[Federal Register Volume 77, Number 238 (Tuesday, December 11, 2012)]
[Notices]
[Pages 73627-73630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29894]


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DEPARTMENT OF ENERGY


2012 LNG Export Study

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Notice of availability of 2012 LNG Export Study and request for 
comments.

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Freeport LNG Expansion, L.P.   [FE Docket No. 10-161-LNG]
 and FLNG Liquefaction, LLC.
Lake Charles Exports, LLC....  [FE Docket No. 11-59-LNG]
Dominion Cove Point LNG, LP..  [FE Docket No. 11-128-LNG]
Carib Energy (USA) LLC.......  [FE Docket No. 11-141-LNG]
Freeport LNG Expansion, L.P.   [FE Docket No. 11-161-LNG]
 and FLNG Liquefaction, LLC.
Cameron LNG, LLC Gulf........  [FE Docket No. 11-162-LNG]
Gulf Coast LNG Export, LLC...  [FE Docket No. 12-05-LNG]
Jordan Cove Energy Project,    [FE Docket No. 12-32-LNG]
 L.P.
LNG Development Company, LLC   [FE Docket No. 12-77-LNG]
 (d/b/a Oregon LNG).
Cheniere Marketing, LLC......  [FE Docket No. 12-97-LNG]
Southern LNG Company, L.L.C..  [FE Docket No. 12-100-LNG]
Gulf LNG Liquefaction          [FE Docket No. 12-101-LNG]
 Company, LLC.
CE FLNG, LLC.................  [FE Docket No. 12-123-LNG]
Excelerate Liquefaction        [FE Docket No. 12-146-LNG]
 Solutions I, LLC.
Golden Pass Products LLC.....  [FE Docket No. 12-156-LNG]
 

SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy 
(DOE) gives notice of the availability of a liquefied natural gas (LNG) 
export cumulative impact study (LNG Export Study) in the above-
referenced proceedings and invites the submission of initial and reply 
comments regarding the LNG Export Study. DOE commissioned the LNG 
Export Study to inform DOE's decisions on applications seeking 
authorization to export LNG from the lower-48 states to non-free trade 
agreement (FTA) countries.\1\ The LNG Export Study consisted of two 
parts. The first part, performed by the Energy Information 
Administration (EIA) and originally published in January 2012, assessed 
how specified scenarios of increased natural gas exports could affect 
domestic energy markets. The second part, performed by NERA Economic 
Consulting (NERA) under contract to DOE, evaluated the macro-economic 
impact of LNG exports on the U.S. economy using a general equilibrium 
macroeconomic model of the U.S. economy with an emphasis on the energy 
sector and natural gas in particular. DOE may use the LNG Export Study 
to inform its decision in the listed proceedings and for other 
purposes. Comments submitted in compliance with the instructions in 
this notice will be placed in the administrative record for all of the 
above-listed proceedings and need only be submitted once.
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    \1\ The LNG Export Study did not consider the impact of exports 
of Alaska natural gas production. Because there is no natural gas 
pipeline interconnection between Alaska and the lower-48 states, the 
macroeconomic consequences of exporting LNG from Alaska are likely 
to be discrete and separate from those of exporting from the lower-
48 states.

DATES: Initial comments are to be filed using procedures detailed in 
the Public Comment Procedures section no later than 4:30 p.m., eastern 
time, January 24, 2013. Reply comments are to be filed using the same 
procedures and will be accepted for filing from January 25, 2013, until 
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4:30 p.m., eastern time, February 25, 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:

John Anderson, 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) 
586-0521.
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

    Pursuant to section 3 of the Natural Gas Act, 15 U.S.C. 717b, 
exports of natural gas, including LNG, must be

[[Page 73628]]

authorized by DOE/FE.\2\ Applications that seek authority to export 
natural gas to countries with which the United States has not entered 
into a free trade agreement providing for national treatment for trade 
in natural gas (non-FTA nations) are presumed to be in the public 
interest unless, after opportunity for a hearing, DOE finds that the 
authorizations would not be consistent with the public interest.
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    \2\ The authority to regulate the imports and exports of natural 
gas, including liquefied natural gas, under section 3 of the NGA (15 
U.S.C. Sec.  717b) has been delegated to the Assistant Secretary for 
FE in Redelegation Order No. 00-002.04E (issued April 29, 2011).
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    On May 20, 2011, in Sabine Pass Liquefaction, LLC, Opinion and 
Order No. 2961 (Sabine Pass), DOE issued a conditional authorization to 
Sabine Pass Liquefaction, LLC for exports to non-FTA nations.\3\ Due to 
its receipt of other applications to export LNG to non-FTA nations, and 
in anticipation of additional applications, DOE cautioned in Order No. 
2961 that it has a continuing duty to monitor supply and demand 
conditions in the United States in order to ensure that authorizations 
to export LNG do not subsequently lead to a reduction in the supply of 
natural gas needed to meet essential domestic needs. Order No. 2961 at 
32. DOE further stated that it would evaluate the cumulative impact of 
the Sabine Pass authorization and any future export authorizations when 
considering subsequent applications for such authority. Id.
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    \3\ On August 7, 2012, DOE/FE issued Order No. 2961-A, A Final 
Opinion and Order Granting Long-Term Authority To Export LNG From 
Sabine Pass LNG Terminal to Non-Free Trade Agreement Nations.
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    Like Sabine Pass, the 15 proceedings identified above involve 
applications submitted by the named parties seeking authorization to 
export LNG from the lower-48 states to non-FTA nations. In response, 
DOE commissioned a study, consisting of two separate parts, of the 
economic impacts of granting these types of applications. The purpose 
of this Notice is to post the LNG Export Study in the 15 proceedings, 
and to invite initial and reply comments on the LNG Export Study, as 
applied to the pending matters. The LNG Export Study and the comments 
that DOE/FE receives in response to this Notice will help to inform our 
determination of the public interest in each case.

The LNG Export Study

    In summary, the LNG Export Study includes:
     An analysis performed by the Energy Information 
Administration (EIA) and originally published in January 2012, entitled 
Effect of Increased Natural Gas Exports on Domestic Energy Markets (EIA 
Study), examining how specified scenarios of increased natural gas 
exports could affect domestic energy markets.
     An evaluation performed by NERA Economic Consulting 
(NERA), a private contractor retained by DOE, entitled Macroeconomic 
Impacts of Increased LNG Exports From the United States (NERA Study). 
The NERA analysis assessed the macroeconomic impact of LNG exports on 
the U.S. economy using a general equilibrium macroeconomic model of the 
U.S. economy with an emphasis on the energy sector and natural gas in 
particular.
    The purpose of the LNG Export Study was to evaluate the cumulative 
economic impact of the Sabine Pass authorization and any future 
requests for authority to export LNG. At the time DOE commissioned the 
EIA analysis, it had issued the Sabine Pass conditional authorization 
and had received applications for authority to export LNG by vessel 
from two additional proposed liquefaction facilities. The combined 
granted and requested authority to export LNG to non-FTA nations at 
that time was the equivalent of 5.6 billion cubic feet per day (Bcf/
day) of natural gas. Additionally, DOE had been contacted by other 
companies that were considering filing additional applications to 
export LNG to non-FTA nations in the Fall of 2011. The approximate 
volume under consideration for export from these companies was 
equivalent to approximately another 6 Bcf/day of natural gas.
    Given the growing interest in exporting LNG from the lower-48 
states, DOE designed the scope of the first part of the LNG Export 
Study, performed by EIA, to understand the implications of additional 
natural gas demand (as exports) on domestic energy markets under 
various scenarios. The scenarios established were not forecasts of 
either the ultimate level, or rates of increase, of exports; instead, 
these scenarios were established to set a wide range of potential LNG 
export scenarios, as assessed by DOE at that time.
    However, the EIA analysis did not address the macroeconomic impacts 
of natural gas exports on the U.S. economy. In particular, given its 
domestic focus, EIA's National Energy Modeling System does not account 
for the impact of energy price changes on the global utilization 
pattern for existing capacity or the siting of new capacity inside or 
outside of the United States in energy-intensive industries.
    Therefore, DOE commissioned NERA to conduct such an analysis. The 
NERA macroeconomic analysis includes a feasibility analysis of 
exporting the specified quantities of natural gas used in the EIA 
analysis, as well as a range of additional global scenarios for natural 
gas supply and demand, including cases with no export constraints.
    The NERA study is available on the DOE/FE Web site (http://www.fossil.energy.gov/programs/gasregulation/LNGStudy.html). The EIA 
study remains available on the EIA Web site (www.eia.gov/analysis/requests/fe). Electronic links to both parts have been posted to the 15 
listed dockets.

Key Findings of the NERA Study

    The Executive Summary of the NERA Study sets forth several key 
findings regarding the macroeconomic impacts of permitting exports of 
LNG from the lower-48 states. DOE does not take a position regarding 
these findings at this time. However, given the complexity of the NERA 
Study, and in order to help focus the comments being solicited by this 
Request, it is worthwhile to set out NERA's key findings verbatim. In 
considering NERA's findings, commenters are urged to keep in mind that 
the NERA Study was performed by an independent non-governmental 
organization under contract to DOE and that its findings are NERA's own 
findings, not those of DOE. The NERA Study's key findings, as presented 
in the NERA Study's Executive Summary are as follows:

    This report contains an analysis of the impact of exports of LNG 
on the U.S. economy under a wide range of different assumptions 
about levels of exports, global market conditions, and the cost of 
producing natural gas in the U.S. These assumptions were combined 
first into a set of scenarios that explored the range of fundamental 
factors driving natural gas supply and demand. These market 
scenarios ranged from relatively normal conditions to stress cases 
with high costs of producing natural gas in the U.S. and 
exceptionally large demand for U.S. LNG exports in world markets. 
The economic impacts of different limits on LNG exports were 
examined under each of the market scenarios. Export limits were set 
at levels that ranged from zero to unlimited in each of the 
scenarios.
    Across all these scenarios, the U.S. was projected to gain net 
economic benefits from allowing LNG exports. Moreover, for every one 
of the market scenarios examined, net economic benefits increased as 
the level of LNG exports increased. In particular, scenarios with 
unlimited exports always had higher net economic benefits than 
corresponding cases with limited exports.
    In all of these cases, benefits that come from export expansion 
more than outweigh the losses from reduced capital and wage

[[Page 73629]]

income to U.S. consumers, and hence LNG exports have net economic 
benefits in spite of higher domestic natural gas prices. This is 
exactly the outcome that economic theory describes when barriers to 
trade are removed.
    Net benefits to the U.S. would be highest if the U.S. becomes 
able to produce large quantities of gas from shale at low cost, if 
world demand for natural gas increases rapidly, and if LNG supplies 
from other regions are limited. If the promise of shale gas is not 
fulfilled and costs of producing gas in the U.S. rise substantially, 
or if there are ample supplies of LNG from other regions to satisfy 
world demand, the U.S. would not export LNG. Under these conditions, 
allowing exports of LNG would cause no change in natural gas prices 
and do no harm to the overall economy.
    U.S. natural gas prices increase when the U.S. exports LNG. But 
the global market limits how high U.S. natural gas prices can rise 
under pressure of LNG exports because importers will not purchase 
U.S. exports if U.S. wellhead price rises above the cost of 
competing supplies. In particular, the U.S. natural gas price does 
not become linked to oil prices in any of the cases examined.
    Natural gas price changes attributable to LNG exports remain in 
a relatively narrow range across the entire range of scenarios. 
Natural gas price increases at the time LNG exports could begin 
range from zero to $0.33 (2010 $/Mcf). The largest price increases 
that would be observed after 5 more years of potentially growing 
exports could range from $0.22 to $1.11 (2010 $/Mcf). The higher end 
of the range is reached only under conditions of ample U.S. supplies 
and low domestic natural gas prices, with smaller price increases 
when U.S. supplies are more costly and domestic prices higher.
    How increased LNG exports will affect different socio-economic 
groups will depend on their income sources. Like other trade 
measures, LNG exports will cause shifts in industrial output and 
employment and in sources of income. Overall, both total labor 
compensation and income from investment are projected to decline, 
and income to owners of natural gas resources will increase. 
Different socio-economic groups depend on different sources of 
income, though through retirement savings an increasingly large 
number of workers share in the benefits of higher income to natural 
resource companies whose shares they own. Nevertheless, impacts will 
not be positive for all groups in the economy. Households with 
income solely from wages or government transfers, in particular, 
might not participate in these benefits.
    Serious competitive impacts are likely to be confined to narrow 
segments of industry. About 10% of U.S. manufacturing, measured by 
value of shipments, has both energy expenditures greater than 5% of 
the value of its output and serious exposure to foreign competition. 
Employment in industries with these characteristics is about one-
half of one percent of total U.S. employment.
    LNG exports are not likely to affect the overall level of 
employment in the U.S. There will be some shifts in the number of 
workers across industries, with those industries associated with 
natural gas production and exports attracting workers away from 
other industries. In no scenario is the shift in employment out of 
any industry projected to be larger than normal rates of turnover of 
employees in those industries.

NERA Study at 1-2.

Invitation to Comment

    DOE invites comments regarding the LNG Export Study that will help 
to inform DOE in its public interest determinations of the 
authorizations sought in the 15 pending applications. Comments must be 
limited to the results and conclusions of these independent analyses on 
the factors evaluated. These factors include the impact of LNG exports 
on: domestic energy consumption, production, and prices, and 
particularly the macroeconomic factors identified in the NERA analysis, 
including Gross Domestic Product (GDP), welfare analysis, consumption, 
U.S. economic sector analysis, and U.S. LNG export feasibility 
analysis, and any other factors included in the analyses. In addition, 
comments can be directed toward the feasibility of various scenarios 
used in both analyses. While this invitation to comment covers a broad 
range of issues, the Department may disregard comments that are not 
germane to the present inquiry. Moreover, no final decisions will be 
issued in the 15 pending proceedings until DOE has received and 
evaluated the comments requested herein.

Public Comment Procedures

    DOE is not establishing a new proceeding or docket by today's 
issuance and the submission of comments in response to this Notice will 
not make commenters parties to any of the pending 15 cases. Persons 
with an interest in the outcome of one or more of the 15 pending 
matters have been given an opportunity to intervene in or protest those 
pending matters by complying with the procedures established in the 
respective notices of application issued in the pending 15 matters and 
published in the Federal Register.\4\
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    \4\ Notices of application in 12 of the pending cases were 
published in the Federal Register as follows: Freeport LNG 
Expansion, L.P. and FLNG Liquefaction, LLC, FE Docket No. 10-161-
LNG, 76 FR4885 (January 27, 2011); Lake Charles Exports, LLC, FE 
Docket No. 11-59-LNG, 76 FR 34212 (June 13, 2011); Dominion Cove 
Point LNG, LP, FE Docket No. 11-128-LNG, 76 FR 76698 (December 8, 
2011); Carib Energy (USA) LLC, FE Docket No. 11-141-LNG, 76 FR 80913 
(December 12, 2011); Freeport LNG Expansion, L.P. and FLNG 
Liquefaction, LLC, FE Docket No. 11-161-LNG, 77 FR 7568 (February 
13, 2012); Cameron LNG, LLC, FE Docket No. 11-162-LNG, 77 FR 10732 
(February 23, 2012); Gulf Coast LNG Export, LLC, FE Docket No. 12-
05-LNG, 77 FR 32962 (June 4, 2012); Jordan Cove Energy Project, 
L.P.,FE Docket No. 12-32-LNG, 77 FR 33446 (June 6, 2012); LNG 
Development Company, LLC (d/b/a Oregon LNG), FE Docket No. 12-77-
LNG, 77 FR 55197 (September 7, 2012); Southern LNG Company, L.L.C., 
FE Docket No. 12-100-LNG, 77 FR 63806 (October 17, 2012); Cheniere 
Marketing, LLC, FE Docket No. 12-097-LNG, 77 FR 64964 (October 24, 
2012); and Gulf LNG Liquefaction Company, LLC FE Docket No. 12-101-
LNG, 77 FR 66454, (November 5, 2012). Comments will be received in 
three other proceedings in which the notices of application were 
issued by DOE/FE on November 30, 2012, but have not yet posted to 
the Federal Register, including CE FLNG, LLC, FE Docket No. 12-123-
LNG; Excelerate Liquefaction Solutions I, LLC, FE Docket No. 12-146-
LNG; and Golden Pass Products LLC, FE Docket No. 12-156-LNG..
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    The record in the 15 pending proceedings will include all comments 
received in response to this Notice. Initial and reply comments will be 
reviewed on a consolidated basis for purposes of hearing, and decisions 
will be issued on a case-by-case basis. In addition to the procedures 
established by this Notice, all comments must meet the applicable 
requirements of DOE's regulations at 10 CFR part 590. The more specific 
your comments, the more useful they will be.
    Reply comments should be directed toward matters specifically 
addressed in initial comments and should not introduce new issues not 
previously raised by other commenters. Reply comments will not be 
accepted until the opportunity for filing initial comments has run.
    Comments may be submitted using one of the following methods: (1) 
Emailing the filing to [email protected]; (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; 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.
    All comments and reply comments submitted in response to this 
Notice should reference the ``2012 LNG Export Study'' in the title 
line. Any comments greater than 5 pages, double-spaced, in length must 
be submitted in electronic format.
    The 2012 LNG Export Study 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. All initial and reply comments 
filed in response to this Notice will be available electronically by 
going to the following DOE/FE Web address: http://

[[Page 73630]]

www.fossil.energy.gov/programs/gasregulation/LNGStudy.html.

    Issued in Washington, DC, on December 5, 2012.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas 
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2012-29894 Filed 12-10-12; 8:45 am]
BILLING CODE 6450-01-P