(updates with comments from Dow Chemical, America's Energy Advantage)
HOUSTON (ICIS)--The US Department of Energy (DOE) on Tuesday approved Sempra Energy’s Cameron project in Louisiana for liquid natural gas (LNG) exports to countries that do not have a free trade agreement (FTA) with the US government.
"Today's authorisation by the DOE represents a critical milestone in the development of our export facilities," Debra Reed, chairman and CEO of Sempra Energy, said in a news release.
The project is approved to export up to 1.7 billion cubic feet/day (bcf/day) for a period of 20 years, the DOE said.
The Cameron project received notice on 10 January that the draft environmental impact statement to construct and operate the liquefaction facilities had been issued, Sempra Energy said.
“Our progress in permitting and financing our project, along with successful execution of commercial and tolling agreements, puts us on track to be one of the first LNG export projects under construction in 2014 and in full commercial operation in 2019,” Sempra LNG President Octavio MC Simoes said in a press release on Tuesday.
It is the fifth liquefaction plant approved and sixth application approved for non-FTA exports. The last application approved was an expansion to the Freeport LNG project on 15 November 2013.
The Cameron project puts the total capacity approved for non-FTA exports from the US at 64m tonnes/year.
More than 20 applications have been filed by companies seeking to export to non-FTA nations. The DOE has discretionary approval in granting non-FTA applications, although applicants automatically receive approval to trade with countries in FTAs with the US.
The Cameron approval brings the total approved for non-FTA exports to 8 bcf/day, which “many researchers and financial analysts have concluded will cause natural gas prices to increase dramatically, which will have repercussions throughout the US economy”, Dow said.
The advent of shale gas in recent years has brought about a renaissance in natural gas production, with the Energy Information Administration (EIA) forecasting record natural gas production of natural gas in the US of 72 bcf/day for 2014.
But how much of the burgeoning gas production to allow to be exported has been a contentious question in the chemicals industry, which relies on natural gas for about 85% of its feedstock requirements.
The abundance of natural gas has been a boon to the manufacturing industry in the US, attracting investment from around the world and helping grow the economy and create jobs, Dow said.
“However, by shipping our own energy resources abroad and without fully understanding the implications to domestic manufacturing, this renaissance and our economic growth could be potentially threatened,” Dow said.
Natural gas prices have nearly doubled since approval of the first LNG export terminal in 2011 and the latest approval raises the cumulative volume of LNG export capacity to more than 10% of domestic production, America's Energy Advantage (AEA), a trade association of manufacturers and commodity producers, said in a news release on Tuesday.
“We remain very concerned that exporting such a large volume of this strategic commodity, which is vital to US competitiveness, is contrary to the national interest,” the AEA said.
Meanwhile, petrochemical maker and global energy major ExxonMobil has previously stated that restricting LNG exports could hurt the US economy. The company declined to comment on Tuesday's non-FTA permit approval.