potential customers include Jamaica and the wider Caribbean, as well as gas-fired power plants in the Asia-Pacific.

The Federal Energy Regulatory Commission is responsible for authorizing the siting and construction of onshore and near-shore LNG import or export facilities under Section 3 of the Natural Gas Act.   On August 3, 2017, the company applied to the Federal Energy Regulatory Commission for approval under Section 157.21 of the Commission's regulations to initiate pre-filing review of its proposed project.

LNG shipments from the U.S. have recently started and are increasing sharply.  Since the first shipment of U.S. LNG from the lower 48 states in February 2016, exports have continued.  The ability to produce and export natural gas is seen by some as a major asset for the U.S. economy -- Energy Secretary Rick Perry has said he expects the U.S. to become the world’s third-largest LNG supplier by 2020.  The increase in business opportunity related to LNG exports is driving a parallel increase in regulatory activity: according to the Federal Energy Regulatory Commission, as of August 14, 2017 eleven applications for export terminals were pending before the Commission, with three more sites in pre-filing, plus additional proposed terminals in Canada and the Gulf of Mexico.  While not all projects have been approved -- for example in 2016  FERC denied approvals requested for the Jordan Cove export project in Oregon -- FERC says it currently regulates twenty-four operational LNG facilities. In addition to FERC siting approval, most LNG exports are subject to further approvals by the Secretary of Energy.

Meanwhile, a group of industrial electricity customers has sent Energy Secretary Perry an open letter expressing alarm "at the volume of LNG exports that have been approved for periods of 20-30 years, especially to non-free trade agreement (NFTA) countries" and at the economic impact of those exports.

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