[Federal Register Volume 59, Number 236 (Friday, December 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30385]


[[Page Unknown]]

[Federal Register: December 9, 1994]


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DEPARTMENT OF ENERGY
[FE Docket No. 94-81-NG]

 

Phillips Alaska Natural Gas Corporation and Marathon Oil Company; 
Application to Amend Authorization to Export Liquefied Natural Gas

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 filed on October 5, 
1994, as supplemented October 11, 1994, by Phillips Alaska Natural Gas 
Corporation (PANGC) and Marathon Oil Company (Marathon) requesting that 
DOE amend a long-standing authorization to export Alaskan liquefied 
natural gas (LNG). PANGC and Marathon seek permission to modify the 
existing price formula used for exports to two Japanese customers. The 
exports originate at their Kenai LNG plant in the Cook Inlet area of 
Alaska and are delivered to Tokyo Electric Power Company, Inc. (Tokyo 
Electric) and Tokyo Gas Company, Ltd. (Tokyo Gas).
    The application is filed under section 3 of the Natural Gas Act and 
DOE Delegation Order Nos. 0204-111 and 0204-127. 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, January 9, 1995.

ADDRESSES: Office of Fuels Programs, Fossil Energy, U.S. Department of 
Energy, Forrestal Building, Room 3F-056, FE-50, 1000 Independence 
Avenue SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION:
Susan K. Gregersen, Office of Fuels Programs, Fossil Energy, U.S. 
Department of Energy, Forrestal Building, Room 3F-056, FE-53, 1000 
Independence Avenue SW., Washington, D.C. 20585
Diane Stubbs, Office of Assistant General Counsel for Fossil Energy, 
U.S. Department of Energy Forrestal Building, Room 6E-042, GC-41, 1000 
Independence Avenue SW., Washington, D.C. 20585.

SUPPLEMENTARY INFORMATION:

Background

    PANGC, a Delaware corporation with its principal place of business 
in Bartlesville, Oklahoma, is a wholly owned subsidiary of Phillips 
Petroleum Company, a Delaware corporation. Marathon, an Ohio 
corporation with its principal place of business in Houston, Texas, is 
a wholly owned subsidiary of USX Corporation, also a Delaware 
corporation. PANGC and Marathon are not affiliated with each other.
    The LNG export authorization held by PANGC (successor to Phillips 
66 Natural Gas Company) and Marathon was granted originally by the 
Federal Power Commission on April 19, 1967. It was subsequently amended 
by DOE's Economic Regulatory Administration in 1982, 1986, 1987, and 
1988, and by FE in 1991 and 1992. PANGC and Marathon are currently 
authorized to export up to 64.4 trillion Btus of LNG through March 31, 
2004. See DOE/ERA Opinion and Order No. 261 (1 ERA 70,130, July 28, 
1988); DOE/FE Opinion and Order No. 261-A (1 FE 70,454, June 18, 
1991); DOE/FE Opinion and Order No. 261-B (1 FE 70,506, December 19, 
1991); and DOE/FE Opinion and Order No. 261-C (1 FE 70,607, June 15, 
1992).
    In DOE/FE Opinion and Order No. 261-A, DOE authorized a market-
sensitive pricing formula under which the monthly selling price per 
MMBtu of LNG exported to Japan by PANGC and Marathon is calculated by 
multiplying a predetermined base price by an adjustment factor composed 
of the arithmetic average price paid in Japan for a barrel of imported 
crude oil over three months. The arithmetic average price is based on 
the weighted average price of all crude oils (including raw oils) 
imported into Japan each month as reported in Japan Exports & Imports 
Monthly which is edited by the Customs Bureau, Ministry of Finance, and 
published by the Japan Tariff Association. In the application filed by 
PANGC and Marathon, the proposed revision to their current price 
formula is in accordance with an agreement (the ``Third Amendatory 
Agreement'') entered into by PANGC, Marathon, Tokyo Electric, and Tokyo 
Gas on April 19, 1994. The revised formula has fewer components and a 
different base price. However, the selling price of the exported LNG 
would continue to be adjusted each month according to changes over 
three months in the published selling price of all crude oils imported 
into Japan.
    PANGC and Marathon assert that the new formula is similar to the 
price formulas used by most other LNG projects which sell into the 
Japanese market. Based on their current modification to the existing 
price formula, if the arithmetic average price for crude oil imported 
into Japan is $15.00 per barrel, the price of LNG sold by PANGC and 
Marathon would be $2.93 per MMBtu. (The heat content of one barrel of 
crude oil is approximately 5.8 MMBtu's.) Applying the formula, a $1.00 
per barrel increase or decrease in the arithmetic average price of 
crude oil would lead to a $0.15 per MMBtu increase or decrease in the 
price of LNG.
    This export application will be reviewed pursuant to section 3 of 
the Natural Gas Act, as amended by section 201 of the Energy Policy Act 
of 1992 (Pub. L. 102-486) and the authority contained in DOE Delegation 
Order Nos. 0204-111 and 0204-127. In reviewing natural gas exports, DOE 
considers domestic need for the gas and any other issue 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. 
Since DOE previously has determined in DOE/FE Opinion and Order No. 261 
that there is no domestic need for the gas involved in this export over 
the term of the LNG sales contract, the modification proposed by PANGC 
and Marathon to their existing price formula shall be evaluated based 
on whether the amendment is in accord with DOE's international gas 
trade policy. Parties that may oppose this application should comment 
in their responses on this issue.
    NEPA Compliance. The National Environmental Policy Act (NEPA) (42 
U.S.C. Sec. 4231 et seq.) requires DOE to give appropriate 
consideration to the environmental effects of its proposed action. No 
final decision will be issued in this proceeding until DOE has met its 
NEPA responsibilities.
    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. Anyone who wants to become a party to 
this proceeding and to have their written comments considered as the 
basis for the decision on the application must, however, file a motion 
to intervene or notice of intervention, as applicable. The filing of a 
protest with respect to this 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 Fuels Programs at the address listed above.
    It is intended that 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 Sec. 590.316.
    A copy of PANGC's and Marathon's application is available for 
inspection and copying in the Office of Fuels Programs docket room, 3F-
056, at the above address. The docket room is open between the hours of 
8:00 a.m. and 4:30 p.m., Monday through Friday, except Federal 
holidays.

    Issued in Washington, D.C., on November 30, 1994.
Clifford P. Tomaszewski,
Director, Office of Natural Gas, Office of Fuels Programs, Office of 
Fossil Energy.
[FR Doc. 94-30385 Filed 12-8-94; 8:45 am]
BILLING CODE 6450-01-P