On July 31, 2019 the U.S. Department of Energy (DOE) issued an order authorizing Gulf LNG Liquefaction Company, LLC to export domestically produced liquefied natural gas (LNG) from the Gulf LNG Project located in Jackson County, Mississippi, near the city of Pascagoula. The Gulf LNG Project is owned by Kinder Morgan’s Southern Gulf LNG Company, LLC. The proposed terminal would export up to 1.53 Bcf/d and be built at the same site as the existing Gulf LNG Terminal.
Initially in 2009, the 230 acre Gulf LNG site was developed as a liquefied natural gas import terminal. However, natural gas production has been ever increasing from shale plays within the United States. In July of 2015 Kinder Morgan responded to the surplus and began the federal application process to redevelop a portion of its plant into an export terminal.
Energy Secretary Rick Perry said, “This announcement advances the Trump administration’s commitment to energy security here at home and for our friends abroad. Increased amounts of U.S. LNG on the world market benefit the American economy, American workers, and consumers and help make the air cleaner around the globe.”
According to the DOE, there are currently five existing LNG export terminals in North America. If the Gulf LNG export terminal is built it will be the sixth.
On April 10, 2019, President Donald Trump signed an Executive Order on Promoting Energy Infrastructure and Economic Growth (Executive Order). In addition to outlining U.S. policy toward private investment in energy infrastructure and directing the U.S. Environmental Protection Agency to take certain actions to improve the permitting process under the Clean Water Act, the Executive Order instructs the U.S. Department of Transportation (DOT) to update the federal safety standards for liquefied natural gas (LNG) facilities. The Executive Order notes that DOT originally issued those safety standards nearly four decades ago and states that the current regulations are not appropriate for “modern, large-scale liquefaction facilities[.]” Accordingly, the Executive Order directs DOT to finalize new LNG regulations within 13 months, or by no later than May 2020, an ambitious deadline given the complex issues involved and typical timeframe for completing the federal rulemaking process.
Please read more about this decision in this Alert.
This week the New York State Department of Environmental Conservation adopted regulations establishing a permitting program for the siting, construction and operation of liquefied natural gas (LNG) facilities in New York State. The New York Legislature previously enacted a statewide moratorium on the construction of LNG storage facilities after the explosion of an LNG tank on Staten Island killed 40 workers in 1973. The new regulations, which take effect on February 26, 2015, require owners and operators to obtain a permit prior to the preparation of a site for, construction of, or operation of facilities that store LNG or convert LNG into natural gas. The regulations include a maximum storage capacity of 70,000 gallons of LNG at each permitted facility. Intrastate transportation of LNG is prohibited unless the route has been certified by the New York State Department of Transportation. The regulations do not affect the statutory moratorium prohibiting the siting of LNG facilities within New York City. Furthermore, the regulations do not apply to compressed natural gas or liquefied petroleum gas, and LNG-fueled vehicles and vessels are exempt from the permitting requirements.
The Economic Times and other news sources are reporting that the U.S. Federal Energy Regulatory Commission (FERC) issued a permit for Dominion Resources to operate the first natural gas liquefaction plant on the east coast. Dominion’s Cove Point plant on the Chesapeake Bay will be used to export more than 5 million metric tons of liquefied natural gas each year. The plant will also be the first export terminal connected to the Marcellus Shale by pipeline. It has been reported that Dominion already has agreements with energy companies in India and Japan to ship the natural gas overseas. The project is likely to be completed by June of 2017.
Environmental groups and industry organizations are at an impasse over regulations proposed by the New York State Department of Environmental Conservation (DEC) that would lift the state’s 40-year ban on the construction and operation of liquefied natural gas (LNG) facilities. New York enacted a moratorium on the construction of LNG storage facilities after the explosion of an LNG tank in Staten Island killed 40 workers in 1973. Several environmental groups that oppose the proposed regulations commented that lifting the LNG ban will open the door for shale gas development through hydraulic fracturing in New York. Industry groups and the DEC, however, said that the regulations would facilitate the use of LNG in long-haul trucks, a cheaper and cleaner option to diesel fuel. “These regulations have nothing whatsoever to do with fracking and everything to do with putting cleaner trucks on our highways,” said a spokeswoman for the DEC. The DEC is expected to finalize the proposed regulations in early 2014.
On April 1, 2013, Dominion announced that it was submitting an application to the Federal Energy Regulatory Commission (FERC) for a $3.4 billion to $3.8 billion natural gas liquefaction project at its existing Dominion Cove Point LNG Terminal located on the Chesapeake Bay in Lusby, Maryland, the Pittsburgh Post-Gazette reports. Cove Point will serve both the Marcellus and Utica shale plays. Subject to receipt of regulatory approvals, Dominion plans to start construction on the 5.25-MTPA (million tons per annum) facility in 2014 and put the liquefaction facilities in service in 2017.
On January 30, 2013, the Federal Energy Regulatory Commission (FERC) published a notice in the Federal Register of the availability of a report prepared by the Office of Energy Projects, “Recommended Parameters for Solid Flame Models for Land Based Liquefied Natural Gas Spills.” In the report, FERC evaluates the suitability of using LNGFIRE3 in siting onshore liquefied natural gas (LNG) facilities, as is currently required under the minimum federal safety standards administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). After comparing with recommendations and parameters from a May 2012 report prepared by Sandia National Laboratories for the U.S. Department of Energy, “Liquefied Natural Gas Safety Research Report to Congress,” FERC concludes that LNGFIRE3 is suitable for such use. In a prior report , FERC evaluated the suitability of using another model, DEGADIS, to determine the vapor-gas-dispersion exclusion zones for onshore LNG facilities under PHMSA’s siting requirements.
On Friday, the Circuit Court for Prince George’s County, Maryland, ruled that Dominion has the right to export liquefied natural gas (“LNG”) from its Cove Point terminal in Calvert County, Maryland. The Sierra Club and the Maryland Conservation Council sued Dominion last year, arguing that a 2005 agreement with Dominion prohibited exports from the Cove Point LNG import terminal. Platts reports that Circuit Court concluded that there is no provision in the 2005 agreement that explicitly prohibits the use of the facility from exporting LNG, and therefore, Dominion has the right to use the facility to export LNG. The State Journal reports that the facility was historically used for imports, but Dominion has since proposed to reconfigure the facility for liquefaction and exports as shale gas continues to boom.