Freeport LNG Development, L.P.; Application To Amend Blanket Authorization To Export Liquefied Natural Gas

AGENCY:

Office of Fossil Energy, DOE.

ACTION:

Notice of Application to Amend Blanket Authorization.

SUMMARY:

The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice of receipt of an application filed on March 4, 2010, by Freeport LNG Development, L.P. (Freeport LNG), requesting an amendment to its blanket authorization to export liquefied natural gas (LNG) granted by DOE/FE on May 28, 2009, in DOE/FE Order No. 2644, and amended on September 22, 2009, in DOE/FE Order No. 2644-A. Freeport LNG seeks authorization to export foreign-sourced LNG from its Quintana Island, Texas facilities to any other country (in addition to those already specifically listed in DOE/FE Order No. 2644, as amended) with capacity to import LNG via ocean-going carrier and with which trade is not prohibited by U.S. law or policy.

The application is filed under section 3 of the Natural Gas Act (NGA) (15 U.S.C. 717b), as amended by section 201 of the Energy Policy Act of 1992 (Pub. L. 102-486), DOE Delegation Order No. 00-002.00I (Nov. 10, 2009), and DOE Redelegation Order No. 00-002.04D (November 6, 2007). Protests, motions to intervene, notices of intervention, and written comments are invited.

DATES:

Protests, motions to intervene or notices of intervention, as applicable, requests for additional procedures, and written comments are to be filed at the address listed below no later than 4:30 p.m., eastern time, April 22, 2010.

ADDRESSES:

U.S. Department of Energy (FE-34), Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT:

Larine Moore or Beverly Howard, U.S. Department of Energy (FE-34), Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585, (202) 586-9478; (202) 586-9387.

Edward Myers, U.S. Department of Energy, Office of the Assistant General Counsel for Fossil Energy and Energy Efficiency, Forrestal Building, Room 6B-159, 1000 Independence Ave., SW., Washington, DC 20585, (202) 586-3397.

SUPPLEMENTARY INFORMATION:

Background

Freeport LNG is a Delaware limited partnership with one general partner, Freeport LNG-GP, Inc., a Delaware corporation, which is owned 50% by an individual, Michael S. Smith, and 50% by ConocoPhillips Company (ConocoPhillips). Freeport LNG's limited partners are: (1) Freeport LNG Investments, LLLP, a Delaware limited liability limited partnership, which owns a 45% limited partnership interest in Freeport LNG; (2) Cheniere FLNG, L.P., a Delaware limited partnership, which owns a 30% limited partnership interest in Freeport LNG; (3) Texas LNG Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of The Dow Chemical Company, which owns a 15% limited partnership interest in Freeport LNG; and (4) Turbo LNG LLC, a Delaware limited liability company and wholly-owned subsidiary of Osaka Gas Co., Ltd., which owns a 10% limited partnership interest in Freeport LNG.

The Federal Energy Regulatory Commission (FERC) has authorized Freeport LNG to site, construct and operate a new LNG import, storage, and vaporization terminal on Quintana Island, Texas and an associated 9.6-mile long send-out pipeline which will be utilized to import up to 1.55 billion cubic feet (Bcf) per day of LNG. On July 1, 2008, FERC issued a letter Order granting Freeport LNG's request to commence service at its Quintana Island import terminal.

On January 15, 2008, FE granted Freeport LNG blanket authorization to import up to 30 Bcf of LNG from various international sources for a two-year term beginning March 1, 2008. On May 28, 2009, FE granted Freeport LNG blanket authorization to export on its own behalf or as agent for others, LNG that previously had been imported from foreign sources in an amount up to the equivalent of 24 Bcf of natural gas on a short-term or spot market basis from Freeport LNG's facilities on Quintana Island, Texas to the United Kingdom, Belgium, Spain, France, Italy, Japan, South Korea, India, China and/or Taiwan over a two-year period commencing May 28, 2009. Further, on September 22, 2009, Freeport LNG's blanket authorization, DOE/FE Order No. 2644 was amended to include the export of previously imported LNG from Freeport LNG's Quintana Island, Texas facilities to Canada and Mexico.

Current Application

In the instant application, Freeport LNG seeks to further amend DOE/FE Order No. 2644 for authorization to export foreign-sourced LNG from its Quintana Island, Texas facilities to any other country (in addition to those already specifically listed in DOE/FE Order No. 2644, as amended) with capacity to import LNG via ocean-going carrier and with which trade is not prohibited by U.S. law or policy.

Public Interest Considerations

In support of its application, Freeport LNG states that pursuant to Section 3 of the NGA, FE is required to authorize exports to a foreign country unless there is a finding that such exports “will not be consistent with the public interest.” Section 3 thus creates a statutory presumption in favor of approval of this Amendment which opponents bear the burden of overcoming. Further, in evaluating an export application, FE applies the principles described in DOE Delegation Order No. 0204-111, which focuses primarily on domestic need for the gas to be exported, and the Secretary's natural gas policy guidelines. Finally, as detailed below, Freeport LNG states that their proposal to export LNG to those countries with the capacity to import LNG via ocean-going carrier and with which trade is not prohibited by U.S. law or policy is consistent with Section 3 of the NGA and FE's policy.

Freeport LNG states that in DOE/FE Order No. 2644, which granted Freeport LNG blanket authorization to export up to 24 Bcf (cumulative) of previously imported foreign-sourced LNG, FE determined that there presently is no domestic reliance on the volumes of imported LNG that Freeport LNG would seek to export. Freeport LNG also states that most recently, FE made the same finding in granting ConocoPhillips blanket authority to export from the Freeport LNG Quintana Island terminal up to 500 Bcf of previously imported LNG. FE stated that “the record shows there is sufficient supply of natural gas to satisfy domestic demand from multiple other sources at competitive prices without drawing on the LNG which ConocoPhillips seeks to export * * *.”

Freeport LNG is requesting further authorization, for itself and as agent for third parties, to periodically export LNG imported under DOE/FE Order No. 2457, as well as LNG of third parties, to any other country not specifically identified in DOE/FE Order No. 2644 with the capacity to import LNG via ocean-going vessel and with which trade is not prohibited by U.S. law or policy, should market conditions in the United States not support domestic sale of those supplies. Freeport LNG states that Amendment of Freeport LNG's short term blanket authorization as requested herein would provide Freeport LNG with the necessary flexibility it requires to respond to changes in domestic and global markets for natural gas and LNG. The additional flexibility sought herein would further encourage Freeport LNG to obtain and store spot market LNG cargoes. Natural gas derived from imported LNG will be available to supply local markets when conditions support it, and will thereby serve to moderate U.S. gas price volatility. As such, Freeport LNG states the requested export authorization is consistent with the public interest.

DOE/FE Evaluation

This export application will be reviewed pursuant to section 3 of the NGA, as amended, and the authority contained in DOE Delegation Order No. 00-002.00I (Nov. 10, 2009) and DOE Redelegation Order No. 00-002.04D (Nov. 6, 2007). In reviewing this LNG export application amendment, DOE will consider any changes that have occurred since the original application in the following areas: domestic need for the gas, as well as any other issues determined to be appropriate, including 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.

Freeport LNG asserts the proposed authorization is in the public interest. Under section 3 of the NGA, as amended, an LNG export from the United States to a foreign country must be authorized unless “the proposed exportation will not be consistent with the public interest.” Section 3 thus creates a statutory presumption in favor of approval of this application, and parties opposing the authorization bear the burden of overcoming this presumption.

The National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq. requires DOE to give appropriate consideration to the environmental effects of its proposed decisions.

Freeport LNG states that there would be no changes required to the Freeport LNG facilities for the proposed exportation of LNG. Consequently, granting this application will not be a Federal action significantly affecting the human environment within the meaning of NEPA.

Public Comment Procedures

In response to this notice, any person may file a protest, motion to intervene or notice of intervention, as applicable, and written comments. Any person wishing to become a party to the proceeding and to have their written comments considered as a basis for any decision on the application must file a motion to intervene or notice of intervention, as applicable. The filing of a protest with respect to the application will not serve to make the 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, motions to intervene, notices of intervention, and written comments must meet the requirements specified by the regulations in 10 CFR part 590. Protests, motions to intervene, notices of intervention, requests for additional procedures, and written comments should be filed with the Office of Oil and Gas Global Security and Supply at the address listed above.

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 Freeport LNG is available for inspection and copying in the Office of Oil and Gas Global Security and Supply docket room, 3E-042, at the above address. 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 is also available electronically by going to the following Web address: http://www.fe.doe.gov/programs/gasregulation/index.html.