Third non-FTA permit for LNG exports granted to Lake Charles Exports

07 August 2013 20:02  [Source: ICIS news]

Third non-FTA permit for LNG exports granted to Lake Charles ExportsHOUSTON (ICIS)--Lake Charles Exports has been granted the third conditional permit to export liquefied natural gas (LNG) to non-Free Trade Agreement (FTA) countries, the US Energy Department (DOE) announced on Wednesday.

The facility, subject to environmental review and final regulatory approval, is conditionally authorised to export by vessel up to 2 billion cubic feet(bcf)/day (15mtpa) of LNG for a period of 20 years to non-FTA countries, which includes countries such as China and Japan.

The Lake Charles, Louisiana, facility was approved in July 2011 to export to FTA countries.

Previously, the DOE granted non-FTA LNG export permits to Sabine Pass LNG in Cameron Parish, Louisiana, in May 2011 and Freeport LNG in Quintana Island, Texas, in May 2013.

The joint developers of the Lake Charles project are Texas-based Energy Transfer Equity (ETE), parent owner of Southern Union and LNG project company Trunkline LNG, and UK-based portfolio supplier BG Group.

The brownfield LNG import terminal aims to flip to liquefaction, with a three-train facility estimated for an on-stream production by the end of the decade, according to BG.

BG would not speculate on its final investment timeline. It had stated previously that the first LNG export is expected by the end of the decade.

According to its filing with the DOE, BG is a producer of LNG from Trinidad, Tobago and Egypt and in 2009-2010 purchased major interests in the Haynesville and Marcellus shale plays in the US, as well as other assets in Texas, Louisiana, West Virginia and Pennsylvania. BG stated in its application that its shale gas production has helped it to become one of the top 10 natural gas marketers in the US.

In lauding the DOE decision, BG Group spokesperson David Byford pointed to economic and employment benefits in the US as an example of how the project is well positioned to capitalise on growing market demand.

Federal law generally requires approval of natural gas exports to countries that have an FTA with the US, while exports to non-FTA countries are scrutinised by the DOE to make sure they are “consistent with the public interest”, the department has said.

The DOE has said it will proceed cautiously with non-FTA permit applications that are awaiting approval, taking a measured approach and monitoring the natural gas market to make sure that the granting of successive applications do not harm the public interest.

Currently, there are 22 non-FTA permit applications pending before the DOE, 14 of which are for projects that are in the midst of Federal Energy Regulatory Commission (FERC) application process.

During BG Group’s recent Q2 earnings presentation before the approval was granted, CEO Chris Finlayson said the company expected the ruling “very soon” but still saw the DOE go-ahead as a first step.

“And it’s important to remember, as I say, that this is the first stage of the process and that companies – not just ourselves but others who are proposing these types of projects, will need to invest a significant amount of money before their proposal is finally approved through the FERC ruling,” he said.

Additional reporting by Ruth Liao

($1 = €0.75)

By: Jeremy Pafford
+1 713 525 2653

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