Monday, June 17, 2019

Shale Law Weekly Review - June 17, 2019

Written by:
Sara Jenkins - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Municipal Regulation: PA Appeals Court Rules that Grandmother Lacks Standing to Challenge Natural Gas Well Location
On June 6, 2019, the Commonwealth Court of Pennsylvania upheld a trial court ruling that a grandmother concerned over her granddaughter’s health lacked standing to challenge the location of a natural gas well site (Worthington v. Mount Pleasant Township, No. 1149 C.D. 2018). The Plaintiff, Jane Worthington, was denied party status at a Mount Pleasant Township Board of Supervisors (Board) hearing regarding approval of a conditional use permit for the well site. Ms. Worthington requested party status to contest the location of the well site over concerns that wind could carry benzene from the site to her granddaughter’s school nearby, affecting her granddaughter’s already poor health. Ultimately, the Commonwealth Court agreed with the Board and the trial court, finding that Ms. Worthington’s “theoretical concerns” did not amount to the “substantial, direct and immediate interest” required to establish standing.

Surface Owner Rights: WV Supreme Court Rules Surface Landowners Not Substantially Burdened by Horizontal Drilling
On June 10, 2019, the Supreme Court of Appeals of West Virginia ruled that surface landowners were not substantially burdened by the horizontal drilling used to develop the Marcellus shale beneath their properties (Andrews v. Antero Resources Corp., No. 17-0126). Petitioners, consisting of various surface landowners, argued that their use and enjoyment of land was being improperly and substantially burdened by the drilling operations. The Petitioners alleged the drilling activities amounted to nuisance and negligence caused by heavy equipment, truck traffic, vibrations, noise, and dust. Respondents, Antero Resources Corporation and Antero Resources Bluestone, LLC had obtained development leases from severance deeds that retained the mineral rights beneath Petitioners’ properties. The court found that the Respondents were not causing any physical damage to the Petitioners’ properties, and the Respondents were within their surface use rights to conduct the activities in question.

International Development: Norway’s Parliament Votes for Increased Restrictions on Fossil Fuel Investments
On June 12, 2019, Norway’s Parliament voted to increase restrictions on fossil fuel investment within Norway’s sovereign wealth fund. According to Reuters, the vote prohibits investment in companies that “mine more than 20 million tonnes of coal annually or generate more than 10 gigawatts (GW) of power from coal.” Norway’s sovereign wealth fund currently invests in 341 oil and gas companies around the world. Reuters reports that the new rules would mean Norway’s fund would divest its stake in companies such as Glencore and Anglo American.

LNG Exports: Commission Approves New Pier for Natural Gas Transportation in New Jersey
On June 12, 2019, the Philadelphia Inquirer reported the approval of plans to construct a new pier in Greenwich Township, New Jersey for the transport of liquified natural gas (LNG). The Delaware River Basin Commission, made up of representatives from Pennsylvania, New Jersey, Delaware, New York, and the federal government, approved the plans at a meeting on June 12. The pier project, proposed by Delaware River Partners, LLC, would allow large tankers to dock along a 1600-foot pier, increasing the capability to ship several commodities, including LNG produced from Pennsylvania wells. The project is expected to cost $96 million.

LNG Exports: City Council Approves Liquified Natural Gas Facility in Southwest Philadelphia
On June 13, 2019 the Philadelphia City Council approved ordinance 181063, which creates a partnership between Philadelphia Gas Works (PGW) and Passyunk Energy Center, LLC (PEC) to build and operate liquified natural gas (LNG) facilities in the city. According to Whyy.org, the city council approved the ordinance with a 13-4 vote. The project will be funded by PEC, and is expected to generate $4 million per year in revenue for PGW. The new LNG facilities will be located within PGW’s existing Passyunk Plant. No additional pipelines or water supplies will be needed for the project.

From the National Oil & Gas Law Experts:
Charles Sartain, What’s the Bidding on the Green New Deal?, (June 13, 2019)

John McFarland, What Happens to Unclaimed Royalties?, (June 13, 2019)


Pennsylvania Legislation:
SB 305: would allow landowners to receive compensation in certain eminent domain actions by the Delaware River Basin Commission (Re-referred to Appropriations - June 11, 2019)

HB 1392: would create an electric vehicle road use fee in accordance with the oil company franchise tax for highway maintenance and construction (Re-committed to Rules - June 10, 2019)

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Check the May Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Friday, June 14, 2019

Shale Law in the Spotlight – Delayed or Abandoned LNG Export Projects in the United States: Louisiana, Maine, and Texas


Written by Chloe Marie – Research Specialist

In May 2017, we wrote three articles addressing the then-pending and approved applications for LNG export projects in the United States. Since that time, many legal developments have occurred and so we will once again provide a discussion of LNG export developments through a multi-part series.

The first two articles in the series addressed approved applications for LNG export projects in the United States with the first article providing an overview on the development of six projects in Louisiana and the second one focusing on five projects in Texas and one project in Georgia that have been approved by both the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy (DOE).

The third article in our series addressed the status of pending LNG export project applications in the states of Alaska, Florida, and Louisiana while a fourth article addressed the status of similar applications in the states of Mississippi, Oregon, and Texas. The fifth article in our series provided an overview of LNG export projects that have moved beyond the mere application stage and are currently in operation.

While we had planned to conclude our series after the fifth article, we decided to expand the series to include one additional topic, that being LNG export projects that have been delayed or are considered to be shelved due to lack of progress on the projects. These projects include two in Louisiana, one in Maine, and one in Texas.  

Louisiana:

The Cambridge Energy (CE) FLNG Terminal Project (FERC docket PF13-11)

The CE FLNG Terminal Project involved the construction and operation of natural gas processing and liquefaction facilities to be located in Plaquemines Parish, Louisiana.

CE FLNG, LLC, sought authorization to export approximately 389.6 Bcf of natural gas per year to FTA and NFTA countries in September 2012, and it obtained approval for export to FTA countries in November 2012. The application for authorization to export LNG to NFTA countries was not acted upon. In December 2013, FERC announced that it would prepare an Environmental Impact Statement (EIS) addressing the project’s potential impacts on the environment. According to a media report, however, the project has been set aside due to a continuous “changing schedule and the lack of full set of draft resource reports” in support of the pre-filing process. The media report dated July 2015 reported that “FERC stressed that should CE FLNG be unable to provide draft resource reports in support of its project by August 1, 2015, it will suspend its participation in the pre-filing process that CE FLNG will have to start anew once it is prepared to move forward.” 

The Mississippi River LNG Project (FERC docket PF14-17-000)

In August 2014, Louisiana LNG Energy, LLC, (LLNG) obtained authorization from the U.S. Department of Energy (DOE) to export up to 103.4 Bcf per year of liquefied natural gas from the proposed Mississippi River LNG Project to FTA countries for a 25-year period. This Project was to include the construction of four liquefaction trains, a marine loading terminal and LNG truck loading facilities, and associated facilities to be located on the east bank of the Mississippi River in Plaquemines Parish, Louisiana. On February 18, 2014, LLNG filed a separate application with the U.S. Department of Energy (DOE) to export the same amount of LNG to NFTA countries.

On June 12, 2017, DOE issued an Order to Show Cause alleging that LLNG failed to comply with the semi-annual reporting requirements set forth in the FTA authorization and also had failed to inform DOE that FERC terminated the pre-filing review process due to LLNG’s inaction. In a letter dated December 13, 2016, FERC indeed stated that LLNG “has not filed the application needed for staff to continue the environmental review of [the] project”. Consequently, on July 24, 2017, DOE issued an Order vacating the prior FTA authorization granted in August 2014 and dismissing the February 2014 application to export LNG to NTFA countries considering it “necessary” because “LLNG is no longer pursuing its proposed LNG export project.”

Maine:

The Downeast LNG Import-Export Project (FERC docket PF14-19-000)

The Downeast LNG Project was initially designed to be an import terminal facility located in Robbinston, Maine; however, on July 22, 2014, Downeast LNG, Inc. filed a request with FERC to initiate the pre-filing review process of the Project for the conversion of its proposed import terminal facility into a bi-directional import and export LNG terminal due to changing market conditions.

In two separate applications filed in October 2014, Downeast LNG, Inc. sought approval from the U.S. Department of Energy (DOE) to export approximately 168 Bcf of liquefied natural gas per year to FTA and NFTA countries. In March 2015, DOE granted such authorization for LNG export to FTA countries and the NFTA countries application remained under review.

On August 17, 2016, FERC issued an Order dismissing dockets and terminating proceedings for the Downeast LNG Import-Export Project pointing out “no significant recent progress toward the development of the bidirectionally import/export project application or in stakeholder engagement.” Subsequently, and at the request of Downeast LNG, Inc., DOE issued an Order vacating the prior FTA authorization granted in March 2015 and dismissing the application to export LNG to NFTA countries.

Texas:

The Eos LNG Export Project (unknown FERC docket)

The Eos LNG Export Project involved the construction and operation of a new LNG export terminal facility at the Port of Brownsville in Brownsville, Texas. Interestingly, the project was to be built on a floating liquefaction unit on a barge and existing LNG tanker anchored to a dock at the Port of Brownsville.

In August 2013, Eos LNG, LLC, applied before the U.S. Department of Energy (DOE) for two separate authorizations to export up to 584 Bcf per year of liquefied natural gas to FTA and NFTA countries. The U.S. Department of Energy (DOE) granted approval to export LNG to FTA countries in November 2013 whereas the NFTA application remained under DOE review.

According to EOS LNG Founder, Andrew Kunian, EOS LNG, LLC, had anticipated to submit the FERC filings in 2015. Based upon our research, however, there is no record of the company initiating the FERC pre-filing process.

References:

The Cambridge Energy (CE) FLNG Terminal Project





The Mississippi River LNG Project




The Downeast LNG Import-Export Project





The Eos LNG Export Project


Additional Resources:

Shale Law in the Spotlight – Existing LNG Export Facilities in the United States: Alaska, Louisiana, Texas, and Maryland (June 13, 2019)









 

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.
 



Wednesday, June 12, 2019

Shale Law in the Spotlight – Existing LNG Export Facilities in the United States: Alaska, Louisiana, Texas, and Maryland


Written by Chloe Marie – Research Specialist

In May 2017, we wrote three articles addressing the then-pending and approved applications for LNG export projects in the United States. Since that time, many legal developments have occurred and so we will once again provide a discussion of LNG export developments through a planned five-part series.

The first two articles in the series addressed approved applications for LNG export projects in the United States with the first article providing an overview on the development of six projects in Louisiana and the second one focusing on five projects in Texas and one project in Georgia that have been approved by both the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy (DOE).

The third article in our series addressed the status of pending LNG export project applications in the states of Alaska, Florida, and Louisiana. A fourth article addressed the status of similar applications in the states of Mississippi, Oregon, and Texas.

This final article in our series will provide an overview of LNG export projects that have moved beyond the mere application stage and are currently in operation.

Existing projects:

Alaska:

The Kenai LNG Export Facility, located in Nikiski, on the Kenai Peninsula, Alaska, began operation in 1969 and was the sole LNG export plant of U.S. production for more than four decades. The Kenai LNG Export Facility consists of a natural gas liquefaction plant as well docking and loading facilities for the exportation of North Cook Inlet natural gas.

ConocoPhillips’ export license for the Kenai LNG plant terminated in March 2013 and all export activities shut down until DOE granted a new authorization in April 2014 to export up 40 Bcf of natural gas over a two-year period from 2014 to 2016. In February 2016, the U.S. Department of Energy once again authorized export of LNG for approximately 40 Bcf per year from February 19, 2016 to February 18, 2018.

ConocoPhillips put the company up for sale in November 2016 due to a change in market conditions, and Andeavor, formerly Tesoro, acquired the Kenai LNG export facility from ConocoPhillips in February 2018. Andeavor planned to expand and support operations at its nearby Kenai refinery. A short time later, Marathon Petroleum Corporation reported in a Press Release dated October 2018 that it had purchased and gained control of Andeavor, becoming a “leading US refining, midstream and marketing company.”

On March 29, 2019, Trans-Foreland Company, LLC, a subsidiary of Marathon Petroleum Corporation, filed an application under Section 3 of the Natural Gas Act (NGA) before the U.S. Federal Energy Regulatory Commission (FERC) to modify the existing Kenai LNG Plant, including “bring[ing] parts of Kenai LNG Plant out of its current warm idle status and add[ing] a 1,000 horsepower electric-driven boil-off gas compressor unit.” Most recently, FERC announced on May 17, 2019, that it will start preparing an environmental assessment (EA) to address the environmental impacts of the proposed Kenai LNG Cool Down Project.

Louisiana:

The Sabine Pass LNG import, storage, and vaporization terminal is located along the Sabine Pass River in Cameron Parish, Louisiana. The facility became an export facility after FERC approved in April 2012 the construction and operation of four trains at the existing terminal to liquefy domestic natural gas for overseas exports – known as the Sabine Liquefaction Project. Sabine Pass Liquefaction, LLC, a subsidiary of Cheniere Energy Partners and owner of the export project, indicated that “this enhanced facility will be operated as a bidirectional terminal and will have the capability both to liquefy natural gas for export, and to import and regasify LNG, simultaneously.”

Sabine Pass Liquefaction, LLC, sought to export approximately 803 Bcf of natural gas per year from Trains 1 through 4 at the existing Sabine Pass LNG terminal to Free Trade Agreement (FTA) countries in August 2010 and obtained authorization from the U.S. Department of Energy (DOE) a month later. Sabine Pass filed a separate application to export LNG to Non-Free Trade (NFTA) countries in September 2010 and received final approval in August 2012.

Construction of Trains 1 through 4 began on August 9, 2012, and Train 1 reached substantial completion on May 27, 2016. Sabine Pass LNG Terminal became the first export facility built in the continental United States to ship liquefied natural gas overseas, with a first-ever shipment made to Bahia LNG terminal in Brazil from Train 1 in February 2016. Trains 2 through 4 reached substantial completion on September 16, 2016, March 31, 2017, and October 9, 2017, respectively.

Texas:

In August 2012, Corpus Christi Liquefaction, LLC, a subsidiary of Cheniere Energy Inc. filed an application under Section 3 of the Natural Gas Act with FERC proposing to construct and operate LNG export and import facilities on the northern shore of Corpus Christi Bay, Texas, including three liquefaction trains, two trains of ambient air vaporizers and a marine terminal with two berths. On December 30, 2014, FERC granted approval for the Corpus Christi Liquefaction Project.

Corpus Christi Liquefaction, LLC, received approval from the U.S. Department of Energy (DOE) to export up to 767 Bcf per year of natural gas to FTA countries in October 2012. DOE also approved export up to 8.61 Bcf per day of natural gas to NFTA countries in May 2015.

Construction on Trains 1 and 2 started on May 13, 2015, and production at the Corpus Christi LNG plant from Train 1 started in November 2018. On March 4, 2019, Cheniere Energy Inc. announced in a Press Release that Train 1 has reached substantial completion on February 28, 2019, and declared that “[u]nder sale and purchase agreements (“SPAs”) with Endesa S.A. and PT Pertamina (Persero), the date of first commercial delivery is expected to occur in June 2019, upon which the term of each of these SPAs commences.” Additionally, FERC approved in January 2019 Cheniere’s request to introduce gas for the commissioning of Train 2 at the Corpus Christi LNG plant with the objective to begin commercial production in a near future, according to a media report.

Maryland:

The Cove Point Liquefaction Project expands the existing Cove Point LNG import terminal located on the Chesapeake Bay near Lusby, Calvert County, Maryland. This Liquefaction Project involved a bi-directional import or export service and the construction of one liquefaction train and associated facilities. Operations at the existing import terminal first started in the fall of 2003.

Dominion Cove Point LNG, LP, applied for an export license authorization with the U.S. Department of Energy (DOE) for up to 1 Bcf per day of liquefied natural gas to FTA countries. DOE granted such authorization in October 2011. In the same month, Dominion also sought authorization to export LNG to NFTA countries, and DOE approved the company’s request in May 2015 and authorized LNG export for up to 281 Bcf per year.

On April 1, 2013, Dominion Cove Point LNG, LP, sought approval from FERC for the construction and operation of the Cove Point Liquefaction Project, and FERC granted authorization on September 29, 2014. Construction of the liquefaction facility started in October 2014. On April 10, 2018, Dominion Energy announced in a Press Release that commercial service for LNG export began at the Cove Point LNG terminal in late March 2018 and declared that the company “will produce LNG for ST Cove Point, which is the joint venture of Sumitomo Corporation and Tokyo Gas, and for Gail Global (USA) LNG, the U.S. affiliate of GAIL (India) LTD, under 20-year take-or-pay contracts.

References:

The Kenai LNG Export Facility in Alaska





The Sabine Pass LNG Terminal in Louisiana





The Corpus Christi Liquefaction Project in Texas






The Cove Point Liquefaction Project in Maryland





Additional Resources:










This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture