[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Notices]
[Pages 15980-15983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06353]


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DEPARTMENT OF ENERGY

[FE Docket No. 13-132-LNG]


Magnolia LNG, 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 25-Year Period

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 11, 2013, by Magnolia LNG, LLC (Magnolia), requesting long-
term, multi-contract authorization to export liquefied natural gas 
(LNG) produced from domestic sources in a volume equivalent to 
approximately 394.2 billion cubic feet per year (Bcf/yr) of natural 
gas, or 1.08 Bcf per day (Bcf/d). Magnolia seeks authorization to 
export the LNG by vessel from the proposed Magnolia LNG Terminal, to be 
located near Lake Charles, Louisiana (Liquefaction Project), for a 25-
year term commencing on the earlier of the date of first export or 10 
years from the date the authorization is granted. Magnolia requests 
authorization to export the LNG by vessel to any country with which the 
United States does not have a free trade agreement (FTA) requiring 
national treatment for trade in natural gas (non-FTA countries), and 
with which trade is not prohibited by U.S. law or policy. Magnolia 
requests this authorization on its own behalf and as agent for other 
parties who hold title to the LNG at the time of export. This 
application was filed under section 3(a) of the Natural Gas Act (NGA), 
15 U.S.C. 717b(a).

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, May 23, 2014.

ADDRESSES: Electronic Filing by email: [email protected].
    Regular Mail: U.S. Department of Energy (FE-34), Office of Oil and 
Gas Global Security and Supply, 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 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 Lisa Tracy, 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) 586-4523.
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 Avenue SW., Washington, DC 20585, (202) 
586-3397.

SUPPLEMENTARY INFORMATION:

Background

    Applicant. Magnolia states that it is a Delaware limited liability 
company with its principal place of business in Houston, Texas. 
Magnolia further states that it is a wholly-owned indirect subsidiary 
of Liquefied Natural Gas Limited (LNG Limited). According to Magnolia, 
LNG Limited is a publicly listed Australian company formed with the 
objective of identifying and developing LNG projects overseas and in 
Australia.
    Procedural History. On February 27, 2013, DOE/FE issued Order No. 
3245, in which it authorized Magnolia to export LNG produced from 
domestic sources to FTA countries (i.e., countries with which the 
United States currently has, or in the future will have, a free trade 
agreement requiring national treatment for trade in natural gas) in a 
volume equivalent to approximately 197.1 Bcf/yr of natural gas (0.54 
Bcf/d), or 4 million metric tons per annum (mtpa) of LNG.\1\
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    \1\ Magnolia LNG, LLC, DOE/FE Order. No. 3245, Order Granting 
Long-Term Multi-Contract Authorization To Export Liquefied Natural 
Gas by Vessel From the Proposed Magnolia LNG Terminal in Lake 
Charles, Louisiana, to Free Trade Agreement Nations (Feb. 27, 2013).
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    On October 15, 2013, Magnolia filed a second application requesting 
authorization to export domestically produced LNG to FTA countries in 
an identical volume as its first FTA order--197.1 Bcf/yr of natural gas 
(4 mtpa of LNG). DOE/FE granted that application on March 5, 2014, in 
DOE/FE Order No. 3406.\2\ Thus, Magnolia is currently authorized under 
both orders to export LNG to FTA countries in a total volume

[[Page 15981]]

equivalent to 394.2 Bcf/yr of natural gas (1.08 Bcf/d).
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    \2\ Magnolia LNG, LLC, DOE/FE Order. No. 3406, Order Granting 
Long-Term Multi-Contract Authorization To Export Liquefied Natural 
Gas by Vessel From the Proposed Magnolia LNG Terminal in Lake 
Charles, Louisiana, to Free Trade Agreement Nations (March 5, 2014).
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    In the Application subject to this notice, Magnolia requests the 
same total export volume for non-FTA countries--394.2 Bcf/yr of natural 
gas, or 8 mtpa of LNG. Magnolia states that this requested non-FTA 
volume is not additive to its FTA authorizations and that, if granted, 
would allow the total FTA and non-FTA export volumes to match.
    Liquefaction Project. Magnolia seeks long-term authorization to 
export domestically produced LNG from the Magnolia LNG Terminal, which 
Magnolia proposes to construct, own, and operate. Magnolia states that 
the Liquefaction Project will be constructed on Industrial Canal South 
Shore PLC Tract 475, a parcel of land approximately 120 acres in size 
located in Calcasieu Parish, south of Lake Charles, Louisiana. Magnolia 
notes that the Terminal will be located in an area zoned for heavy 
industrial use.
    Magnolia states that, on March 6, 2013, it secured property from 
the Port of Lake Charles to construct the Magnolia LNG Terminal. 
Specifically, it signed an exclusive, binding four-year Real Estate 
Lease Option Agreement with the Lake Charles Harbor & Terminal District 
for the opportunity to assess the project site for the purpose of 
locating, constructing, operating, and maintaining the proposed 
Liquefaction Project.\3\ Magnolia states that, subject to compliance 
with the terms of the Option Agreement, it may exercise the option and 
enter into the ground lease with the Port at any time.
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    \3\ The Real Estate Lease Option is attached to Magnolia's 
Application as Exhibit B.
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    Magnolia states that the Liquefaction Project is anticipated to 
include four LNG trains, two LNG storage tanks each with capacity of 
approximately 160,000 m\3\, and vessel loading facilities. According to 
Magnolia, each of the LNG trains will be capable of producing up to 2 
mtpa of LNG, for a total capacity of 8 mtpa of LNG. Magnolia further 
states that it plans to receive natural gas by pipeline at the Magnolia 
LNG Terminal, liquefy the gas, and load the LNG from the storage tanks 
onto an LNG carrier berthed alongside the Magnolia LNG Terminal.

Current Application

    Magnolia requests long-term, multi-contract authorization to export 
LNG in a volume equivalent to approximately 394.2 Bcf/yr of domestic 
natural gas (1.08 Bcf/d) from the proposed Magnolia LNG Terminal to any 
non-FTA country which has developed or in the future develops the 
capacity to import LNG, and with which trade is not prohibited by U.S. 
law or policy. Magnolia requests this authorization for a 25-year term 
commencing on the earlier of the date of first export or 10 years from 
the date the requested authorization is granted.
    Magnolia states that it seeks to export the requested LNG on its 
own behalf and as agent for others. Magnolia states that it will comply 
with all DOE/FE requirements for exports and agents as set forth in 
recent DOE/FE orders, including registering each LNG title holder for 
whom Magnolia seeks to export as agent. Magnolia proposes that this 
registration include a written statement by the title holder 
acknowledging and agreeing to comply with all applicable requirements 
included by DOE/FE in Magnolia's export authorization, and to include 
those requirements in any subsequent purchase or sale agreement entered 
into by that title holder. In addition, Magnolia states that it will 
file under seal with DOE/FE any relevant long-term commercial 
agreements between Magnolia and the LNG title holder, once those 
agreements have been executed.
    Magnolia states that the terms and conditions related to the use of 
the Magnolia LNG Terminal facilities will be set forth in agreements 
with Project customers. Magnolia anticipates that these agreements will 
be for terms of up to 25 years in duration and will run concurrently 
with Magnolia's export authorization. Magnolia states that it has not 
yet entered into such agreements, but that it is engaged in commercial 
negotiations with several potential terminal customers. Magnolia states 
that DOE/FE has previously found that this commitment conforms to the 
requirements of 10 CFR 590.202(b), which calls upon applicants to 
supply transaction specific information ``to the extent practicable.''
    Magnolia states that the Magnolia LNG Terminal will be situated 
within approximately three miles of four major interstate/intrastate 
natural gas pipelines owned by Trunkline Gas Company, Kinder Morgan 
Louisiana Pipeline (KMLP), Gulf South Pipeline Company, LP, and Chevron 
Pipe Line Company, respectively. Magnolia states that it currently is 
in advanced discussions with KMLP to provide the direct connection to 
the Magnolia LNG Terminal through which feed gas supplies will flow, 
and for the compression required to transport the feed gas to the 
terminal. Magnolia states that, through KMLP, its tolling customers 
will be able to directly access multiple interstate natural gas 
pipelines and storage facilities, thus providing a variety of stable 
and economical supply options.
    According to Magnolia, the sources of natural gas will include 
conventional and unconventional supplies from various regions, 
including recent shale gas discoveries in Haynesville, Eagle Ford, 
Barnett, Floyd-Neal/Conasauga, and Marcellus shale plays. Magnolia 
emphasizes that the size to traditional and emerging natural gas supply 
sources in close proximity to the Magnolia LNG Terminal will provide 
Magnolia's customers with diverse and reliable alternative gas supply 
options.

Public Interest Considerations

    Magnolia contends that the proposed exports from the Liquefaction 
Project are consistent with the public interest under section 3(a) of 
the NGA, 15 U.S.C. 717b(a). Magnolia cites the following in support of 
its position: (1) DOE/FE's two-part LNG Export Study, issued in 
2012,\4\ (2) data from the U.S. Energy Information Administration's 
(EIA) Annual Energy Outlook 2013 (AEO 2013),\5\ and (3) a study by the 
Berkeley Research Group (BRG) commissioned by Magnolia to support the 
Application, as discussed below.
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    \4\ LNG Export Study, available at http://energy.gov/fe/services/natural-gas-regulation/lng-export-study.
    \5\ U.S. Energy Information Administration, Annual Energy 
Outlook 2013 with Projections to 2040 (April 2013), available at 
http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf.
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    Magnolia further states that, over the last two years, no credible 
evidence has been presented to support the argument that LNG exports 
will harm the United States. Rather, according to Magnolia, the 
Liquefaction Project will create jobs, develop industry, foster 
continued production of domestic conventional and unconventional 
natural gas supplies, promote international trade and improve the U.S. 
balance of trade, and promote strong relationships with strategic 
international allies. In support of the Application, Magnolia discusses 
the following:
    BRG Study. Magnolia states that the BRG Study, attached to 
Magnolia's Application as Exhibit A, employed a three-pronged analytic 
approach to assess the potential impacts of long-term LNG exports from 
the United States and Canada. It also provided a high level assessment 
of the potential range of long-term impacts on global LNG prices and 
their differential to U.S. prices. Magnolia states that the findings of 
the BRG Study support the conclusion that its proposed LNG exports are 
not inconsistent with the public interest.
    Domestic Need for the Natural Gas To Be Exported. Citing the LNG 
Export

[[Page 15982]]

Study and EIA's AEO 2013, Magnolia contends that the United States has 
an abundant supply of natural gas that is sufficient to meet domestic 
demand and to support Magnolia's requested LNG export authorization. 
According to Magnolia, AEO 2013 shows that domestic natural gas supply 
as measured by proved natural gas reserves has been increasing, and 
that EIA projects that U.S. dry natural gas production will increase by 
1.3 percent per year through 2040.
    Turning to the adequacy of supply as compared to domestic demand 
for natural gas, Magnolia cites AEO 2013 in stating that U.S. dry 
natural gas production will exceed consumption by 2019, and that U.S. 
dry natural gas production alone will exceed total U.S. natural gas 
consumption by 3.60 trillion cubic feet in 2040. Magnolia cites the BRG 
Study in stating that the U.S. draw on economic shale production 
relative to other supply sources, like conventional gas and coal bed 
methane, could potentially be even higher that the figures provided by 
EIA. Magnolia also notes that BRG's conclusion--that increased demand 
for natural gas will be met by increased supply from low cost shale 
production--is consistent with both EIA's data and DOE/FE's conclusions 
in recent LNG export orders. Magnolia specifically notes DOE/FE's 
agreement with the macroeconomic study conducted by NERA Economic 
Consulting (one of two parts of the LNG Export Study) that there will 
be net economic benefits to the United States even in the face of 
unlimited LNG exports.
    Impact on U.S. Natural Gas Demand Market Prices. Magnolia states 
that the results of the BRG Study support the conclusion that 
Magnolia's proposed LNG exports will have a minimal and manageable 
impact on U.S. natural gas market demand and prices. Specifically, BRG 
found that the impacts of LNG exports on U.S. natural gas prices and 
U.S. domestic natural gas demand under all scenarios studied would be 
minimal. Magnolia also points out that DOE/FE has concluded in recent 
LNG export orders that LNG exports will not necessarily exacerbate the 
risk of large upward natural gas prices spikes.
    Domestic Energy Security and International Impacts. Magnolia states 
that authorization requested in the Application will have a minimal 
effect, if any, on domestic energy security. Rather, in Magnolia's 
view, the proposed LNG exports will promote a more robust global market 
for natural gas. Magnolia further states that the proposed exports, if 
authorized, will be consistent with President Obama's National Export 
Initiative (NEI), as established by Executive Order on March 11, 2010, 
and will support other important federal policies.
    Economic Benefits. Magnolia maintains that the Liquefaction Project 
will stimulate the local, regional, and national economies through the 
direct and indirect creation of new jobs, increased economic activity, 
and tax revenues. In particular, Magnolia asserts that it will use U.S. 
companies to supply much of the equipment and materials required in the 
construction of the Magnolia LNG Terminal. Magnolia further states that 
the proposed exports will help balance the U.S. trade deficit, assist 
U.S. allies by diversifying their supply options, and allow commercial 
parties a greater opportunity to freely negotiate trade agreements with 
their counterparties.
    Additional details can be found in Magnolia's Application, which is 
posted on the DOE/FE Web site at: http://www.fossil.energy.gov/programs/gasregulation/authorizations/2013_applications/13_132_lng_nfta.pdf.

Environmental Impact

    Magnolia states that, on March 20, 2013, the Federal Energy 
Regulatory Commission (FERC) accepted Magnolia's request to commence 
FERC's pre-filing process. Magnolia states that, consistent with the 
National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., FERC 
will act as the lead agency for the environmental review, with DOE 
acting as a cooperating agency. Magnolia states that it will also seek 
any necessary permits from other federal, state, and local agencies, as 
well as conduct any necessary consultations.

DOE/FE Evaluation

    The Application will be reviewed pursuant to section 3(a) of the 
NGA, 15 U.S.C. 717b(a), and DOE will consider any issues required by 
law or policy. To the extent determined to be relevant, these issues 
will include the domestic need for the natural gas proposed to be 
exported, the adequacy of domestic natural gas supply, U.S. energy 
security, and the cumulative impact of the requested authorization and 
any other LNG export application(s) previously approved on domestic 
natural gas supply and demand fundamentals. DOE may also consider other 
factors bearing on the public interest, including the impact of the 
proposed exports on the U.S. economy (including GDP, consumers, and 
industry), job creation, the U.S. balance of trade, and international 
considerations; and whether the authorization 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 address these issues in 
their comments and/or protests, as well as other issues deemed relevant 
to the Application.
    NEPA requires DOE to give appropriate consideration to the 
environmental effects of its 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 Applicant, 
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. 13-132-LNG 
in the title line; (2) mailing an original and three paper copies of 
the filing to the Office of Oil and Gas Global Security and Supply at 
the address listed in ADDRESSES; or (3) hand delivering an original and 
three paper copies of the filing to the Office of Oil and Gas Global 
Security and Supply at the address listed in ADDRESSES. All filings 
must include a reference to FE Docket No. 13-132-LNG. Please Note: If 
submitting a filing via email, please include all related documents and 
attachments (e.g., exhibits) in the original email correspondence. 
Please do not include any active hyperlinks or password protection in 
any of the documents or attachments related to the filing. All 
electronic filings submitted to DOE must follow these guidelines to 
ensure

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that all documents are filed in a timely manner. Any hardcopy filing 
submitted greater in length than 50 pages must also include, at the 
time of the filing, a digital copy on disk of the entire submission.
    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 is available for inspection and copying in the 
Division of Natural Gas Regulatory Acitivities 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 March 18, 2014.
John A. Anderson,
Director, Division of Natural Gas Regulatory Activities, Office of Oil 
and Gas Global Security and Supply, Office of Oil and Natural Gas.
[FR Doc. 2014-06353 Filed 3-21-14; 8:45 am]
BILLING CODE 6450-01-P