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Obama Politics: Gas-Export Study Delay Puts U.S. Projects in Limbo for This Year

By Jim Snyder
Sep 18, 2012 2:14 PM CT

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.

‘Complicated Analysis’

“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.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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LNG EXPORT: U.S. Gas Exports Put on Back Burner

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By TENNILLE TRACY

The Obama administration is telling Japan and other allied countries they will have to wait before moving forward on plans to buy American natural gas, people involved in the talks said.

A dramatic increase in U.S. natural-gas production has led several U.S. companies, including Sempra Energy SRE +0.23% and Dominion Resources Inc., D +0.15% to seek permits from the Department of Energy to export gas to countries that lack free-trade agreements with the U.S. Exxon Mobil Corp. XOM -0.73% Chief Executive Rex Tillerson said Wednesday his company was looking at exporting from the U.S. Gulf Coast and Canada.

Sempra and Dominion are working with Japanese partners that want to import the gas as their country looks for new power sources. The U.S. currently exports relatively small amounts of natural gas via pipelines to Canada and Mexico, but a wave of recent export proposals marks the first time in decades that companies have sought to liquefy U.S. gas and transport it overseas.

But exports have become a hot-button topic for some lawmakers in Washington and have highlighted uncertainty about what kind of energy power the U.S. wants to become as companies unearth huge supplies of natural gas in shale rock.

“We are going to have to answer some basic questions about our role as a producer,” Michael Levi, a senior fellow at the Council on Foreign Relations, said. “The fact that some of these debates have been so difficult stems from their novelty.”

Japan’s prime minister raised the gas-export issue with President Barack Obama at an April 30 meeting, one of several occasions on which Tokyo has pushed the administration.

But the U.S. has told Japan, a leading military ally in the Pacific, it will have to wait, in large part because of the political sensitivities, participants in the talks said.

“I think it’s going to require more people taking a look at it,” an administration official said, adding, “We’re very sympathetic to Japan. They’re in a very difficult situation.”

Following the disaster at its Fukushima Daiichi nuclear plant last year, Japan pulled the plug on all of its nuclear reactors, forcing it to replace a power source that generated about 30% of its electricity. The government is studying whether to restart some of the reactors, but nuclear power is likely to play a smaller role in five or 10 years.

That is when the U.S. natural gas could start arriving, but only if the U.S. grants permits to export terminals that would liquefy the gas for shipping across the Pacific.

Japan isn’t the only country waiting. “The requests come from everywhere,” the administration official said. Natural gas is much cheaper in the U.S. than in Europe and Asia, where the fuel’s value is often tied to the price of oil. Companies importing American gas would be able to reduce costs with contracts tied to the lower U.S. prices.

Mr. Tillerson laid out the case for exports at Exxon’s shareholder meeting Wednesday, saying they would create jobs and help the U.S. trade balance. Sen. Lisa Murkowksi, a Republican from Alaska, asked President Obama in April to expedite permits for natural-gas exports. She said exports could give Alaska a market for gas from its North Slope, which lacks a gas pipeline to the lower 48 states.

Opponents, including Rep. Ed Markey of Massachusetts and some other congressional Democrats, say the U.S. could boost its energy security by keeping its natural gas at home. Oil-and-gas entrepreneur T. Boone Pickens, in an interview, objected to the idea of selling the gas at a discount to global prices. “You’re kind of giving your own stuff away, and it’s stupid to do that,” said Mr. Pickens, who wants U.S. trucks to use natural gas.

Japanese officials said they recognized the Obama administration’s political challenges.

“It is difficult for the U.S. to say yes [to exports] because of the presidential election,” said Hirohide Hirai, director of the petroleum and natural-gas division of Japan’s economy ministry. “There won’t be any deal with any country before November.”

U.S. officials say they are weighing how exports would affect job creation, trade and the domestic price of natural gas. A price spike would hurt consumers and weaken a competitive advantage enjoyed by U.S. manufacturers that use natural gas as a raw material. An Energy Department assessment is due later this year, and an administration official said decisions will follow in a “timely manner.”

—Mitsuru Obe and Isabel Ordonez contributed to this article.

Write to Tennille Tracy at tennille.tracy@dowjones.com

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USA: Mitsubishi Inks Development Deal with Cameron LNG

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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: Osaka Gas Eyes U.S. LNG

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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.

He said that Osaka Gas may invest in planned LNG terminals in Maryland, Louisiana and Texas.

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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USA: Sempra Wins DOE Approval for Cameron LNG Export

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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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USA: Sempra to Pursue Tolling Fee for Cameron LNG Export Scheme

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Sempra LNG will underpin its 12 million tonnes per annum (mtpa) liquefaction plans for its US Cameron LNG plant with a tolling fee rather than taking title of the natural gas and then offering it to sellers at the facility on a free on board (FOB) basis, a company executive said on Thursday.

We are settled on the tolling structure and do not envisage changing it down the line,” Octavio Simoes, Sempra’s vice president of commercial development, said.

It’s more attractive as it doesn’t give us volume or price risk exposure to the US market,” he told ICIS Heren on the sidelines of the World LNG Summit in Rome.

Sempra Energy became the sixth US company, and the fourth in the US Gulf region, to declare its formal intentions to export US natural gas as LNG, having filed a request with US regulators on 10 November.

In the request, the California-based company asked the US Department of Energy (DOE) for consent to send up to 1.7 billion cubic feet (bcf)/day to free-trade-friendly countries for 20 years from the Hackberry, Louisiana, plant.

Sempra said the document was the first in a two-part process, with a request to export to non-free-trade nations to follow.

The subsequent application to export domestic LNG to non-FTA countries will require an analysis of the public interest, and Cameron LNG will provide additional evidence regarding the public interest as part of that application,” Sempra said in the filing.

Sempra’s export intentions bring the total amount of conceived large-scale natural-gas liquefaction in the lower 48 US states to more than 67mtpa.

The DOE said during a recent US Senate hearing that it would be conducting a pair of studies to deepen its understanding of the market impacts that could come with a large-scale push towards exporting US natural gas as LNG.

The government agency will not approve a non-free-trade agreement request until the studies are concluded, possibly in the first quarter of next year.

Exports not only option

But the Sempra executive said the company could feasibly sell some LNG from Cameron to the developing LNG transport market in the US rather than committing all of the volumes for export.

Building a liquefaction facility in the US does not necessarily mean that you are committed to exports,” Simoes said. “There is a great arbitrage opportunity offered by the difference in LNG prices and diesel prices in the US.”

Sempra CEO Debra Reed said during a quarterly earnings call on 4 November that the company had received strong interest from “large, credit-worthy counterparties” seeking liquefaction services from Cameron LNG on a long-term contract basis.

Sempra said long-term export authorisation is needed before it can finalise commercial agreements, which will be 20-year deals run in conjunction with the export license.

(icis)

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USA: Sempra Files with DOE to Export LNG from Cameron Terminal

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Sempra Energy has become the sixth US company, and fourth in the US Gulf, with formal intentions to export US natural gas as LNG, having filed a request with US regulators on Thursday to send out 12 million tonnes per annum (mtpa) from its existing Cameron LNG site.

The California-based company asked the US Department of Energy (DOE) for consent to send up to 1.7 billion cubic feet (bcf)/day (0.05 million cubic metres/day) to free-trade-friendly countries for 20 years.

Sempra said the Thursday document was the first in a two-part process, with a request to export to non-free-trade nations to follow.

The subsequent application to export domestic LNG to non-FTA countries will require an analysis of the public interest, and Cameron LNG will provide additional evidence regarding the public interest as part of that application,” Sempra said in the DOE filing.

Sempra’s export intention brings the total amount of conceived large-scale liquefaction in the lower 48 US states to more than 67mtpa.

Sempra’s DOE application follows the company’s previously announced plans to proceed with a liquefaction facility at its 1.5bn cubic feet (bcf)/day Cameron LNG import terminal in Cameron Parish, Louisiana.

Sempra CEO Debra Reed said during a quarterly earnings call on 4 November that the company had received strong interest from “large, credit-worthy counterparties” seeking liquefaction services from Cameron LNG on a long-term contract basis.

Sempra provided no commercial details in its DOE filing.

(icis)

Source –  LNG World News

US Freeport LNG set to re-export cargo by early Oct

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By Edward McAllister

NEW YORK, Sept 22 (Reuters) – The U.S. Freeport liquefied natural gas terminal in Texas is set to re-export another cargo of LNG in the next two weeks to take advantage of higher-paying markets in Asia or Europe, a company representative said on Wednesday.

A tanker is expected to load up and transport LNG overseas at the end of September or beginning of October, said Mark Mallett, Freeport’s vice president of operations and engineering.

The Al Ruwais LNG tanker, which recently offloaded at the Altamira terminal in Mexico, headed north toward Freeport this week and was seen about 100 miles (160 km) from the terminal on Wednesday, according to AISLive ship tracker on Reuters.

“We have received no official notification from our customers if this is the ship, but we expect to load a tanker by early October, maybe in late September,” Mallett said.

This would be the latest in a growing number of re-export deals done since the terminal received approval in May 2009 to import LNG, store it and export later to more attractive markets overseas.

It is a symptom of over-supply in the U.S. gas market and the subsequent weak prices which have deterred shippers from sending much LNG to U.S. terminals this year.

On Thursday, U.S. gas futures, just below $4 per mmBtu, were about $2.80 below British gas prices and about $5 below Asia spot LNG prices, making it profitable for traders to send cargoes to Asia from the U.S. even after shipping costs. <0#NG-NGLNM=R>

The last re-export cargo left Freeport at the beginning of September for Japan in the Excalibur tanker, after Freeport customer ConocoPhillips (COP.N) sold a cargo to Citi Group (C.N). [ID:nN31238805]

Cheniere Energy’s (LNG.A) Sabine Pass terminal in Louisiana, which also has re-export capabilities, could make similar use of an empty tanker.

Sabine Pass and Freeport — currently the only U.S. terminals that can re-export LNG — have together exported 9.7 bcf of gas since they received the approval last year, according to Waterborne Energy analysts in Houston. Sempra Energy‘s (SRE.N) Cameron LNG terminal in Louisiana has recently applied for a re-export license.

Cheniere has gone one step further, planning to build a liquefaction plant that would export domestically-produced gas. Freeport LNG is also considering its options in that area, Mallett said. (Reporting by Edward McAllister; Editing by Marguerita Choy)

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