• FERC Authorizes Pipeline to Deliver Domestic Gas to Sabine Pass LNG Terminal
  • March 8, 2013
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • On February 21, 2013, FERC authorized Cheniere Creole Trail Pipeline, L.P. (“Creole Trail”) to modify its current pipeline system in Cameron and Beauregard Parishes, Louisiana so that it will allow bi-directional flow to deliver domestic gas to the liquefied natural gas (“LNG”) terminal owned by Sabine Pass LNG, L.P. (“Sabine Pass”). FERC previously authorized the siting, construction and operation of the Sabine Pass LNG export facility on April 16, 2012 (see April 24, 2012 edition of the WER). FERC also granted Creole Trail’s request to roll the costs of its pipeline modification project into system-wide rates in its next Natural Gas Act (“NGA”) section 4 rate case. This order marks the next step towards Sabine Pass completing its LNG terminal and beginning to export LNG from the U.S.

    FERC’s April 16 order originally enabled Sabine Pass to store domestic gas for its export operations, and to construct and operate facilities for Sabine Pass’ LNG terminal to operate as a bi-directional facility for importing foreign gas and exporting domestic gas. On April 30, 2012, Creole Trail filed its NGA section 7(c) certificate application to modify its system to allow bi-directional flow of gas to deliver gas supplies to the Sabine Pass LNG terminal. As further detailed in Creole Trail’s application, the proposed facilities will be completed in two phases, with the first completed by the fourth quarter of 2014, and the second completed by the end of the second quarter of 2016. Creole Trail estimated that the total capital cost for its expansion project will be $104,305,155.

    FERC reviewed Creole Trail’s proposal under its Certificate Policy Statement, which determines whether there is: (1) a need for a proposed project; and (2) if the project is in the public interest. FERC found that Creole Trail’s proposal “would provide reverse flow capability on its system to provide domestic gas to Sabine Pass without adverse impacts on landowners, customers, existing customers or pipelines.” Accordingly, FERC approved Creole Trail’s proposal as consistent with its Certificate Policy Statement and required by public convenience and necessity under the NGA, subject to environmental and other conditions. FERC conditioned its certificate authorization on the following:

    • Creole Trail’s Phase 1 facilities being made available for service within 2 years of the date of FERC’s order and the Phase 2 facilities being made available for service within 4 years of the date of FERC’s order, as required by section 157.20(b) of FERC’s regulations;
    • Creole Trail’s compliance with all applicable FERC regulations under the NGA; and
    • Creole Trail’s compliance with various environmental conditions listed in Appendix A to FERC’s order.

    In order for Sabine Pass to export LNG, it had to receive permits from both the Department of Energy (“DOE”) and FERC. In addition to FERC’s April 16 order, Sabine Pass previously received DOE approval to export LNG to all Free Trade Agreement (“FTA”) and non-FTA nations on September 7, 2010 and May 20, 2011, respectively. Thus far, Sabine Pass is the only entity to receive DOE approval to export LNG to non-FTA nations.

    With regard to additional proposed LNG export facilities, on December 5, 2012, DOE released the second of two LNG export studies it previously commissioned, which analyzed the macroeconomic impacts of LNG exports from the U.S. (see December 10, 2012 edition of the WER). Initial comments regarding the study were due on January 24, 2013, however DOE accepted initial comments until January 27, 2013. Reply comments regarding the study were due February 25, 2013. DOE is expected to begin to act on pending LNG export applications to non-FTA nations on a case-by-case basis, beginning with those who engaged in pre-filing at FERC. According to DOE’s website, as of January 30, 2013, there were 16 applications to export domestically produced LNG to non-FTA nations that were waiting for DOE approval.