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

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