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

Contracts

Diana Extends Containership Time Charters

Diana Containerships Inc. announced direct continuation of time charter agreements for m/v Cap Domingo and m/v Cap Doukato   Diana Containerships Inc., a global

BMT Supports Samalaju Port Development

BMT subsidiaries in the Asia-Pacific region have been awarded a contract to provide design expertise for an advanced bulk-material handling system for the emerging port of Samalaju in East Malaysia.

EU: Ships Will Measure CO2 Emissions

Shippers to begin monitoring from 2018; Environmental groups say law is weak, shippers favorable. The shipping sector will for the first time have to monitor

Legal

Third Strike, Mansour Is Out

The M/V "MANSOUR M" with IMO number 7600586 has been banned for the 3rd time after subsequent detentions after the second refusal of access order in the Paris MoU region.

New Company Takes Over OW Tanker

OW Tanker, a unit of bankrupt OW Bunker and owner of its marine fuel supply ships, has been taken over by a newly-created company, the fleet manager told Reuters on Wednesday.

WRRDA: Clearing the Channel for P3 Projects

A Creative Combination for Financing Inland Waterways Infrastructure Earlier this year, the U.S. maritime industry in general, and the inland waterways industry in particular,

Finance

New Company Takes Over OW Tanker

OW Tanker, a unit of bankrupt OW Bunker and owner of its marine fuel supply ships, has been taken over by a newly-created company, the fleet manager told Reuters on Wednesday.

WRRDA: Clearing the Channel for P3 Projects

A Creative Combination for Financing Inland Waterways Infrastructure Earlier this year, the U.S. maritime industry in general, and the inland waterways industry in particular,

Choosing the Best Financing Proposal

It isn’t always about the rate. In a robust boatbuilding market – like the one we see now – even the most successful, financially stable operators need to borrow.

Energy

MHI Completes Development of "Sayaringo STaGE"

Mitsubishi Heavy Industries, Ltd. (MHI) has completed development of the "Sayaringo STaGE," a next-generation LNG (liquefied natural gas) carrier. The Sayaringo

Drillsearch Discovers Gas at Varanus South-1

Drillsearch Energy Limited announced a new wet gas discovery on the Western Cooper Wet Gas Fairway of the Cooper Basin. The Varanus South-1 well in PEL 513 (Drillsearch

Gazprom to Partner Turkey to Supply Gas

Moscow hosted today a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Taner Yildiz, Minister of Energy and Natural Resources of the Republic of Turkey.

LNG

World’s First LNG-Ready Ultra Large Container Ship Named

The race is on in global maritime circles to be the “world’s first” in every aspect of environmental friendliness, particularly in regards to the incorporation of LNG as fuel onboard commercial ships.

ClassNK Approves Niigata Dual-fuel Engine Design

Classification society ClassNK has granted approval to the design of the new 28AHX-DF dual-fuel engine developed by Niigata Power Systems Co., Ltd. The new engine

Massive LNG Absorber Shipped to Malaysia

Successful transport of 1,480t absorber for biggest LNG plant worldwide in Malaysia.   1,480 tons and a high center of gravity made the transport of an absorber

News

USCG Suspend Search for Crabber Near Anacortes, Wash.

The Coast Guard has suspended the search for a crabber reported overdue near Anacortes, Wednesday. Dean Harvey, 48, of Bremerton, remains missing. Search

Third Strike, Mansour Is Out

The M/V "MANSOUR M" with IMO number 7600586 has been banned for the 3rd time after subsequent detentions after the second refusal of access order in the Paris MoU region.

MHI Completes Development of "Sayaringo STaGE"

Mitsubishi Heavy Industries, Ltd. (MHI) has completed development of the "Sayaringo STaGE," a next-generation LNG (liquefied natural gas) carrier. The Sayaringo

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Salvage Ship Electronics Ship Simulators
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: 0.2167 sec (5 req/sec)