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American Shipper

LNG terminals look to reverse the flow

LNG terminals look to reverse the flow

   With the explosive growth in natural gas production from U.S. shale formations, marine terminals originally built to receive tankers filled with liquefied natural gas from abroad are planning to build liquefaction plants so they can export LNG.

   Cheniere Energy Partners will spend $6.5 billion expanding a facility in Louisiana along the Sabine Pass River that will allow it to export as well as receive liquefied natural gas.

   By 2015 the new facility will be able to liquefy 1 billion cubic feet of natural gas per day and double that capacity by 2018.

   In addition to being pumped aboard ships for export, the gas can also be stored at the facility for use during peak demand periods.

   Cheniere Energy's facility is able to store 16.8 billion cubic feet of gas in five tanks, and the company is planning to add a sixth to bring capacity up to 20.2 billion cubic feet.

   Louisiana Gov. Bobby Jindal said the expansion is “one of the largest capital investments in the history of Louisiana and will build on our incredible record of job creation projects all across the state.”

   Charif Souki, chairman and chief executive officer of Cheniere Energy, said Louisiana natural gas production has doubled in the past two years through development of the Haynesville shale gas fields.

   Cheniere Energy anticipates construction will begin in early next year.

   In May, the U.S. Energy Department gave conditional authorization to Cheniere Energy to export a pending final environmental and regulatory approval.

   That approval has proved controversial.

   The Associated Press quoted U.S. Rep. Tim Murphy, R-Pa., chairman of the Congressional natural gas caucus, as saying 'sending natural gas overseas is the medical equivalent of bleeding a patient in order to cure him. I fear what this would do to prices.'

Proposed Sabine Pass Liquefaction Expansion Project

   In addition to the Sabine project, Freeport LNG is proposing to expand liquefaction infrastructure at the existing terminal to provide export capacity of about 1.4 billion cubic feet of gas per day, and Lake Charles Exports, is seeking authorization to export up to about 2 billion cubic feet per day.

   Bert Kalisch, president and CEO of the American Public Gas Association, which represents 700 publicly owned natural gas systems, said in a letter to the chairman and ranking members of the House Energy and Commerce Committee and Senate Committee on Energy and Natural Resources that exports from those three facilities could make the U.S. the world's second-largest exporter of LNG.

   He warned “exportation of significant quantities of natural gas has potentially serious adverse implications for U.S. national security and for domestic consumers of natural gas.”

   Large-scale export of natural gas via LNG will “play havoc” with gas supply and prices and tie domestic gas prices to more volatile global markets, he said.

   He said his group “is not anti-free trade, but when important policies collide, nations must make choices ' the wise policy choice at this time in our history is to limit exports of natural gas so we may realistically pursue the greater goal of energy independence.”

   Exports of natural gas must be approved by the Energy Department, but the Natural Gas Act generally views exports as beneficial to the country.

   Section 3(a) of the Natural Gas Act, said applications to export gas would be approved unless the secretary of Energy finds “the proposed exportation or importation will not be consistent with the public interest.”

   In approving the Sabine application, DOE said the law “creates a rebuttable presumption that a proposed export of natural gas is in the public interest, and DOE must grant such an application unless those who oppose the application overcome that presumption.”

   Earlier this year, in a phone call with investment bankers, Thomas Farrell, CEO of Dominion Resources, said his firm is looking at exploring development of liquefaction capability at its Cove Point LNG terminal, noting its proximity to the Marcellus shale where there is intensive natural gas exploration and production taking place.

   And last week the Portland Oregonian newspaper reported that developers of the Jordan Cove LNG terminal in Coos Bay, Ore., are considering asking the government for permission to export as well as import natural gas.

   The Federal Energy Regulatory Commission also said there are three proposed or possible Canadian LNG export terminals in Kitimat, Douglas Island, and Prince Rupert, British Columbia. ' Chris Dupin

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