DOE, Energy Exports, Energy Policy, Liquefied Natural Gas (LNG), Natural Gas, U.S. House, U.S. Senate

Dominion Cove Point LNG, LP is the Third Facility This Year to Receive DOE Authorization to Export Liquefied Natural Gas to Non-FTA Countries

            Last week, Dominion Cove Point LNG, LP (“Dominion”) became the third facility this year to receive conditional authorization from the Department of Energy to export domestically produced liquefied natural gas (“LNG”) to countries that do not have a free trade agreement with the United States (“non-FTA countries).  See DOE Press Release.  This is the fourth facility to receive conditional authorization from the DOE, and the third that has been authorized since May this year.  Dominion is the first facility in the Northern region of the country to be approved for LNG export to non-FTA countries – the DOE also has granted conditional authorization to Sabine Pass (May, 2011), Freeport LNG (May, 2013) and Lake Charles Exports (August, 2013).  Under the Dominion Authorization, the company is conditionally approved to export up to 0.77 billion cubic feet per day of natural gas to non-FTA countries from its terminal in Calvert County, Maryland for a period of 20 years, pending environmental and final regulatory review.  Combined with the other three facilities approved to export LNG to non-FTA countries, the DOE has approved the export of up to 6.37 billion cubic feet of LNG per day.  Although this is just a fraction of the 2013 U.S. production rate of 69.96 billion cubic feet per day projected by the Energy Information Administration, we may see some resistance to the approval of additional LNG exports.

            The U.S. Congress remains invested in the country’s move into LNG exports.  In our previous post, Two Steps Forward Towards U.S. Liquefied Natural Gas (LNG) Exportation: Are We Moving Far Enough Fast Enough, we discussed the U.S. Senate Energy and Natural Resources Committee’s activities regarding LNG exports and Chairman Ron Wyden’s and Ranking Member Lisa Murkowski’s differing perspectives on the U.S. pushing ahead to increase the level of approved LNG exports.  In response to the latest Dominion approval, both Senators remained steadfast in their views, with Chairman Wyden cautioning against approving LNG exports without assurances that domestic prices and Americans would not suffer and Ranking Member Murkowski urging the DOE to move quickly to review applications for additional projects.  Chairman Fred Upton of the U.S. House Energy and Commerce Committee echoed Ranking Member Murkowski’s sentiment in his statement regarding the Dominion authorization.

Chairman Wyden’s Statement:

With today’s approval, the United States is now squarely in the range that experts are saying is the most likely level of U.S. natural gas exports. If DOE approves exports above that range, the agency has an obligation to use most recent data about U.S. natural gas demand and production and prove to American families and manufacturers that these exports will not have a significant impact on domestic prices, and in turn on energy security, growth and employment.

Ranking Member Murkowski’s Comment:

The United States has a narrowing window of opportunity to join the global gas trade. In order for us to take advantage of the geopolitical and economic benefits offered by selling American gas to our friends and allies overseas, projects like Dominion’s Cove Point must be approved without unnecessary delay,” Murkowski said. “I welcome this decision, but I must point out that Cove Point filed its application in October 2011, and is just now seeing a decision. On average, each of the four projects approved so far had to wait 22 months for a decision. I’m encouraged that DOE seems to have picked up the pace of its reviews. It’s important that DOE now move with timely purpose onto the next.

Chairman Upton’s Statement:

DOE has now approved four export licenses, but several more continue to languish in review and the timeline for approvals is uncertain. Today’s approval of the Cove Point Terminal is welcome progress, but DOE must act quickly on the remaining licenses or we risk losing out on important opportunities for economic growth and job creation.

            There are twenty additional applications pending, with the two most recent applications filed in August 2013 by EOS LNG LLC (Docket No. 13-116-LNG) and Barca LNG LLC (Docket No. 13-118-LNG).  The Senate Committee Republicans’ news release regarding the Dominion authorization included the following chart to illustrate the delay in processing the first four applications:

Approved LNG Export Orders to Non-FTA Countries

Date of Non-FTA Application

Date of Approval

Days of Delay

Months

Sabine Pass

9/7/2010

5/20/2011

255

8.5

Freeport LNG

12/17/2010

5/17/2013

882

29.4

Lake Charles Exports

5/6/2011

8/7/2013

824

27.5

Dominion Cove Point

10/3/2011

9/11/2013

709

23.6

AVERAGE

22.3

Even if the DOE continues its current rate of review for the remaining applications, is that a guarantee that the U.S. will export additional LNG? According to information in the Senate Committee Democrats’ news release regarding the Lake Charles LNG export authorization, the 6.37 billion cubic feet per day that has been authorized for export to date is in the range of the “6-8 bcf per day that numerous reports and analysts have projected as the likely range for U.S. LNG exports, without impacts on domestic prices.”  The DOE’s analysis of whether additional LNG exports are in the best interests of the nation may be altered, given the potential impact of additional exports on domestic prices.  Chairman Wyden stated after the Lake Charles authorization that “the Energy Department has a higher bar to prove these exports are in the best interests of American consumers and employers.”  Is that bar even higher now?  We will watch developing policy in this area and keep you posted.

You can read our additional posts on the potential for U.S. exportation of LNG here and here.

Brian Heslin

About Brian Heslin

Brian Heslin represents energy companies in regulatory proceedings at the state and federal level. In addition, he provides advice on busines and strategic planning, upstream natural gas supply and capacity negotiation, compliance and other related services.

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