Gulf Coast LNG Export, LLC; Application for Long-Term Authorization To Export Domestically Produced Liquefied Natural Gas for a 25-Year Period, 32962-32965 [2012-13430]
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
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[FR Doc. 2012–13473 Filed 6–1–12; 8:45 am]
BILLING CODE 4000–01–P
DEPARTMENT OF ENERGY
[FE Docket No. 12–05–LNG]
Gulf Coast LNG Export, LLC;
Application for Long-Term
Authorization To Export Domestically
Produced Liquefied Natural Gas for a
25-Year Period
Office of Fossil Energy, DOE.
Notice of application.
AGENCY:
ACTION:
The Office of Fossil Energy
(FE) of the Department of Energy (DOE)
gives notice of receipt of an application
(Application), filed on January 10, 2012,
by Gulf Coast LNG Export, LLC (Gulf
Coast), requesting long-term, multicontract authorization to export
domestically produced liquefied natural
gas (LNG) in an amount up to the
equivalent of 1,022 billion cubic feet
(Bcf) of natural gas per year, which
averages to 2.8 Bcf per day (Bcf/d), up
to a total of 25.55 trillion cubic feet
(Tcf), over a 25-year period,
commencing on the earlier of the date
of first export or eight years from the
date the requested authorization is
granted. Gulf Coast proposes to export
LNG from a proposed natural gas
liquefaction facility and LNG terminal
to be located at the Port of Brownsville
in Brownsville, Texas, which Gulf Coast
plans to develop, to any country which
has or in the future develops the
capacity to import LNG via ocean-going
carrier, and with which trade is not
prohibited by U.S. law or policy. Gulf
Coast seeks to export this LNG on its
own behalf and also as agent for third
parties. The Application was filed under
section 3 of the Natural Gas Act (NGA).
Protests, motions to intervene, notices of
intervention, and written comments are
invited.
SUMMARY:
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
Protests, motions to intervene or
notices of intervention, as applicable,
requests for additional procedures, and
written comments are to be filed using
procedures detailed in the Public
Comment Procedures section no later
than 4:30 p.m., eastern time, August 3,
2012.
ADDRESSES:
Electronic Filing on the Federal
eRulemaking Portal under FE Docket
No. 12–05–LNG: https://
www.regulations.gov.
Electronic Filing by email:
fergas@hq.doe.gov.
DATES:
Regular Mail
U.S. Department of Energy (FE–34),
Office of Natural Gas Regulatory
Activities, Office of Fossil Energy, P.O.
Box 44375, Washington, DC 20026–
4375.
Hand Delivery or Private Delivery
Services (e.g., FedEx, UPS, etc.)
U.S. Department of Energy (FE–34),
Office of Natural Gas Regulatory
Activities, Office of Fossil Energy,
Forrestal Building, Room 3E–042, 1000
Independence Avenue SW.,
Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT:
Larine Moore or Lisa Tracy, U.S.
Department of Energy (FE–34), Office of
Natural Gas Regulatory Activities, Office
of Fossil Energy, Forrestal Building,
Room 3E–042, 1000 Independence
Avenue SW., Washington, DC 20585,
(202) 586–9478; (202) 586–4523.
Edward Myers, U.S. Department of
Energy, Office of the Assistant General
Counsel for Electricity and Fossil
Energy, Forrestal Building, Room 6B–
256, 1000 Independence Ave. SW.,
Washington, DC 20585, (202) 586–3397.
SUPPLEMENTARY INFORMATION:
ebenthall on DSK5SPTVN1PROD with NOTICES
Background
Gulf Coast is a Delaware limited
liability company with its principal
place of business in Houston, Texas.
Gulf Coast is owned by Michael Smith,
the founder and current Chairman and
CEO of Freeport LNG Development, L.P.
(97 percent), the Kaily Morgan Smith
Irrevocable Trust (1.5 percent), and the
Tara Marielle Smith Irrevocable Trust
(1.5 percent).
Gulf Coast plans to develop, own and
operate a natural gas liquefaction
facility and LNG export terminal at the
Port of Brownsville, in Brownsville,
Texas (Brownsville Terminal). Gulf
Coast states that the Brownsville
Terminal will include four trains
capable of liquefying up to 2.8 Bcf/d of
natural gas, a marine berth, full
containment LNG storage tanks, a
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pipeline connection to natural gas
transportation lines, and associated
utilities.
Current Application
In the instant Application, Gulf Coast
seeks long-term, multi-contract
authorization to export domestically
produced LNG up to the equivalent of
1,022 Bcf of natural gas per year (2.8
Bcf/d), up to a total of 25.55 Tcf, for a
period of twenty-five years beginning on
the earlier of the date of first export or
eight years from the date the
authorization is granted by DOE/FE.
Gulf Coast seeks authorization to export
domestically produced LNG to countries
from the United States to any country
which has or in the future develops the
capacity to import LNG via ocean-going
carrier, and with which trade is not
prohibited by U.S. law or policy. In the
alternative, Gulf Coast requests
authorization for that portion of Gulf
Coast’s requested authorization quantity
or term that DOE/FE determines to be in
the public interest.
When submitted in January 2012, the
Application did not contain evidence
that Gulf Coast had established a
business relationship with the Port of
Brownsville where the proposed
liquefaction facility and LNG export
terminal are to be constructed. Absent
some credible evidence that an
applicant for an LNG export
authorization has taken meaningful
steps toward establishing the sorts of
business relationships essential for
performing the services for which
authorization is sought from this agency
(for example, securing a means of
obtaining LNG for export, contracting
for capacity at an existing LNG terminal,
or initiating the process of securing
property to construct such a terminal),
DOE/FE will generally consider such an
application deficient and, if the
deficiency is not corrected in a
reasonable time, the application may be
dismissed without prejudice to refilling
at a later time. See, 10 CFR 590.203.
On March 27, 2012, Gulf Coast sent
DOE/FE a copy of an option agreement
between Gulf Coast and the Brownsville
Navigation District of Cameron County,
Texas, to demonstrate its commercial
relationship with the owner of the
property on which the proposed facility
would be built. Gulf Coast requested the
agreement be afforded confidential
treatment and not posted to the public
docket. Subsequently, Gulf Coast agreed
to allow a redacted version of the option
agreement to be placed in the public
docket of the proceeding. On May 16,
2012, Gulf Coast submitted the redacted
agreement, and DOE/FE deemed the
application complete at that time.
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Gulf Coast states that rather than
entering into long-term natural gas
supply or LNG export contracts, it
contemplates that its business model
will be based primarily on Liquefaction
Tolling Agreements (LTAs), under
which individual customers who hold
title to natural gas will have the right to
deliver that gas to Gulf Coast and
receive LNG. Gulf Coast states that in
the current natural gas market, LTAs
fulfill the role previously performed by
long-term supply contracts, in that they
provide stable commercial arrangements
between companies involved in natural
gas services.
Gulf Coast requests long-term multicontract authorization to engage in
exports of LNG on its own behalf or as
agent for others. Gulf Coast
contemplates that the title holder at the
point of export 1 may be Gulf Coast or
one of Gulf Coast’s LTA customers, or
another party that has purchased LNG
from an LTA customer pursuant to a
long-term contract. Gulf Coast requests
authorization to register each LNG title
holder for whom Gulf Coast seeks to
export as agent, and proposes that this
registration include a written statement
by the title holder acknowledging and
agreeing to comply with all applicable
requirements included by DOE/FE in
Gulf Coast’s export authorization, and to
include those requirements in any
subsequent purchase or sale agreement
entered into by that title holder. In
addition to its registration of any LNG
title holder for whom Gulf Coast seeks
to export as agent, Gulf Coast states that
it will file under seal with DOE/FE any
relevant long-term commercial
agreements between Gulf Coast and
such LNG title holder, including LTAs,
once they have been executed.2
Gulf Coast states that the natural gas
supply underlying the proposed exports
will come from the interconnected and
highly liquid domestic market for
natural gas. Gulf Coast states that given
the size of the traditional natural gas
market in Texas, and the exponential
growth of unconventional resources in
the region, a diverse and reliable source
of natural gas will be available to
support the requested authorization.
1 LNG exports occur when the LNG is delivered
to the flange of the LNG export vessel. See The Dow
Chemical Company, FE Docket No. 10–57–LNG,
Order No. 2859 at p. 7 (October 5, 2010).
2 Gulf Coast states that the practice of filing
contracts after the DOE/FE has granted export
authorization is well established. See Yukon Pacific
Corporation, ERA Docket No. 87–68–LNG, Order
No. 350 (November 16, 1989); Distrigas
Corporation, FE Docket No. 95–100–LNG, Order
No. 1115, at p. 3 (November 7, 1995); See also
Freeport LNG Expansion and FLNG Liquefaction,
LLC, FE Docket No. 10–160–LNG, Order No. 2913
at 9–10 (February 10, 2011).
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
Gulf Coast provides further discussion
of the gas supply markets in the
Application.
Public Interest Considerations
ebenthall on DSK5SPTVN1PROD with NOTICES
In the instant Application, Gulf Coast
requests authorization to export to any
country which has or in the future
develops the capacity to import LNG via
ocean-going carrier, and with which
trade is not prohibited by U.S. law or
policy. Gulf Coast states that this may
include countries with which the
United States has an FTA requiring
national treatment for trade in natural
gas or LNG, as well as non-FTA
countries. Gulf Coast acknowledges that
in the review of its Application, DOE/
FE will be guided by the individual
statutory provisions that apply
separately to the export of LNG to FTA
and non-FTA countries. In either case,
Gulf Coast contends that the requested
authorization would not be inconsistent
with the public interest and should be
granted by DOE/FE.
Gulf Coast asserts that applications
submitted to DOE/FE that seek to export
LNG to FTA countries should be
reviewed pursuant to the public interest
standard in Section 3(c) of the Natural
Gas Act (NGA).3 Gulf Coast maintains
that these exports are deemed to be in
the public interest and must be granted
without modification or delay.
With regard to exports of LNG to nonFTA countries, Gulf Coast states that
DOE/FE has consistently ruled that
section 3(a) of the NGA creates a
rebuttable presumption that proposed
exports of natural gas are in the public
interest. Gulf Coast asserts that unless
opponents of an export license make an
affirmative showing based on evidence
in the record that the export would be
inconsistent with the public interest,
DOE/FE must grant the export
application.4
Gulf Coast asserts that in evaluating
whether the proposed exportation is
within the public interest, DOE/FE
applies the principles established by the
Policy Guidelines,5 which promote free
and open trade by minimizing federal
control and involvement in energy
markets, and DOE Delegation Order No.
0204–111, which requires
‘‘consideration of the domestic need for
the gas to be exported.’’ Gulf Coast cites
3 15
U.S.C. 717b(c).
4 DOE/FE Order No. 1473, note 42 at p. 13, citing
Panhandle Producers and Royalty Owners
Association v. ERA, 822 F.2d 1105, 1111 (D.C. Cir.
1987).
5 Policy Guidelines and Delegation Orders
Relating to the Regulation of Imported Natural Gas,
49 FR 6684 (Feb. 22, 1984).
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DOE/FE Order No. 2961,6 in which
DOE/FE stated that its public interest
review of applications to export natural
gas to countries with which the United
States does not have an FTA ‘‘has
continued to focus on the domestic need
for the natural gas proposed to be
exported; whether the proposed exports
pose a threat to the security of domestic
natural gas supplies; and any other issue
determined to be appropriate * * *’’.
Gulf Coast states that as a result of
technological advances, huge reserves of
domestic shale gas that were previously
infeasible or uneconomic to develop are
now being profitably produced in many
regions of the United States. Gulf Coast
asserts that the United States is now
estimated to have more natural gas
resources than it can use in a century.7
Gulf Coast also states that large volumes
of domestic shale gas reserves and
continued low production costs will
enable the United States to export LNG
while also meeting domestic demand for
natural gas for decades to come.
Gulf Coast asserts that as U.S. natural
gas reserves and production have risen,
U.S. natural gas prices have fallen to the
point where they are among the lowest
in the developed world. Gulf Coast
states that LNG supply contracts in
Asian markets are pegged to crude oil
prices. Gulf Coast asserts that while
Europe receives pipeline gas from
various sources, the long supply chains
and relative inflexibility of markets have
made diversification of supply a high
priority. Gulf Coast states that domestic
natural gas prices are projected to
remain low relative to European and
Asian markets well into the future,
thereby making exports of LNG by
vessel a viable long-term opportunity for
the United States.
Gulf Coast states the project is
positioned to provide the Gulf Coast
region and the United States with
significant economic benefits by
increasing domestic natural gas
production. Gulf Coast states that these
benefits will be obtained with only a
minimal effect on domestic natural gas
prices. Gulf Coast states that at current
and forecasted rates of demand, the
United States’ natural gas reserves will
meet demand for 100 years. Gulf Coast
states that the project allows the United
States to benefit now from the natural
gas resources that may not otherwise be
6 Sabine Pass Liquefaction LLC, DOE/FE Docket
No. 10–110 LNG (DOE/FE Order No. 2961), May 20,
2011.
7 Gulf Coast states that total U.S. recoverable
natural gas reserves equal about 2,543 trillion cubic
feet (Tcf), which Gulf Coast states is more than 105
times the total domestic consumption of 24.1 Tcf
in 2010. U.S. Energy Information Administration,
Annual Energy Outlook 2011, at 79 (April 26, 2011).
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produced for many decades, if ever.
Gulf Coast provides further discussion
on why the proposed export
authorization is in the public interest.
First, Gulf Coast contends that the
project will cause direct and indirect job
creation through construction (3,000
onsite jobs over five to six years) and
operation (more than 250 permanent
jobs) of the planned project, and
indirect jobs as a result of increased
drilling for and production of natural
gas (34,000 to 42,000 jobs).8
Second, Gulf Coast maintains the
project would create significant
economic stimulus, with the total
economic benefits to the American
economy estimated to be between $7.2
and $10.4 billion per year from 2018 to
2043, or $90 to $130 billion over the
requested 25-year export term.9
Third, Gulf Coast contends that there
will be a material improvement in the
U.S. balance of trade. Gulf Coast states
that assuming an average value of $7 per
million Btu, exporting approximately
2.8 Bcf/d of LNG through the project
will improve the U.S. balance of
payments by approximately $7.3 billion
per year, or $183 billion over the
requested 25-year export term.
Fourth, Gulf Coast states that the
project will have significant
environmental benefits by reducing
global greenhouse gas emissions if the
natural gas exported is used as a
substitute for coal and fuel oil.
Fifth, Gulf Coast states that the project
supports American energy security. Gulf
Coast maintains that the United States
has developed a massive natural gas
resource base that is sufficient to supply
domestic demand for a century, even
with significant exports of LNG. Gulf
Coast contends that the project will not
adversely affect U.S. energy security.
Gulf Coast references a report by the
Massachusetts Institute of Technology’s
Energy Initiative, which concludes that
‘‘[t]he U.S. should sustain North
American energy market integration and
support development of a global ‘liquid’
natural gas market with diversity of
supply. A corollary is that the U.S.
should not erect barriers to gas imports
or exports.’’ 10
8 Gulf Coast cites to the following: Baumann,
Robert H., D.E. Dismukes, D.V. Mesyanzhinov, and
A.G. Pulsipher, Analysis of the Economic Impact
Associated with Oil and Gas Activities on State
Leases, Louisiana State University Center for Energy
Studies (2002); Snead, Mark C., The Economic
Impact of Oil and Gas Production and Drilling on
the Oklahoma Economy, Oklahoma State University
(2002); Considine, Timothy J., The Economic
Impacts of the Marcellus Shale: Implications for
New York, Pennsylvania and West Virginia, A
Report to the American Petroleum Institute (2010).
9 Id.
10 MIT Energy Initiative, MIT Study on the Future
of Natural Gas, at 157 (2011).
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
Further details can be found in the
Application, which has been posted at
https://www.fe.doe.gov/programs/
gasregulation/.
Based on the reasoning provided in
the Application, Gulf Coast requests that
DOE/FE determine that Gulf Coast’s
request for long-term, multi-contract
authorization to export LNG is not
inconsistent with the public interest.
ebenthall on DSK5SPTVN1PROD with NOTICES
Environmental Impact
Gulf Coast states that its proposed
LNG exports will require the siting,
construction and operation of the
proposed Brownsville Terminal, subject
to environmental review and
authorization by the FERC. Gulf Coast
states that it will initiate the FERC
authorization process within 180 days
of DOE/FE’s order approving this
Application. Accordingly, Gulf Coast
requests that DOE/FE issue a
conditional order authorizing the export
of domestically produced LNG from the
planned Brownsville Terminal
conditioned on completion of the
environmental review and subsequent
authorization by the FERC.
DOE/FE Evaluation
The Application will be reviewed
pursuant to section 3 of the NGA, as
amended, and the authority contained
in DOE Delegation Order No. 00–
002.00L (April 29, 2011) and DOE
Redelegation Order No. 00–002.04E
(April 29, 2011). In reviewing this LNG
export Application, DOE will consider
any issues required by law or policy. To
the extent determined to be relevant or
appropriate, these issues will include
the impact of LNG exports associated
with this Application, and the
cumulative impact of any other
application(s) previously approved, on
domestic need for the gas proposed for
export, adequacy of domestic natural
gas supply, U.S. energy security, and
any other issues, including the impact
on the U.S. economy (GDP), consumers,
and industry, job creation, U.S. balance
of trade, international considerations,
and whether the arrangement is
consistent with DOE’s policy of
promoting competition in the
marketplace by allowing commercial
parties to freely negotiate their own
trade arrangements. Parties that may
oppose this Application should
comment in their responses on these
issues, as well as any other issues
deemed relevant to the Application.
NEPA requires DOE to give
appropriate consideration to the
environmental effects of its proposed
decisions. No final decision will be
issued in this proceeding until DOE has
met its NEPA responsibilities.
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Due to the complexity of the issues
raised by the Applicants, interested
persons will be provided 60 days from
the date of publication of this Notice in
which to submit comments, protests,
motions to intervene, notices of
intervention, or motions for additional
procedures.
Public Comment Procedures
In response to this notice, any person
may file a protest, comments, or a
motion to intervene or notice of
intervention, as applicable. Any person
wishing to become a party to the
proceeding must file a motion to
intervene or notice of intervention, as
applicable. The filing of comments or a
protest with respect to the Application
will not serve to make the commenter or
protestant a party to the proceeding,
although protests and comments
received from persons who are not
parties will be considered in
determining the appropriate action to be
taken on the Application. All protests,
comments, motions to intervene or
notices of intervention must meet the
requirements specified by the
regulations in 10 CFR part 590.
Filings may be submitted using one of
the following methods: (1) Submitting
comments in electronic form on the
Federal eRulemaking Portal at https://
www.regulations.gov, by following the
on-line instructions and submitting
such comments under FE Docket No.
12–05–LNG. DOE/FE suggests that
electronic filers carefully review
information provided in their
submissions and include only
information that is intended to be
publicly disclosed; (2) emailing the
filing to fergas@hq.doe.gov, with FE
Docket No. 12–05–LNG in the title line;
(3) mailing an original and three paper
copies of the filing to the Office Natural
Gas Regulatory Activities at the address
listed in ADDRESSES; or (4) hand
delivering an original and three paper
copies of the filing to the Office of
Natural Gas Regulatory Activities at the
address listed in ADDRESSES.
A decisional record on the
Application will be developed through
responses to this notice by parties,
including the parties’ written comments
and replies thereto. Additional
procedures will be used as necessary to
achieve a complete understanding of the
facts and issues. A party seeking
intervention may request that additional
procedures be provided, such as
additional written comments, an oral
presentation, a conference, or trial-type
hearing. Any request to file additional
written comments should explain why
they are necessary. Any request for an
oral presentation should identify the
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32965
substantial question of fact, law, or
policy at issue, show that it is material
and relevant to a decision in the
proceeding, and demonstrate why an
oral presentation is needed. Any request
for a conference should demonstrate
why the conference would materially
advance the proceeding. Any request for
a trial-type hearing must show that there
are factual issues genuinely in dispute
that are relevant and material to a
decision and that a trial-type hearing is
necessary for a full and true disclosure
of the facts.
If an additional procedure is
scheduled, notice will be provided to all
parties. If no party requests additional
procedures, a final Opinion and Order
may be issued based on the official
record, including the Application and
responses filed by parties pursuant to
this notice, in accordance with 10 CFR
590.316.
The Application filed by Gulf Coast is
available for inspection and copying in
the Office of Natural Gas Regulatory
Activities docket room, Room 3E–042,
1000 Independence Avenue SW.,
Washington, DC 20585. The docket
room is open between the hours of 8
a.m. and 4:30 p.m., Monday through
Friday, except Federal holidays. The
Application and any filed protests,
motions to intervene or notice of
interventions, and comments will also
be available electronically by going to
the following DOE/FE Web address:
https://www.fe.doe.gov/programs/
gasregulation/. In addition,
any electronic comments filed will also
be available at: https://
www.regulations.gov.
Issued in Washington, DC, on May 29,
2012.
John A. Anderson,
Manager, Natural Gas Regulatory Activities,
Office of Oil and Gas Global Security and
Supply, Office of Fossil Energy.
[FR Doc. 2012–13430 Filed 6–1–12; 8:45 am]
BILLING CODE 6450–01–P
ENVIRONMENTAL PROTECTION
AGENCY
[EPA–HQ–OPPT–2012–0261; FRL–9350–5]
Certain New Chemicals; Receipt and
Status Information
Environmental Protection
Agency (EPA).
ACTION: Notice.
AGENCY:
Section 5 of the Toxic
Substances Control Act (TSCA) requires
any person who intends to manufacture
(defined by statute to include import) a
new chemical (i.e., a chemical not on
SUMMARY:
E:\FR\FM\04JNN1.SGM
04JNN1
]]>Agencies
[Federal Register Volume 77, Number 107 (Monday, June 4, 2012)]
[Notices]
[Pages 32962-32965]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13430]
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DEPARTMENT OF ENERGY
[FE Docket No. 12-05-LNG]
Gulf Coast LNG Export, LLC; Application for Long-Term
Authorization To Export Domestically Produced Liquefied Natural Gas for
a 25-Year Period
AGENCY: Office of Fossil Energy, DOE.
ACTION: Notice of application.
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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice of receipt of an application (Application), filed on
January 10, 2012, by Gulf Coast LNG Export, LLC (Gulf Coast),
requesting long-term, multi-contract authorization to export
domestically produced liquefied natural gas (LNG) in an amount up to
the equivalent of 1,022 billion cubic feet (Bcf) of natural gas per
year, which averages to 2.8 Bcf per day (Bcf/d), up to a total of 25.55
trillion cubic feet (Tcf), over a 25-year period, commencing on the
earlier of the date of first export or eight years from the date the
requested authorization is granted. Gulf Coast proposes to export LNG
from a proposed natural gas liquefaction facility and LNG terminal to
be located at the Port of Brownsville in Brownsville, Texas, which Gulf
Coast plans to develop, to any country which has or in the future
develops the capacity to import LNG via ocean-going carrier, and with
which trade is not prohibited by U.S. law or policy. Gulf Coast seeks
to export this LNG on its own behalf and also as agent for third
parties. The Application was filed under section 3 of the Natural Gas
Act (NGA). Protests, motions to intervene, notices of intervention, and
written comments are invited.
[[Page 32963]]
DATES: Protests, motions to intervene or notices of intervention, as
applicable, requests for additional procedures, and written comments
are to be filed using procedures detailed in the Public Comment
Procedures section no later than 4:30 p.m., eastern time, August 3,
2012.
ADDRESSES:
Electronic Filing on the Federal eRulemaking Portal under FE Docket
No. 12-05-LNG: https://www.regulations.gov.
Electronic Filing by email: fergas@hq.doe.gov.
Regular Mail
U.S. Department of Energy (FE-34), Office of Natural Gas Regulatory
Activities, Office of Fossil Energy, P.O. Box 44375, Washington, DC
20026-4375.
Hand Delivery or Private Delivery Services (e.g., FedEx, UPS, etc.)
U.S. Department of Energy (FE-34), Office of Natural Gas Regulatory
Activities, Office of Fossil Energy, Forrestal Building, Room 3E-042,
1000 Independence Avenue SW., Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT:
Larine Moore or Lisa Tracy, U.S. Department of Energy (FE-34),
Office of Natural Gas Regulatory Activities, Office of Fossil Energy,
Forrestal Building, Room 3E-042, 1000 Independence Avenue SW.,
Washington, DC 20585, (202) 586-9478; (202) 586-4523.
Edward Myers, U.S. Department of Energy, Office of the Assistant
General Counsel for Electricity and Fossil Energy, Forrestal Building,
Room 6B-256, 1000 Independence Ave. SW., Washington, DC 20585, (202)
586-3397.
SUPPLEMENTARY INFORMATION:
Background
Gulf Coast is a Delaware limited liability company with its
principal place of business in Houston, Texas. Gulf Coast is owned by
Michael Smith, the founder and current Chairman and CEO of Freeport LNG
Development, L.P. (97 percent), the Kaily Morgan Smith Irrevocable
Trust (1.5 percent), and the Tara Marielle Smith Irrevocable Trust (1.5
percent).
Gulf Coast plans to develop, own and operate a natural gas
liquefaction facility and LNG export terminal at the Port of
Brownsville, in Brownsville, Texas (Brownsville Terminal). Gulf Coast
states that the Brownsville Terminal will include four trains capable
of liquefying up to 2.8 Bcf/d of natural gas, a marine berth, full
containment LNG storage tanks, a pipeline connection to natural gas
transportation lines, and associated utilities.
Current Application
In the instant Application, Gulf Coast seeks long-term, multi-
contract authorization to export domestically produced LNG up to the
equivalent of 1,022 Bcf of natural gas per year (2.8 Bcf/d), up to a
total of 25.55 Tcf, for a period of twenty-five years beginning on the
earlier of the date of first export or eight years from the date the
authorization is granted by DOE/FE. Gulf Coast seeks authorization to
export domestically produced LNG to countries from the United States to
any country which has or in the future develops the capacity to import
LNG via ocean-going carrier, and with which trade is not prohibited by
U.S. law or policy. In the alternative, Gulf Coast requests
authorization for that portion of Gulf Coast's requested authorization
quantity or term that DOE/FE determines to be in the public interest.
When submitted in January 2012, the Application did not contain
evidence that Gulf Coast had established a business relationship with
the Port of Brownsville where the proposed liquefaction facility and
LNG export terminal are to be constructed. Absent some credible
evidence that an applicant for an LNG export authorization has taken
meaningful steps toward establishing the sorts of business
relationships essential for performing the services for which
authorization is sought from this agency (for example, securing a means
of obtaining LNG for export, contracting for capacity at an existing
LNG terminal, or initiating the process of securing property to
construct such a terminal), DOE/FE will generally consider such an
application deficient and, if the deficiency is not corrected in a
reasonable time, the application may be dismissed without prejudice to
refilling at a later time. See, 10 CFR 590.203.
On March 27, 2012, Gulf Coast sent DOE/FE a copy of an option
agreement between Gulf Coast and the Brownsville Navigation District of
Cameron County, Texas, to demonstrate its commercial relationship with
the owner of the property on which the proposed facility would be
built. Gulf Coast requested the agreement be afforded confidential
treatment and not posted to the public docket. Subsequently, Gulf Coast
agreed to allow a redacted version of the option agreement to be placed
in the public docket of the proceeding. On May 16, 2012, Gulf Coast
submitted the redacted agreement, and DOE/FE deemed the application
complete at that time.
Gulf Coast states that rather than entering into long-term natural
gas supply or LNG export contracts, it contemplates that its business
model will be based primarily on Liquefaction Tolling Agreements
(LTAs), under which individual customers who hold title to natural gas
will have the right to deliver that gas to Gulf Coast and receive LNG.
Gulf Coast states that in the current natural gas market, LTAs fulfill
the role previously performed by long-term supply contracts, in that
they provide stable commercial arrangements between companies involved
in natural gas services.
Gulf Coast requests long-term multi-contract authorization to
engage in exports of LNG on its own behalf or as agent for others. Gulf
Coast contemplates that the title holder at the point of export \1\ may
be Gulf Coast or one of Gulf Coast's LTA customers, or another party
that has purchased LNG from an LTA customer pursuant to a long-term
contract. Gulf Coast requests authorization to register each LNG title
holder for whom Gulf Coast seeks to export as agent, and proposes that
this registration include a written statement by the title holder
acknowledging and agreeing to comply with all applicable requirements
included by DOE/FE in Gulf Coast's export authorization, and to include
those requirements in any subsequent purchase or sale agreement entered
into by that title holder. In addition to its registration of any LNG
title holder for whom Gulf Coast seeks to export as agent, Gulf Coast
states that it will file under seal with DOE/FE any relevant long-term
commercial agreements between Gulf Coast and such LNG title holder,
including LTAs, once they have been executed.\2\
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\1\ LNG exports occur when the LNG is delivered to the flange of
the LNG export vessel. See The Dow Chemical Company, FE Docket No.
10-57-LNG, Order No. 2859 at p. 7 (October 5, 2010).
\2\ Gulf Coast states that the practice of filing contracts
after the DOE/FE has granted export authorization is well
established. See Yukon Pacific Corporation, ERA Docket No. 87-68-
LNG, Order No. 350 (November 16, 1989); Distrigas Corporation, FE
Docket No. 95-100-LNG, Order No. 1115, at p. 3 (November 7, 1995);
See also Freeport LNG Expansion and FLNG Liquefaction, LLC, FE
Docket No. 10-160-LNG, Order No. 2913 at 9-10 (February 10, 2011).
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Gulf Coast states that the natural gas supply underlying the
proposed exports will come from the interconnected and highly liquid
domestic market for natural gas. Gulf Coast states that given the size
of the traditional natural gas market in Texas, and the exponential
growth of unconventional resources in the region, a diverse and
reliable source of natural gas will be available to support the
requested authorization.
[[Page 32964]]
Gulf Coast provides further discussion of the gas supply markets in the
Application.
Public Interest Considerations
In the instant Application, Gulf Coast requests authorization to
export to any country which has or in the future develops the capacity
to import LNG via ocean-going carrier, and with which trade is not
prohibited by U.S. law or policy. Gulf Coast states that this may
include countries with which the United States has an FTA requiring
national treatment for trade in natural gas or LNG, as well as non-FTA
countries. Gulf Coast acknowledges that in the review of its
Application, DOE/FE will be guided by the individual statutory
provisions that apply separately to the export of LNG to FTA and non-
FTA countries. In either case, Gulf Coast contends that the requested
authorization would not be inconsistent with the public interest and
should be granted by DOE/FE.
Gulf Coast asserts that applications submitted to DOE/FE that seek
to export LNG to FTA countries should be reviewed pursuant to the
public interest standard in Section 3(c) of the Natural Gas Act
(NGA).\3\ Gulf Coast maintains that these exports are deemed to be in
the public interest and must be granted without modification or delay.
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\3\ 15 U.S.C. 717b(c).
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With regard to exports of LNG to non-FTA countries, Gulf Coast
states that DOE/FE has consistently ruled that section 3(a) of the NGA
creates a rebuttable presumption that proposed exports of natural gas
are in the public interest. Gulf Coast asserts that unless opponents of
an export license make an affirmative showing based on evidence in the
record that the export would be inconsistent with the public interest,
DOE/FE must grant the export application.\4\
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\4\ DOE/FE Order No. 1473, note 42 at p. 13, citing Panhandle
Producers and Royalty Owners Association v. ERA, 822 F.2d 1105, 1111
(D.C. Cir. 1987).
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Gulf Coast asserts that in evaluating whether the proposed
exportation is within the public interest, DOE/FE applies the
principles established by the Policy Guidelines,\5\ which promote free
and open trade by minimizing federal control and involvement in energy
markets, and DOE Delegation Order No. 0204-111, which requires
``consideration of the domestic need for the gas to be exported.'' Gulf
Coast cites DOE/FE Order No. 2961,\6\ in which DOE/FE stated that its
public interest review of applications to export natural gas to
countries with which the United States does not have an FTA ``has
continued to focus on the domestic need for the natural gas proposed to
be exported; whether the proposed exports pose a threat to the security
of domestic natural gas supplies; and any other issue determined to be
appropriate * * *''.
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\5\ Policy Guidelines and Delegation Orders Relating to the
Regulation of Imported Natural Gas, 49 FR 6684 (Feb. 22, 1984).
\6\ Sabine Pass Liquefaction LLC, DOE/FE Docket No. 10-110 LNG
(DOE/FE Order No. 2961), May 20, 2011.
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Gulf Coast states that as a result of technological advances, huge
reserves of domestic shale gas that were previously infeasible or
uneconomic to develop are now being profitably produced in many regions
of the United States. Gulf Coast asserts that the United States is now
estimated to have more natural gas resources than it can use in a
century.\7\ Gulf Coast also states that large volumes of domestic shale
gas reserves and continued low production costs will enable the United
States to export LNG while also meeting domestic demand for natural gas
for decades to come.
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\7\ Gulf Coast states that total U.S. recoverable natural gas
reserves equal about 2,543 trillion cubic feet (Tcf), which Gulf
Coast states is more than 105 times the total domestic consumption
of 24.1 Tcf in 2010. U.S. Energy Information Administration, Annual
Energy Outlook 2011, at 79 (April 26, 2011).
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Gulf Coast asserts that as U.S. natural gas reserves and production
have risen, U.S. natural gas prices have fallen to the point where they
are among the lowest in the developed world. Gulf Coast states that LNG
supply contracts in Asian markets are pegged to crude oil prices. Gulf
Coast asserts that while Europe receives pipeline gas from various
sources, the long supply chains and relative inflexibility of markets
have made diversification of supply a high priority. Gulf Coast states
that domestic natural gas prices are projected to remain low relative
to European and Asian markets well into the future, thereby making
exports of LNG by vessel a viable long-term opportunity for the United
States.
Gulf Coast states the project is positioned to provide the Gulf
Coast region and the United States with significant economic benefits
by increasing domestic natural gas production. Gulf Coast states that
these benefits will be obtained with only a minimal effect on domestic
natural gas prices. Gulf Coast states that at current and forecasted
rates of demand, the United States' natural gas reserves will meet
demand for 100 years. Gulf Coast states that the project allows the
United States to benefit now from the natural gas resources that may
not otherwise be produced for many decades, if ever. Gulf Coast
provides further discussion on why the proposed export authorization is
in the public interest.
First, Gulf Coast contends that the project will cause direct and
indirect job creation through construction (3,000 onsite jobs over five
to six years) and operation (more than 250 permanent jobs) of the
planned project, and indirect jobs as a result of increased drilling
for and production of natural gas (34,000 to 42,000 jobs).\8\
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\8\ Gulf Coast cites to the following: Baumann, Robert H., D.E.
Dismukes, D.V. Mesyanzhinov, and A.G. Pulsipher, Analysis of the
Economic Impact Associated with Oil and Gas Activities on State
Leases, Louisiana State University Center for Energy Studies (2002);
Snead, Mark C., The Economic Impact of Oil and Gas Production and
Drilling on the Oklahoma Economy, Oklahoma State University (2002);
Considine, Timothy J., The Economic Impacts of the Marcellus Shale:
Implications for New York, Pennsylvania and West Virginia, A Report
to the American Petroleum Institute (2010).
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Second, Gulf Coast maintains the project would create significant
economic stimulus, with the total economic benefits to the American
economy estimated to be between $7.2 and $10.4 billion per year from
2018 to 2043, or $90 to $130 billion over the requested 25-year export
term.\9\
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\9\ Id.
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Third, Gulf Coast contends that there will be a material
improvement in the U.S. balance of trade. Gulf Coast states that
assuming an average value of $7 per million Btu, exporting
approximately 2.8 Bcf/d of LNG through the project will improve the
U.S. balance of payments by approximately $7.3 billion per year, or
$183 billion over the requested 25-year export term.
Fourth, Gulf Coast states that the project will have significant
environmental benefits by reducing global greenhouse gas emissions if
the natural gas exported is used as a substitute for coal and fuel oil.
Fifth, Gulf Coast states that the project supports American energy
security. Gulf Coast maintains that the United States has developed a
massive natural gas resource base that is sufficient to supply domestic
demand for a century, even with significant exports of LNG. Gulf Coast
contends that the project will not adversely affect U.S. energy
security. Gulf Coast references a report by the Massachusetts Institute
of Technology's Energy Initiative, which concludes that ``[t]he U.S.
should sustain North American energy market integration and support
development of a global `liquid' natural gas market with diversity of
supply. A corollary is that the U.S. should not erect barriers to gas
imports or exports.'' \10\
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\10\ MIT Energy Initiative, MIT Study on the Future of Natural
Gas, at 157 (2011).
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[[Page 32965]]
Further details can be found in the Application, which has been
posted at https://www.fe.doe.gov/programs/gasregulation/.
Based on the reasoning provided in the Application, Gulf Coast
requests that DOE/FE determine that Gulf Coast's request for long-term,
multi-contract authorization to export LNG is not inconsistent with the
public interest.
Environmental Impact
Gulf Coast states that its proposed LNG exports will require the
siting, construction and operation of the proposed Brownsville
Terminal, subject to environmental review and authorization by the
FERC. Gulf Coast states that it will initiate the FERC authorization
process within 180 days of DOE/FE's order approving this Application.
Accordingly, Gulf Coast requests that DOE/FE issue a conditional order
authorizing the export of domestically produced LNG from the planned
Brownsville Terminal conditioned on completion of the environmental
review and subsequent authorization by the FERC.
DOE/FE Evaluation
The Application will be reviewed pursuant to section 3 of the NGA,
as amended, and the authority contained in DOE Delegation Order No. 00-
002.00L (April 29, 2011) and DOE Redelegation Order No. 00-002.04E
(April 29, 2011). In reviewing this LNG export Application, DOE will
consider any issues required by law or policy. To the extent determined
to be relevant or appropriate, these issues will include the impact of
LNG exports associated with this Application, and the cumulative impact
of any other application(s) previously approved, on domestic need for
the gas proposed for export, adequacy of domestic natural gas supply,
U.S. energy security, and any other issues, including the impact on the
U.S. economy (GDP), consumers, and industry, job creation, U.S. balance
of trade, international considerations, and whether the arrangement is
consistent with DOE's policy of promoting competition in the
marketplace by allowing commercial parties to freely negotiate their
own trade arrangements. Parties that may oppose this Application should
comment in their responses on these issues, as well as any other issues
deemed relevant to the Application.
NEPA requires DOE to give appropriate consideration to the
environmental effects of its proposed decisions. No final decision will
be issued in this proceeding until DOE has met its NEPA
responsibilities.
Due to the complexity of the issues raised by the Applicants,
interested persons will be provided 60 days from the date of
publication of this Notice in which to submit comments, protests,
motions to intervene, notices of intervention, or motions for
additional procedures.
Public Comment Procedures
In response to this notice, any person may file a protest,
comments, or a motion to intervene or notice of intervention, as
applicable. Any person wishing to become a party to the proceeding must
file a motion to intervene or notice of intervention, as applicable.
The filing of comments or a protest with respect to the Application
will not serve to make the commenter or protestant a party to the
proceeding, although protests and comments received from persons who
are not parties will be considered in determining the appropriate
action to be taken on the Application. All protests, comments, motions
to intervene or notices of intervention must meet the requirements
specified by the regulations in 10 CFR part 590.
Filings may be submitted using one of the following methods: (1)
Submitting comments in electronic form on the Federal eRulemaking
Portal at https://www.regulations.gov, by following the on-line
instructions and submitting such comments under FE Docket No. 12-05-
LNG. DOE/FE suggests that electronic filers carefully review
information provided in their submissions and include only information
that is intended to be publicly disclosed; (2) emailing the filing to
fergas@hq.doe.gov, with FE Docket No. 12-05-LNG in the title line; (3)
mailing an original and three paper copies of the filing to the Office
Natural Gas Regulatory Activities at the address listed in ADDRESSES;
or (4) hand delivering an original and three paper copies of the filing
to the Office of Natural Gas Regulatory Activities at the address
listed in ADDRESSES.
A decisional record on the Application will be developed through
responses to this notice by parties, including the parties' written
comments and replies thereto. Additional procedures will be used as
necessary to achieve a complete understanding of the facts and issues.
A party seeking intervention may request that additional procedures be
provided, such as additional written comments, an oral presentation, a
conference, or trial-type hearing. Any request to file additional
written comments should explain why they are necessary. Any request for
an oral presentation should identify the substantial question of fact,
law, or policy at issue, show that it is material and relevant to a
decision in the proceeding, and demonstrate why an oral presentation is
needed. Any request for a conference should demonstrate why the
conference would materially advance the proceeding. Any request for a
trial-type hearing must show that there are factual issues genuinely in
dispute that are relevant and material to a decision and that a trial-
type hearing is necessary for a full and true disclosure of the facts.
If an additional procedure is scheduled, notice will be provided to
all parties. If no party requests additional procedures, a final
Opinion and Order may be issued based on the official record, including
the Application and responses filed by parties pursuant to this notice,
in accordance with 10 CFR 590.316.
The Application filed by Gulf Coast is available for inspection and
copying in the Office of Natural Gas Regulatory Activities docket room,
Room 3E-042, 1000 Independence Avenue SW., Washington, DC 20585. The
docket room is open between the hours of 8 a.m. and 4:30 p.m., Monday
through Friday, except Federal holidays. The Application and any filed
protests, motions to intervene or notice of interventions, and comments
will also be available electronically by going to the following DOE/FE
Web address: https://www.fe.doe.gov/programs/gasregulation/.
In addition, any electronic comments filed will also be available at:
https://www.regulations.gov.
Issued in Washington, DC, on May 29, 2012.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2012-13430 Filed 6-1-12; 8:45 am]
BILLING CODE 6450-01-P
