Steptoe & Johnson PLLC: FERC Issues First Authorization to Export LNG from Domestic Production

Steptoe & Johnson PLLC: FERC Issues First Authorization to Export LNG from Domestic Production

By Kurt L. Krieger 

On April 16, 2012, the Federal Energy Regulatory Commission (FERC) approved a Sabine Pass Liquefaction, LLC and Sabine Pass LNG, L.P. proposal to site, construct and operate facilities at Cameron Parish, Louisiana, to export up to 2.2 billion cubic feet per year of liquefied natural gas (LNG) from domestic production resources in the lower 48 (Docket No. CP11-72). The export facility is proposed to be online by 2015. FERC's approval comes after receipt of Department of Energy (DOE) authorization to export the LNG to all Free Trade and non-Free Trade Agreement nations.

In another order issued the same day, FERC vacated a 2009 order which had authorized Jordan Cove Energy Project, L.P. to site, construct and operate an LNG import facility in Oregon (Docket No. CP07-441 to -444). Jordan Cove no longer intends to import LNG based on changed market conditions. In a recent letter to the FERC, Jordan Cove indicated that it intends to explore the feasibility of an LNG export project at the same site (Docket No. PF12-7). This action, taken in response to requests for rehearing (and more than two years after issuance) of the 2009 order, caused one Commissioner to issue a dissenting opinion.

The export of LNG is drawing attention from Congress and environmental groups. Some members of Congress are proposing legislation to ban LNG exports based on gas price and domestic job concerns. Meanwhile, environmental groups have written to the Council on Environmental Quality (CEQ) and the USEPA (in a February 29, 2012 letter) asking that the DOE and FERC be directed to analyze under the National Environmental Policy Act (NEPA) (and Section 309 of the Clean Air Act) the impacts of increased natural gas production caused by the exporting of LNG in a programmatic and in project-specific environmental impact statements (EIS) before approving export facility proposals.

There are currently 12 existing LNG import terminals in the United States, and several others are being proposed. There are approximately seven additional LNG export facilities being proposed, including one at Cove Point, Maryland, with the others being in Louisiana and Texas. 

Kurt L. Krieger focuses his practice in the area of energy law with experience representing regulated companies and interested parties before the Federal Energy Regulatory Commission ("FERC") and state and commonwealth public service or utility commissions.

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