DOE Approves Second US LNG Export Project to Non-FTA Countries
In our article US LNG Exports: March Madness and the Road to the Final Four Projects, we predicted that Freeport LNG would make it to the final round of US LNG export projects approved by the US Department of Energy (DOE). According to a Freeport LNG news release issued on Friday, our LNG Export March Madness bracket is holding up.
The US Department of Energy has authorized Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC (Freeport) to export LNG to so called non-Free Trade Agreement (non-FTA) countries. Subject to environmental review and final regulatory approval, Freeport is conditionally authorized to export up to 1.4 (Bcf/d) for a period of 20 years.
In granting Freeport’s application, the DOE addressed a number of issues and factors in its 127-page Order including the impact of the LNG project on natural gas prices, domestic gas supplies and the resource base, domestic natural gas demand, the benefits to the US economy expected to accrue from LNG exports, the impacts on international trade, the global environmental benefits of natural gas, and the benefits to national energy security. Based on its analysis of these factors, as well as the extensive comments that had been submitted to the DOE, the DOE ultimately concluded that authorizing the Freeport LNG export project was not inconsistent with the public interest.
While the DOE’s Order will no doubt be scrutinized by a number of organizations, including the Sierra Club, which has petitioned DOE for a formal rulemaking procedure, the Freeport authorization should at least quiet some of the calls from Japan that the US should export LNG to that country since Freeport has contracted for half of its capacity with Japan's Osaka Gas and Chubu Electric.
The DOE’s full order can be found at: http://energy.gov/sites/prod/files/2013/05/f0/ord3282.pdf.
Susan L Sakmar
Susan L. Sakmar is currently a visiting assistant law professor at the University of Houston Law Center and an expert on global gas markets, including LNG and global shale gas development. She is the author of the latest book on LNG, “Energy for the 21st Century: Opportunities and Challenges for LNG,” which is now available for pre-order on Amazon.com. More information about the book as well the approval process for US LNG exports can be found at www.susansakmar.com.