Overhaul Of U.S. Natural Gas Export Review Process

Posted by Joseph R. Fonseca
Thursday, May 29, 2014

 

The Obama administration on Thursday announced a major overhaul of its review process for U.S. liquefied natural gas exports, a change that would benefit companies with strong financial backing for their projects.

Under the proposal, the Department of Energy would no longer issue conditional approvals of projects.

Instead, the department would decide whether an LNG export project is in the national interest only after the Federal Energy Regulatory Commission, or another agency, had issued a final environmental review.

The action would shift emphasis from the department's conditional approval, placing the onus on FERC.

The department said that by waiting until the environmental review is completed, it could better determine the viability of a project, because the FERC process costs far more than the department's application process.

Companies pay up to $100 million to complete the FERC process, a significant investment that separates serious projects from those that may not have financial means to actually construct multibillion-dollar export facilities.

An Energy Department export application costs about $20,000 to file.

"DOE will also be better positioned to judge the cumulative market impacts of its authorizations in its public interest review," Christopher Smith, deputy assistant secretary for fossil energy, said in a statement.

"It changes the risk profile of every project that's out there that hasn't received an export authorization," said Steve Martin, vice president of finance and contracts for Louisiana LNG Energy.

"Some of the project financing requires an offtake commitment, and an offtake commitment is somewhat dependent upon being able to take it somewhere, so for final investment decisions, there could be some impact." His company currently is seeking an offtake contract, Martin said. A final investment decision is not in place yet.

An offtake contract is a would-be buyer's commitment to purchase a project's LNG.

The administration has been under pressure from backers of LNG exports, including many Republican lawmakers and some Democrats from oil and gas states, to streamline the approval process for LNG projects.

While the Department of Energy decides whether proposed LNG exports to countries lacking a free-trade agreement with the United States are in the public interest, FERC weighs the safety and environmental impact of the export facilities.

Until now, the administration set up its queue mostly based on when applications were filed with the department, with some priority given to project backers that had filed with FERC.

The proposed changes will likely not have too much impact on the two projects at the front of the old queue.

The public will have 45 days to comment on the DOE's plan. During that time the department will continue to review projects under its existing process, making it likely that the next application up for review, Leucadia National Corp's Oregon LNG project, could snare a conditional approval.

Cheniere's Corpus Christi project is next in line, but it is also far along in its review process at FERC. If the administration's plan is adopted, the project is likely to be one of the first approved under the new procedures.

Gas industry groups that have pressed the department to speed up its process were cautiously optimistic about the plan but also raised concerns.

If the DOE is allowed to alter the process at any time, those projects that benefit from these changes may be put at a disadvantage later on, said Bill Cooper, head of the Center for Liquefied Natural Gas.

"We just don't have any regulatory certainty about the process. It keeps changing," he said.

The department said it also plans to undertake additional studies of the economic impact of U.S. LNG exports of between 12 billion and 20 billion cubic feet a day.

The application review process would continue while these studies are conducted, the DOE said.

By Ayesha Rascoe

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

Star Bulk Takes Delivery of First Capesize from JMU

Athens, Greece-headquartered Star Bulk Carriers says it has taken delivery of 'M/V Peloreus' a 182,000 dwt Capesize built by Japan Marine United (“JMU”) and the

Ardmore Shipping Secures Newbuilding Finance

Ardmore Shipping Corporation says it has signed agreements to upsize its existing senior loan facility with ABN AMRO Bank N.V., Nordea Bank Finland Plc, and Skandinaviska Enskilda Banken AB ("SEB").

Gulf Island Fab Sign Bechtel Offshore Cooperation Agreement

Gulf Island Fabrication, Inc. says it has signed a cooperative agreement with Bechtel Oil, Gas, and Chemicals, Inc. to work together to pursue opportunities for offshore projects for the U.

Legal

House Subcommittee Hearing Highlights “Dismal State” of U.S. Icebreaking Capability

At the July 23, 2014, hearing of the House Subcommittee on Coast Guard and Maritime Transportation on “Implementing U.S. Policy in the Arctic” the committee chairman, Rep.

Iraqi Kurdish Oil Nears US Port Despite Concern in Washington

A tanker carrying crude oil from Iraqi Kurdistan is just two days away from arriving at a U.S. port, according to ship tracking satellites, despite Washington's

Maritime NZ Oil Spill Response Review: Submissions

Maritime New Zealand (MNZ) says it invites submissions on its draft updated New Zealand Marine Oil Spill Response Strategy 2014 (the draft Strategy). The draft Strategy, (available at http://bit.

Finance

Star Bulk Takes Delivery of First Capesize from JMU

Athens, Greece-headquartered Star Bulk Carriers says it has taken delivery of 'M/V Peloreus' a 182,000 dwt Capesize built by Japan Marine United (“JMU”) and the

Ardmore Shipping Secures Newbuilding Finance

Ardmore Shipping Corporation says it has signed agreements to upsize its existing senior loan facility with ABN AMRO Bank N.V., Nordea Bank Finland Plc, and Skandinaviska Enskilda Banken AB ("SEB").

UK Chancellor Mentions Hi-Tech Tax Breaks on Bibby Offshore Visit

Bibby Offshore, subsea services provider to the oil & gas industry, says it has hosted a visit by George Osborne, Chancellor of the Exchequer, to the Company’s workshop,

Energy

Turkey Approves EIA Report for South Stream’s Offshore Section

The Ministry of Environment and Urban Planning of Turkey approved the Environmental Impact Assessment (EIA) Report and issued a positive opinion of the EIA results

Iain Conn to Leave BP

BP today announced that Iain Conn, Group Managing Director and Chief Executive, Downstream, is leaving the company and is to step down from BP’s board by the end of the year.

Rosneft Produced 1st Lot of Fischer Tropsch Synthesis Catalysts

Rosneft has proved its leadership in national GTL (gas-to-liquid) technologies development. First pilot batches of Fischer Tropsch synthesis catalysts have been

LNG

ABS, MPA to Collaborate on Maritime R&D

ABS and the Maritime and Port Authority of Singapore (MPA) signed a memorandum of understanding (MOU) today to promote maritime research and development (R&D) and innovation.

GTT Wins DSME Order for 9 More Icebreaking LNGCs

Gaztransport & Technigaz (GTT), a designer of membrane containment systems for the maritime transportation and storage of Liquefied Natural Gas (LNG), announced

Wilhelmsen Secures Inert Gas System Orders

Breakthrough order in Japanese shipbuilding market sees largest ever capacity Maritime Protection IG units delivered for leading domestic owners. Wilhelmsen

News

USCG Leadership Development Center Change of Command

The Coast Guard’s Leadership Develop Center will have its first change of command ceremony Thursday, July 31 at 11 a.m. in front of Yeaton Hall at the U.S. Coast Guard Academy in New London, Conn.

6 MW Offshore Wind Turbine of Siemens Certified

Siemens Energy has obtained type certification of DNV GL for the company's innovative D6 offshore wind turbine. The model Siemens SWT-6.0-154 is equipped with a modern direct drive generator,

Turkey Approves EIA Report for South Stream’s Offshore Section

The Ministry of Environment and Urban Planning of Turkey approved the Environmental Impact Assessment (EIA) Report and issued a positive opinion of the EIA results

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Offshore Oil Pipelines Pod Propulsion Ship Repair Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1577 sec (6 req/sec)