Sabine Pass is granted an NGA Section 3 authorization to
site, construct, and operate facilities to liquefy and export
domestically produced natural gas.
On April 16, the Federal Energy Regulatory Commission (FERC)
granted Sabine Pass Liquefaction and Sabine Pass LNG (collectively,
Applicants) authorization to construct and operate facilities to
liquefy and export domestically produced natural gas at the
existing Sabine Pass Liquefied Natural Gas (LNG) terminal in
Cameron Parish, Louisiana.1 The project will be
constructed in two stages, each with two LNG process trains
containing gas treatment facilities, gas turbine-driven refrigerant
compressors, cold boxes and heat exchangers for cooling and
liquefying natural gas, waste heat recovery systems, and other
facilities. Upon completion, the terminal will operate
simultaneously as a bi-directional LNG facility for export and
import service. The facilities will enable the companies to liquefy
and export up to 16 million tons per annum, or 2.2 Bcf per day.
Sabine Pass Liquefaction has secured 20-year LNG Processing
Services Agreements with entities in Great Britain, Spain, India,
and Korea to sell 3.5 million metric tons of LNG per year to each
Some commenters raised concerns that exporting domestically
produced natural gas would have adverse effects on domestic
consumers, the U.S. energy supply, and national security. FERC
found, however, that these concerns were directly related to the
effects of exporting the commodity, rather than the effects of the
facilities used for such export and were therefore beyond the scope
of FERC's authority. The Secretary of the Department of Energy
(DOE) delegated to the Commission the authority to approve or
disapprove the construction and operation of facilities and the
site of their location under NGA Section 3. FERC determined that
this delegation of authority does not permit FERC to approve or
disapprove the import or export of the commodity or to consider its
implications or the resulting economic and public
FERC determined that the project will not have a significant
impact on the quality of the human environment and can be
constructed and operated safely. It prepared an environmental
assessment (EA) with the cooperation of the DOE, U.S. Army Corp of
Engineers, and the Department of Transportation. FERC determined
that an EA, instead of an Environmental Impact Statement (EIS), was
appropriate because all of the proposed facilities would be within
the footprint of the existing LNG terminal, which was previously
the subject of an EIS, and because the issues that needed to be
considered were small in number and well defined.
FERC rejected the arguments of environmental groups that FERC
must consider the cumulative effects from other potential LNG
export projects and the environmental effects from increased shale
gas production. FERC determined that, because no other entity had
filed an application for Section 3 authority for LNG exports, any
effects from such projects were speculative. Similarly, FERC
observed that there was no direct tie between exports from the
Sabine Pass terminal and any particular shale formation and that
Sabine Pass exports could come from any source of natural gas.
Therefore, FERC concluded, any effects from additional shale gas
development were not "reasonably foreseeable" as defined
under the environmental regulations and were not an
"effect" of the project to be considered in a cumulative
effects analysis. The EA concluded that the project does not
constitute a major federal action significantly affecting the
quality of the human environment, eliminating the need for an
FERC ordered Sabine Pass LNG and Sabine Pass Liquefaction to
complete construction and have the proposed facilities available
for service within five years.
1. Sabine Pass Liquefaction, LLC and Sabine Pass LNG,
L.P., 139 FERC ¶ 61,039 (2012). FERC granted Sabine Pass
LNG authorization under Section 3 of the Natural Gas Act (NGA) to
site, construct, and operate the terminal in 2004 and subsequently
authorized it to construct additional storage tanks and expanded
vaporization systems to increase the send-out capacity in
2. However, FERC observed that DOE's finding that
there was substantial evidence of economic and public benefits such
that the authorization was not inconsistent with the public
interest. DOE/FE Order No. 2961 (2011).
Copyright 2012. Morgan, Lewis & Bockius LLP. All Rights
This article is provided as a general informational service
and it should not be construed as imparting legal advice on any
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In a recent and much anticipated decision by both natural gas producers and landowners, the Pennsylvania Supreme Court finally cleared up confusion about who owns the mineral rights to shale gas in Butler v. Powers Estate.
Natural gas producers and landowners alike breathed a sigh of relief on April 24, 2013 as the Pennsylvania Supreme Court (the "Supreme Court" or "Court") overturned a lower court decision that questioned whether subsurface ownership rights of natural gas in shale formations should be treated differently than ownership rights of natural gas in conventional formations.
The city of Lancaster, California recently adopted an ordinance requiring builders of most new homes to install functional solar power generation systems on these homes prior to their sale to the public.
As discussed previously on the blog, the IRS released Notice 2013-29 on April 15 which provided guidance on determining when construction has begun on a qualified renewable energy facility for purposes of the production tax credit.