The Energy Department’s delay in releasing a report on liquefied natural-gas exports puts in limbo for this year as many as 12 applications including projects backed by Dominion Resources Inc. and Sempra Energy. (SRE)
The department commissioned the study last year to assess the economic impact of exports on domestic energy use after granting Cheniere Energy Inc. (LNG) permission to ship gas from Louisiana. It said future permits won’t be issued until the study is completed.
The first part of the study is complete, and a second portion was scheduled to come out in the first quarter. That date was pushed back to late in the U.S. summer, which ends Sept. 22. A posting on the department website now says it will be “complete by the end of the year.”
“It is really unfortunate, but I don’t think anything happens until we see the results of that report,” said Bill Cooper, president of the Center for Liquefied Natural Gas, which advocates for gas shipments. The Washington-based group includes LNG producers, shippers and terminal operators.
“None of the applicants, I’m certain, want to see a delay in the regulatory process,” Cooper said in an interview.
The study was started after lawmakers led by Representative Edward Markey, a Massachusetts Democrat, and Senator Ron Wyden, an Oregon Democrat, said overseas sales might increase domestic energy prices.
The delay probably will push release of the Energy Department’s report until after the election in November.
“This is a complicated economic analysis assessing a dynamic market,” Jen Stutsman, an Energy Department spokeswoman, said in an e-mail. “We take our responsibility to issue these determinations seriously and want to make sure the necessary time is taken to get it right.”
Investors including Sempra Energy in partnership with Mitsubishi Corp. and Mitsui & Co. Ltd., Freeport LNG with Macquarie Group Ltd., and Dominion Resources, have applied for approvals from the Energy Department.
U.S. permits are required to sell gas to countries that aren’t free-trade partners with the U.S., a group that includes Japan and Spain.
As natural-gas prices soared in the last decade, energy companies sought permission to build import terminals. Hydraulic fracturing, or fracking, for natural gas has opened access to reserves that previously couldn’t be produced economically, driving prices to a decade low and letting companies shift gears and seek overseas buyers for the fuel.
In fracking, oil and gas companies shoot a mixture of water, sand and chemicals underground to crack shale rock formations and free fossil fuels trapped inside.
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Mitsubishi Corporation said it has signed a Commercial Development Agreement with Cameron LNG, a subsidiary of Sempra Energy, to liquefy approximately 4 million metric tones of natural gas at Cameron LNG terminal.
The agreement binds the parties to negotiate a 20-year tolling agreement, based on agreed-upon terms outlined in the Commercial Development Agreement. The intending tolling agreement will enable Mitsubishi Corporation to become a foundation customer of LNG produced at Cameron LNG terminal, and Mitsubishi Corporation will market them to overseas utility customers.
In recent years, due to the rapid increase of natural gas production in the United States, some LNG receiving terminals are planned to be converted to LNG export terminals by additionally building liquefaction facilities.
Cameron LNG receiving terminal in Hackberry is expected to start conversion in late 2013 with operations to commence in late 2016. The completed liquefaction facility will utilize Cameron LNG’s existing facilities, and is expected to be comprised of three liquefaction trains with a total export capability of approximately 12 million tonnes per annum (Mtpa) of liquefied natural gas (LNG). In January 2012, Cameron LNG received approval from the U.S. Department of Energy (DOE) to export up to 12 Mtpa of domestically produced LNG from the Cameron LNG terminal to all current and future Free Trade Agreement countries. The authorization to export LNG to countries with which the U.S. does not have a Free Trade Agreement is pending review by the DOE. Cameron LNG expects to receive the required permits from the Federal Energy Regulatory Commission (FERC) and enter into a turnkey contract in 2013 for engineering and construction services for the project.
Natural gas which Mitsubishi Corporation will procure from the North American natural gas market will be processed through the Cameron LNG facility pursuant to a tolling agreement for 4 Mtpa, which LNG will then be marketed to utility customers. To secure natural gas from the market in safely and cost competitive manner, Mitsubishi Corporation will utilize expertise of independent gas marketer CIMA Energy Ltd. (headquartered in Houston, Texas) which Mitsubishi Corporation holds 34% share.
Under a situation where Japan is currently importing LNG mainly from the Middle East and Southeast Asia, LNG import from the United States will contribute to diversification of energy resources and increase flexibility of supply plan by utilizing fluid North America’s natural gas market in parallel.
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Japan’s Osaka Gas is in negotiations to buy liquefied natural gas from Dominion Resources, Sempra Energy and Freeport LNG in the United States, Bloomberg reported, citing Tetsushi Ikuta, general manager of Osaka Gas energy resources and international business development.
Osaka Gas said recently that it plans to purchase 7.19 million mt of LNG during fiscal 2012.
The company also plans to invest 290 billion yen (3.49 billion U.S. dollars) in LNG storage facilities and laying pipelines in five years from fiscal 2012-2016.
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The U.S. Department of Energy granted Sempra a long‐term authorization to export up to the equivalent of 1.7 Bcf/d of natural gas as LNG to FTA countries for 20 years from the proposed Cameron, Louisiana, LNG liquefaction plant.
The ruling paves the way for a second approval allowing Sempra to export LNG to all LNG import nations, with or without U.S. free trade agreements.
Cameron LNG is situated on a 260-acre industrial-zoned site along the Calcasieu Channel in Hackberry, Louisiana. It is located 18 miles from the Gulf of Mexico and within 35 miles of five major interstate pipelines that serve nearly two-thirds of all U.S. natural gas markets.
The $900 million LNG terminal is currently capable of processing up to 1.5 billion cubic feet of natural gas per day.
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