[Federal Register Volume 76, Number 236 (Thursday, December 8, 2011)]
[Notices]
[Pages 76698-76702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31518]


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DEPARTMENT OF ENERGY

[FE Docket No. 11-128-LNG]


Dominion Cove Point LNG, LP; Application To Export Domestic 
Liquefied Natural Gas to Non-Free Trade Agreement Nations

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 (Application), filed on 
October 3, 2011, by Dominion Cove Point LNG, LP (DCP), requesting long-
term, multi-contract authorization to export up to 7.82 million metric 
tons per year of domestically produced liquefied natural gas (LNG) 
(equivalent to approximately 365 billion cubic feet [Bcf] per year of 
natural gas) \1\ for a 25-year period, commencing the earlier of the 
date of first export or six years from the date of issuance of the 
requested authorization. DCP seeks authorization to export LNG from the 
Cove Point LNG Terminal, owned by DCP, in Calvert County, Maryland, to 
any country (1) with which the United States does not have a free trade 
agreement (FTA) requiring national treatment for trade in natural

[[Page 76699]]

gas, (2) which has or in the future develops the capacity to import LNG 
via ocean-going carrier, and (3) with which trade is not prohibited by 
U.S. law or policy. DCP is requesting this authorization to act as an 
agent for others who hold title to the LNG pursuant to long-term 
contractual agreements with the other parties. The Application was 
filed under section 3 of the Natural Gas Act (NGA). Protests, motions 
to intervene, notices of intervention, and written comments are 
invited.
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    \1\ DCP states that 7.82 million metric tons per annum is 
equivalent to approximately 1 Bcf per day of natural gas.

DATES: Protests, motions to intervene or notices of intervention, as 
applicable, requests for additional procedures, and written comments 
are to be filed using procedures detailed in the Public Comment 
Procedures section no later than 4:30 p.m., eastern time, February 6, 
2012.
    Responses to Pending Motions described in the SUPPLEMENTARY 
INFORMATION section of this notice, must be filed no later than 4:30 
p.m., eastern time, December 23, 2011.

ADDRESSES:
Electronic Filing on the Federal eRulemaking Portal under FE Docket No. 
11-128-LNG: http://www.regulations.gov.
Electronic Filing by email: [email protected].
Regular Mail: U.S. Department of Energy (FE-34), Office of Natural Gas 
Regulatory Activities, Office of Fossil Energy, P.O. Box 44375, 
Washington, DC 20026-4375.
Hand Delivery or Private Delivery Services (e.g., FedEx, UPS, etc.): 
U.S. Department of Energy (FE-34), Office of Natural Gas Regulatory 
Activities, Office of Fossil Energy, Forrestal Building, Room 3E-042, 
1000 Independence Avenue SW., Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT:
Larine Moore or Lisa Tracy, U.S. Department of Energy (FE-34), Office 
of Natural Gas Regulatory Activities, Office of Fossil Energy, 
Forrestal Building, Room 3E-042, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-9478; (202) 586-4523.
Edward Myers, U.S. Department of Energy, Office of the Assistant 
General Counsel for Electricity and Fossil Energy, Forrestal Building, 
Room 6B-159, 1000 Independence Ave. SW., Washington, DC 20585, (202) 
586-3397.

SUPPLEMENTARY INFORMATION:

Background

    DCP is a Delaware limited partnership with its principal place of 
business in Lusby, Maryland, and offices in Richmond, Virginia. DCP is 
a subsidiary of Dominion Resources, Inc. (DRI), a producer and 
transporter of energy. DRI is a Virginia corporation with its principal 
place of business in Richmond, Virginia.
    DCP owns the Cove Point LNG Terminal (Terminal), as well as the 88-
mile Cove Point Pipeline connecting the Terminal to the interstate 
pipeline grid. The construction and operation of the Terminal was 
initially authorized in 1972 as part of a project to import LNG from 
Algeria and transport natural gas to U.S. markets. Shipments of LNG to 
the Terminal began in March 1978, but ceased in December 1980. In 2001, 
the Federal Energy Regulatory Commission (FERC) authorized the 
reactivation of the Terminal and the construction of new facilities to 
receive imports of LNG. In 2006, the FERC authorized the Cove Point 
Expansion project, which nearly doubled the size of the Terminal, 
expanded the capacity of the Cove Point Pipeline, and provided for new 
downstream pipeline and storage facilities. In 2009, the FERC 
authorized DCP to upgrade, modify, and expand its existing off-shore 
pier at the Terminal to accommodate the docking of larger LNG vessels.
    The Terminal currently has peak daily send-out capacity of 1.8 Bcf 
and on-site LNG storage capacity of the equivalent of 14.6 Bcf of 
natural gas (678,900 cubic meters of LNG). DCP's 88-mile Cove Point 
Pipeline, which has firm transportation capacity of 1.8 Bcf, connects 
the Terminal to the major Mid-Atlantic gas transmission system of 
Transcontinental Gas Pipe Line Company, LLC, Columbia Gas Transmission, 
LLC, and Dominion Transmission, Inc., an interstate gas transmission 
business unit of DRI.
    DCP plans to develop, own, and operate facilities at the Terminal 
to liquefy domestically produced natural gas and to load the resulting 
LNG onto tankers for export to foreign markets. DCP anticipates placing 
its liquefaction project in service by the end of 2016. Following the 
approval and construction of the liquefaction and export facilities, 
DCP intends that the Cove Point LNG Terminal will be operated as a bi-
directional facility with capability to both import and export LNG.

Related Applications and Authorizations

    This Application is the second part of a two-phased authorization 
sought by DCP to export domestically produced natural gas as LNG from 
the Cove Point LNG Terminal. On October 7, 2011, in DOE/FE Order No. 
3019 (Docket No. 11-115-LNG), FE granted DCP authorization to export 
domestically produced LNG up to the equivalent of 1 Bcf/day of natural 
gas from the Cove Point LNG Terminal for a 25-year term, beginning on 
the earlier date of first export or October 7, 2017, pursuant to one or 
more long-term contracts that do not exceed the term of the 
authorization. That authorization provides that LNG may be exported to 
Australia, Bahrain, Canada, Chile, Dominican Republic, El Salvador, 
Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Peru, 
and Singapore, and to any nation with which the United States 
subsequently enters into a FTA requiring national treatment for trade 
in natural gas, provided that the destination nation has the capacity 
to import LNG via ocean going vessels. The requested export volume in 
that order is identical to the export volume in the current Application 
of 7.82 million metric tons of LNG per year, equivalent to 365 Bcf/
year, or 1 Bcf/day of natural gas. The Cove Point liquefaction 
facilities would be limited to exports of up to the equivalent of 365 
Bcf/year of natural gas, including both exports to FTA and non-FTA 
countries.
    On August 8, 2011, in Docket No. 11-98-LNG, DCP also submitted an 
application to FE requesting a two year blanket authorization to export 
from the Terminal LNG that previously had been imported into the United 
States from foreign sources in an amount up to the equivalent of 150 
Bcf of natural gas. The application sought authorization to export this 
LNG to any country with the capacity to import LNG via ocean-going 
carrier and with which trade is not prohibited by U.S. law or policy. A 
notice of that application was published in the Federal Register on 
September 21, 2011, (76 FR 58489), and public comments were due by 
October 21, 2011. The application in Docket No. 11-98-LNG currently is 
under review by FE.

Current Application

    In the instant Application, DCP seeks long-term, multi-contract 
authorization to export up to 7.82 million metric tons of domestically 
produced LNG annually from the Terminal, equivalent to approximately 
365 Bcf/year of natural gas for a 25-year period, commencing the 
earlier of the date of first export or six years from the date the 
authorization is issued. DCP seeks authorization to export 
domestically-produced LNG to countries with which the United States 
does not have an FTA and with which trade is not prohibited by U.S. law 
or policy. DCP is requesting this

[[Page 76700]]

authorization to act as agent on behalf of other entities who 
themselves hold title to the LNG.
    DCP states that its liquefaction project will be integrated with 
existing facilities at its Terminal. Existing facilities that may be 
used include the off-shore pier (with two berths), insulated LNG and 
gas piping from the pier to the on-shore Terminal and within the 
Terminal facility, the seven LNG storage tanks, on-site power 
generation, and control systems. In addition, DCP states that it will 
construct new facilities to liquefy the natural gas delivered to the 
Terminal through the Cove Point Pipeline. The new liquefaction 
facilities would be located on land already owned by DCP. DCP states 
that it is currently engaged in Preliminary Front End Engineering 
Design (``Pre-FEED'') studies for its liquefaction project and is in 
the process of conducting commercial negotiations with potential 
customers. Based on the outcome of the pre-FEED studies, DCP 
anticipates constructing one to three liquefaction trains, allowing the 
export of the equivalent of up to 365 Bcf/year, for an average of 1 
Bcf/d.
    DCP states that customers will be responsible for procuring their 
own gas supplies and holding title to the gas that they will deliver to 
DCP for liquefaction as well as the LNG to be exported from the 
Terminal. DCP states that customers may enter into long-term gas supply 
contracts or procure spot supplies in the very large and liquid U.S. 
gas market. The gas will be delivered to DCP from the interstate 
pipeline grid, thereby allowing gas to be sourced from a wide variety 
of regions. DCP states that the DTI pipeline system provides direct 
access to Appalachian (including Marcellus Shale) supply as well as 
connections to supplies from the Gulf of Mexico area, the mid-
continent, the Rockies and Canada. DCP states that DTI also operates 
the largest underground natural gas storage system in the country, as 
well as a trading hub: Dominion South Point.
    DCP anticipates entering into one or more long-term contractual 
agreements of approximately twenty years to provide natural gas 
liquefaction and LNG export services. DCP plans to enter into those 
contracts on a date that is closer to the date of first export. DCP 
anticipates that these contracts will allow DCP to provide its 
customers with options for liquefying natural gas and loading it onto 
LNG tankers at the Terminal for export or for importing LNG at the 
Terminal for vaporization and send-out as regasified LNG into the 
domestic market. DCP states that it will file under seal with DOE/FE 
any relevant long-term commercial agreements that it enters into with 
LNG title holders on whose behalf the exports will be performed, once 
the agreements are executed.
    DCP states that it does not intend to hold title to the LNG itself, 
and is requesting authorization to act as agent on behalf of other 
entities who themselves hold title to the LNG. DCP states that is will 
register each such LNG title holder with DOE/FE consistent with 
registration requirements previously adopted in DOE/FE Order 2986, 
issued July 19, 2011, which granted blanket export authorization to 
Freeport LNG Development, L.P.
    DCP requests that, consistent with prior orders issued by DOE/FE, 
the authorization requested here should be conditioned on DCP's receipt 
of all necessary FERC authorizations of the facilities needed for the 
export of LNG. Lastly, with regard to this Application, DCP urges DOE 
to make clear its policy on future modifications to any LNG export 
authorization, so that investments in these projects can be made with 
greater certainty.

Public Interest Considerations

    In support of its Application, DCP states that Section 3(a) of the 
Natural Gas Act (NGA) sets forth the statutory standard for review of 
this Application and that Section 3(a) of the NGA creates a rebuttable 
presumption that proposed exports of natural gas are in the public 
interest. DCP states that DOE has explained that opponents of an export 
application must make an affirmative showing of inconsistency with the 
public interest in order to overcome the rebuttable presumption 
favoring export applications. DCP also states that DOE has repeatedly 
reaffirmed the continued applicability of its policy guidelines and has 
held that they apply equally to export applications though originally 
written to apply to imports. DCP contends that based on the standard of 
evaluation implemented by DOE, the granting of their request to export 
LNG will be consistent with, and will advance, the public interest.
    DCP states in support of its Application, that it commissioned and 
submitted three studies by independent consultants: two by Navigant 
Consulting, Inc., and one study by ICF International. Based on these 
studies, DCP believes its project is in the public interest for the 
following reasons:
    First, DCP contends that sufficient reserves now exist to satisfy 
domestic demand as well as the proposed LNG exports. DCP notes that the 
recent phenomenon of domestic shale gas has increased gas reserves and, 
consequently, gas production levels are projected to continue to grow 
steadily. In particular, DCP points to the Marcellus Shale formation, 
which, based on initial production, allegedly dwarfs the amount of LNG 
that DCP proposes to export.
    Second, based on a sector-by-sector outlook for gas demand, DCP 
contends that LNG exports from the United States have the potential to 
provide a steady, reliable baseload market that will underpin on-going 
supply development, and help to keep domestic gas prices stable. DCP 
maintains that the studies conclude that given the level of North 
American gas reserves compared to any reasonable expectation of demand, 
domestic consumers will not be exposed to overseas LNG prices. DCP also 
contends it is very unlikely that the projected levels of LNG exports 
will increase the need for significant amounts of imported LNG.
    Third, based on an analysis of supply reserves and demand, 
including the proposed gas exports, DCP maintains that current gas 
reserves are more than sufficient to support all expected demand at 
least through 2040, and that there is no ``domestic need'' for the gas 
that DCP seeks authority to export. DCP also contends that the proposed 
exports will not pose any possible threat to the security of domestic 
natural gas supplies.
    Fourth, based on a series of four pricing model scenarios, DCP 
states that even with very conservative assumptions, LNG exports from 
the Terminal will have no more than a very modest impact on domestic 
gas prices. The Navigant Study, North American Gas System Model to 
2040, submitted with the Application, reflects Henry Hub price 
increases of 4% to 6% in the 2020 to 2040 period, compared to a 
reference case. See page 5 of the Navigant Study.
    Fifth, DCP states that the export of domestically produced LNG will 
provide the following economic benefits, as detailed in the ICF 
Consulting Study (Appendix C of the Application):
    A. An improvement in the U.S. balance of trade of $2.8 billion to 
nearly $7.1 billion per year, equal to 0.6 to 1.4 percent of the trade 
deficit, based on the expected value of the exports.
    B. Creation of about 16,450 new jobs created during the 2011 
through 2040 period.
    C. Value added GDP contributions related to the Cove Point LNG 
exports that would total about $1.6 billion annually, plus additional 
government taxes and royalties of approximately $850 million annually.

[[Page 76701]]

    D. The creation of about 1,250 temporary construction jobs annually 
during the construction of the facilities needed for the export 
operations, resulting in about $120 million in annual value added GDP 
contributions, and about $27 million in annual government tax revenues.
    E. Environmental benefits associated with the LNG export project 
resulting from the fact that the planned exports of LNG will result in 
the substitution of natural gas for coal and fuel oil in other 
countries, thereby reducing global greenhouse gas emissions 
significantly over the requested 25-year export term.
    Further details can be found in the Application, which has been 
posted at http://www.fe.doe.gov/programs/gasregulation/index.html.

Environmental Impact

    DCP notes that in order to accommodate the proposed export 
activities, construction of new facilities at the Cove Point LNG 
Terminal will be required. DCP states that the facilities will be 
designed to minimize or mitigate any environmental or other adverse 
impacts. DCP further states that approval of the Application would not 
constitute a Federal action significantly affecting the human 
environment under the National Environmental Policy Act (NEPA).\2\
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    \2\ 42 U.S.C. 4321 et seq.
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    DCP states that once it has further developed its plans concerning 
the facilities to be constructed for the project, it will request 
permission to commence the FERC's mandatory pre-filing process under 
NEPA and subsequently file an application for the necessary FERC 
authorization for the construction and operation of the facilities to 
liquefy and export gas. DCP acknowledges that the requested 
authorization to be issued by DOE/FE would not take effect until FERC 
has completed its NEPA review and has granted DCP authorization for the 
export of domestic LNG from the Cove Point facility. DCP requests that 
DOE/FE issue a conditional order authorizing the export of domestic LNG 
from the Terminal conditioned on completion of the environmental review 
and subsequent authorization by FERC.

DOE/FE Evaluation

    The Application will be reviewed pursuant to section 3 of the NGA, 
as amended, and the authority contained in DOE Delegation Order No. 00-
002.00L (April 29, 2011) and DOE Redelegation Order No. 00-002.04E 
(April 29, 2011). In reviewing this LNG export Application, DOE will 
consider any issues required by law or policy. To the extent determined 
to be relevant or appropriate, these issues will include the impact of 
LNG exports associated with this Application, and the cumulative impact 
of any other application(s) previously approved, on domestic need for 
the gas proposed for export, adequacy of domestic natural gas supply, 
U.S. energy security, and any other issues, including the impact on the 
U.S. economy (GDP), consumers, and industry, job creation, U.S. balance 
of trade, international considerations, and 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. In addition, DOE/FE notes that the Application 
uses the term ``reserves'' when citing the quantity of resources in 
some instances. This may have an impact on some of the conclusions 
reached in the Application since there is a significant difference 
between ``reserves'' and resources. Parties that may oppose this 
Application should comment in their responses on these issues, as well 
as any other issues deemed relevant to the Application.
    NEPA requires DOE to give appropriate consideration to the 
environmental effects of its proposed decisions. No final decision will 
be issued in this proceeding until DOE has met its NEPA 
responsibilities.
    Due to the complexity of the issues raised by the Applicants, 
interested persons will be provided 60 days from the date of 
publication of this Notice in which to submit comments, protests, 
motions to intervene, notices of intervention, or motions for 
additional procedures.

Pending Motions To Intervene and Comments

    On October 20, 2011, DOE received the Motion of Coalition for 
Responsible Siting of LNG to Intervene in this proceeding. On November 
15, 2011, DOE received the Motion of Shell NA LNG LLC to Intervene and 
Comments on Application to Export LNG. Section 590.303(e) of DOE's 
regulations (10 CFR 590.303(e)) provides that answers to motions to 
intervene must be filed within 15 days after the motion to intervene 
was filed unless the Assistant Secretary for Fossil Energy permits a 
later date for good cause shown. Because the two motions to intervene 
were submitted prior to the issuance and publication of the instant 
notice of application, interested persons may not have adequate notice 
to respond to the motions. For good cause, therefore, DOE/FE is hereby 
extending the due date on responses to the pending motions. Responses 
to those two motions must be filed no later than 4:30 p.m., eastern 
time, December 23, 2011.

Public Comment Procedures

    In response to this notice, any person may file a protest, 
comments, or a motion to intervene or notice of intervention, as 
applicable. Any person wishing to become a party to the proceeding that 
has not already done so must file a motion to intervene or notice of 
intervention, as applicable. The filing of comments or a protest with 
respect to the Application will not serve to make the commenter or 
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, comments, motions to intervene or notices of intervention 
must meet the requirements specified by the regulations in 10 CFR part 
590.
    Filings may be submitted using one of the following methods: (1) 
Submitting comments in electronic form on the Federal eRulemaking 
Portal at http://www.regulations.gov, by following the on-line 
instructions and submitting such comments under FE Docket No. 11-128-
LNG. DOE/FE suggests that electronic filers carefully review 
information provided in their submissions and include only information 
that is intended to be publicly disclosed; (2) emailing the filing to 
[email protected], with FE Docket No. 11-128-LNG in the title line; (3) 
mailing an original and three paper copies of the filing to the Office 
Natural Gas Regulatory Activities at the address listed in ADDRESSES; 
or (4) hand delivering an original and three paper copies of the filing 
to the Office of Natural Gas Regulatory Activities at the address 
listed in ADDRESSES.
    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

[[Page 76702]]

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 DCP is available for inspection and 
copying in the Office of Natural Gas Regulatory Activities docket room, 
Room 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585. 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 and any filed 
protests, motions to intervene or notice of interventions, and comments 
will also be available electronically by going to the following DOE/FE 
Web address: http://www.fe.doe.gov/programs/gasregulation/index.html. 
In addition, any electronic comments filed will also be available at: 
http://www.regulations.gov.

    Issued in Washington, DC, on December 2, 2011.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas 
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2011-31518 Filed 12-7-11; 8:45 am]
BILLING CODE 6450-01-P