[Federal Register Volume 77, Number 214 (Monday, November 5, 2012)]
[Notices]
[Pages 66454-66457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26928]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

[FE Docket No. 12-101-LNG]


Gulf LNG Liquefaction Company, LLC; Application for Long-Term 
Authorization To Export Liquefied Natural Gas Produced From Domestic 
Natural Gas Resources to Non-Free Trade Agreement Countries for a 20-
Year Period

AGENCY: Office of Fossil Energy, DOE.

ACTION: Notice of application.

-----------------------------------------------------------------------

SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy 
(DOE) gives notice of receipt of an application (Application) filed on 
August 31, 2012, by Gulf LNG Liquefaction Company, LLC (GLLC), 
requesting long-term, multi-contract authorization to export up to 11.5 
million tons per annum (mtpa) of domestically produced liquefied 
natural gas (LNG), the equivalent of approximately 547.5 billion cubic 
feet (Bcf) of natural gas per year (Bcf/yr), or 1.5 Bcf per day (Bcf/
d), over a 20-year period, commencing on the earlier of the date of 
first export or ten years from the date the requested authorization is 
granted. The LNG would be exported from the Gulf LNG Energy, LLC 
Terminal (Gulf LNG Terminal), a facility located in Pascagoula, 
Mississippi, to any country that has or in the future develops the 
capacity to import LNG via ocean-going carrier and with which the 
United States does not prohibit trade but also does not have a free 
trade agreement (FTA) requiring national treatment for trade in natural 
gas. GLLC is requesting this authorization both on its own behalf and 
as agent for other parties who themselves hold title to the LNG at the 
time of export. 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.

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, January 4, 
2013.

ADDRESSES: 
    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-256, 1000 Independence Ave. SW., Washington, DC 20585, (202) 
586-3397


SUPPLEMENTARY INFORMATION:

Background

    GLLC is a Delaware limited liability company with its principal 
place of business in Birmingham, Alabama. GLLC is a wholly owned 
subsidiary of Gulf LNG Holdings Group, LLC (Gulf LNG Holdings). GLLC is 
a wholly owned subsidiary of Gulf LNG Holdings Group, LLC (Gulf LNG 
Holding). Kinder Morgan, Inc., indirectly through its wholly-owned 
subsidiary, Southern Gulf LNG Company, LLC, owns a fifty percent 
interest in Gulf LNG Holdings. GE Energy Financial Services, a unit of 
GE, directly and indirectly owns a forty-six percent interest in Gulf 
LNG Holdings. Other investors identified in the Application own the 
remaining four percent interest of Gulf LNG Holdings.
    GLLC states that this application represents the second part of a 
two-part application request. On May 2, 2012, in Docket No. 12-47-LNG, 
GLLC filed with DOE/FE a separate application for long-term, multi-
contract authorization to export up to 11.5 mtpa of domestically 
produced LNG for 25 years (equivalent to approximately 547.5 Bcf/yr, or 
1.5 Bcf/d) to any country with which the United States currently has, 
or in the future may enter into, an FTA requiring national treatment 
for trade in natural gas, and which has or in the future develops the 
capacity to import LNG via ocean-going carrier. DOE/FE granted this 
authorization on June 15, 2012, in Order No. 3104.
    On October 28, 2005, Gulf LNG Energy, LLC, a subsidiary of Gulf LNG 
Holdings, filed an application with the Federal Energy Regulatory 
Commission (FERC) under Section 3 of the Natural Gas Act requesting 
authority to site, construct and operate an LNG import terminal in 
Jackson County, Mississippi. Concurrently Gulf LNG Pipeline, LLC filed 
an application under Section 7(c) of the Natural Gas Act to construct, 
own and operate an approximately five mile-long pipeline from the 
proposed LNG terminal. FERC authorized the construction of the terminal 
and pipeline (collectively, the ``Gulf LNG Terminal'') on February 16, 
2007. The Gulf LNG Terminal commenced service on October 1, 2011.
    GLLC plans to build natural gas processing and liquefaction 
facilities to receive and liquefy domestic natural gas at the Gulf LNG 
Terminal (the ``Project''). The Project facilities will be integrated 
into the existing terminal

[[Page 66455]]

facilities which currently consist of a single marine berth, two 
storage tanks, vaporization units and associated piping and control 
equipment, associated utilities, infrastructure and support systems; 
and a 5.02 mile send-out pipeline extending to several interstate 
pipelines. The Gulf LNG Terminal has a peak sendout capacity of 1.5 
Bcf/d. GLLC states that the new facilities planned for the project will 
include natural gas pre-treatment, liquefaction, and export facilities 
with a capacity of up to 11.5 mtpa of LNG, plus enhancements to the 
existing equipment and additional utilities. GLLC states that the 
additional facilities would permit gas to be received by pipeline at 
the Gulf LNG Terminal, where it would be liquefied and then loaded from 
the Gulf LNG Terminal's storage tanks onto vessels berthed at the 
existing marine facility. GLLC also states that once the project is 
operational, it will have the capability to: (1) Liquefy domestic 
natural gas for export, or (2) import LNG and either re-gasify the 
imported LNG for delivery to domestic markets or export the LNG to 
foreign markets. GLLC does not expect the Export Project to result in 
vessel traffic to or from the facility in excess of that currently 
authorized for the existing import facility.
    GLLC acknowledges that the proposed facilities would be subject to 
review and approval by the FERC. Upon completion of initial facility 
planning and design, GLLC will request that the Commission initiate the 
mandatory pre-filing review process for the Export Project. GLLC states 
it anticipates that this request will be made before the end of 2013.

Current Application

    In the instant Application, GLLC seeks long-term, multi-contract 
authorization to export up to 11.5 mtpa of domestically produced 
natural gas, as LNG (equivalent to approximately 547.5 Bcf/yr, or 1.5 
Bcf/d of natural gas), for a period of 20 years beginning on the 
earlier of the date of first export or ten years from the date the 
authorization is granted by DOE/FE. GLLC requests that such long-term 
authorization provide for export from the Gulf LNG Terminal to any 
country (i) with which the United States does not have an FTA requiring 
national treatment for trade in natural gas, (ii) which has developed 
or in the future develops the capacity to import LNG via ocean-going 
carrier, and (iii) with which trade is not prohibited by U.S. law or 
policy.
    GLLC requests authorization to export LNG on its own behalf and as 
agent for other parties who themselves hold title to the LNG at the 
time of export. GLLC states that to ensure that all exports are 
permitted and lawful under U.S. laws and policies, it will comply with 
all DOE requirements for an exporter or agent.
    GLLC asserts that in recent orders granting long-term authorization 
to export LNG to FTA countries, DOE found that the applicants were not 
required to submit, with their applications, transaction-specific 
information, as specified in section 509.202(b) of DOE's regulations. 
GLLC requests that DOE make the same finding for this Application.
    GLLC seeks authorization to export natural gas available in the 
integrated U.S. natural gas pipeline system. GLLC notes that due to the 
Gulf LNG Terminal's direct access to multiple major interstate 
pipelines and indirect access to the national gas pipeline grid, the 
Project's customers will have a wide variety of stable and economical 
supply options from which to choose.

Public Interest Considerations

    GLLC states that DOE/FE's primary consideration is whether the 
exports will be transacted on a market-driven, competitive basis. GLLC 
states that this is the case here: The owners of gas or the holders of 
capacity at the Export Project facilities will make decisions whether 
to export gas based on then prevailing market conditions in the 
domestic market and the destination markets. GLLC states that with 
export capability at the Gulf LNG Terminal, both exports and imports 
will be subject to the ultimate market test: Those with capacity at the 
terminal will decide whether the market warrants imports of LNG, 
exports of LNG or neither. GLLC states that while its transactions will 
be competitive, market-based transactions consistent with DOE/FE's 
public interest policy, it is aware of the ongoing debate over whether 
LNG exports will cause price increases in the domestic market that run 
counter to the public interest.
    In order to address such concerns, GLLC commissioned Navigant 
Consulting, Inc. (Navigant) to undertake a study of the potential 
impact to domestic supply and prices that might result from LNG 
exports. The Navigant Market Analysis Study, attached to the 
Application as Appendix A, considered the possible impacts that the 
Export Project might have on natural gas supply and pricing. Navigant's 
analysis also assumed the existence of additional LNG exports from 
other projects as well as an aggressive increase in natural gas demand 
due to the use of natural gas in transportation vehicles. GLCC states 
that even in the High Demand Base Case, which assumes 6.2 Bcf/d of LNG 
exports in addition to GLLC's requested 1.5 Bcf/d and makes aggressive 
assumptions about natural gas vehicle demand, the impact on domestic 
prices over the term of the requested authorization is minimal.
    GLLC states that Navigant concludes that LNG exports will actually 
encourage a more reliable and stable domestic natural gas market with 
less volatility, which will benefit all market participants. By 
providing an additional outlet for supply, LNG exports will help to 
level the peaks and valleys historically common to the natural gas 
industry. GLLC states that in other words, LNG exports will reduce the 
price volatility that can lead producers to curtail production and 
reduce investment when prices are declining, which, in turn, leads to 
prices to subsequently spike when production falls too low. GLLC also 
states that its Export Project will not rely on any particular source 
of gas, but rather, through the nationally integrated gas pipeline 
grid, and will be able to access gas supplies from a variety of 
producing basins within the U.S.
    To further support its Application, GLLC states that it also 
commissioned Navigant Economics to perform an Economic Impact 
Assessment Study. Highlighted in Appendix B of the Application, GLLC 
states that the study shows that the GLLC Export Project will create 
material economic benefits in the Southeast region where the Export 
Project is to be located. GLLC further states that during both the 
construction and operation phases, the GLLC Export Project will 
contribute to and stimulate the local and regional economy. GLLC 
maintains that because development of the GLLC Export Project will take 
place wholly within a brownfield development area, the environmental 
impacts of the project will be minimal.
    Finally, GLLC states that the Application demonstrates that exports 
of LNG from the Gulf LNG Terminal will be in the public interest for 
the following reasons:
    First, exports from the GLLC Export Project will involve the sale 
of gas in volumes and at prices responsive to market needs.
    Second, GLLC states that there are more than adequate gas reserves 
to supply the U.S. market, even with exports from GGLC, exports from 
other projects in the amount of an additional 6.2 Bcf/d and with 
aggressive growth in demand for natural gas vehicles.
    Third, GLLC states that natural gas to be exported from the GLLC 
Export Project may be sourced from a variety of conventional and 
unconventional

[[Page 66456]]

supply basins by using the highly efficient and integrated U.S. natural 
pipeline grid.
    Fourth, GLLC states that the impact of LNG exports on the price of 
domestic gas will be minimal, and will be expected to average less than 
8 percent.
    Fifth, GLLC states that the Export Project will create economic 
benefits to the local and regional economies in the Southeast region 
surrounding the project location in Jackson County, Mississippi, as 
well as the national economy.
    Sixth, GLLC contends that LNG exports will lead to less volatility 
in domestic natural gas markets and increased stability that benefits 
producers and consumers by levelizing demand.
    Seventh, GLLC states that LNG exports will benefit the United 
States by contributing toward a decreased trade deficit and advancing 
U.S. interests abroad.
    Eighth, GLLC maintains that the Export Project will have relatively 
small environmental impacts because the construction will take place 
wholly within a brownfield development area and displace 
environmentally damaging fuels in those countries.
    Further details can be found in the Application, which has been 
posted at http://www.fe.doe.gov/programs/gasregulation/index.html.

Environmental Impact

    GLLC states that the Export Project will have minimal environmental 
impacts. GLLC states that although the export facilities will be 
constructed on property adjacent to the existing import facilities, the 
project will be located wholly in a brownfield development area. GLLC 
anticipates that, given this project scope, the FERC will prepare an 
Environmental Impact Statement as part of its environmental review. The 
FERC conducted an environmental review of the Gulf LNG Terminal site in 
connection with authorization of the siting, construction, and 
operation of the Terminal in Docket No. CP06-12-000. GLLC also states 
that any additional environmental impacts associated with construction 
and operation of the Export Project will be reviewed by the FERC and 
the applicable state and federal permitting agencies (e.g., United 
States Army Corps of Engineers, Georgia Department of Natural 
Resources, and Coast Guard, among others) as part of the permitting 
process for the Export Project. Consistent with its practice regarding 
other applications, DOE/FE will be a cooperating agency in the FERC's 
environmental review.\1\ GLLC further states that it will keep DOE/FE 
apprised of the progress of the environmental review conducted by the 
FERC.
---------------------------------------------------------------------------

    \1\ DOE/FE Order No. 2961-A, at 27.
---------------------------------------------------------------------------

    GLLC states that it currently is in the process of evaluating the 
necessary infrastructure modifications and additions necessary to 
accommodate both FTA and non-FTA exports. GLLC states that, following 
such evaluation, it will initiate the pre-filing review process at the 
FERC for the proposed Export Project facilities. GLLC requests that 
DOE/FE issue an order approving the Application, with such approval 
subject to a satisfactory environmental review by the 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. 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 environmental 
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.

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 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) 
Emailing the filing to [email protected] with FE Docket No. 12-101-LNG 
in the title line; (2) mailing an original and three paper copies of 
the filing to the Office of Natural Gas Regulatory Activities at the 
address listed in ADDRESSES. The filing must include a reference to FE 
Docket No. 12-101-LNG; or (3) 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. The filing must include 
a reference to FE Docket No. 12-101-LNG.
    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.

[[Page 66457]]

    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 GLLC 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 8:00 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.

    Issued in Washington, DC, on October 26, 2012.
Robert F. Corbin,
Director, Office of Oil and Gas Global Security and Supply, Office of 
Fossil Energy.
[FR Doc. 2012-26928 Filed 11-2-12; 8:45 am]
BILLING CODE 6450-01-P