Office of Fossil Energy, DOE.
Notice of application.
The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice of receipt of an application (Application) filed on February 22, 2013, by Freeport-McMoRan Energy LLC (FME), requesting long-term, multi-contract authorization to export liquefied natural gas (LNG) produced from domestic sources in an amount up to 24 million metric tons per year (mtpa), which FME states is equivalent to approximately 1,176 billion cubic feet per year (Bcf/y) of natural gas, or 3.2 Bcf per day (Bcf/d).
FME seeks authorization to export the LNG for a 30-year term from the proposed Main Pass Energy HubTM Deepwater Port (MPEHTM Port), to be located in federal waters in Main Pass Block 299, 16 miles offshore of Louisiana. In the portion of FME's Application subject to this Notice, FME requests authorization to export LNG 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) with which trade is not prohibited by U.S. law or policy. FME requests that this authorization commence on the earlier of the date of first export or 10 years from the date the authorization is granted. FME requests this authorization both on its behalf and as agent for other parties who hold title to the LNG at the time of export. The Application was filed under section 3 of the Natural Gas Act (NGA), 15 U.S.C. 717b.
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, August 5, 2013.
Electronic Filing by email: email@example.com.
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.
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FOR FURTHER INFORMATION CONTACT:
Larine Moore or Marc Talbert, 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) 586-9478; (202) 586-7991.
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.
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FME, a subsidiary of McMoRan Exploration Co., is a Delaware limited liability company with its principal place of business in New Orleans, Louisiana. FME is also an initial member of Main Pass Energy Hub LLC (MPEH LLC), which is a Delaware limited liability company with its principal place of business in New Orleans, Louisiana. The other initial member of MPEH LLC is United LNG, LLC, a Delaware limited liability company.
FME is requesting this authorization to export LNG from the MPEHTM Port, currently owned by FME. FME and United LNG, LP are parties to a Memorandum of Understanding (MOU) concerning the commercial development of the MPEHTM Port. United LNG, LP is a Texas limited partnership with its principal place of business in Houston, Texas. After execution of the MOU, MPEH LLC was formed.
FME states that the MPEHTM Port is proposed to be located in approximately 210 feet of water at a deepwater site in Start Printed Page 34085the Gulf of Mexico on the Outer Continental Shelf (OCS) of the United States, approximately 16 miles offshore from southeast Louisiana at Main Pass Block 299 (Block 299).
FME states that the MPEHTM Port will be configured to receive, store, condition, and liquefy domestic natural gas for export as LNG. Construction of the MPEHTM Port will include modification of existing offshore structures currently owned by FME; construction of new facilities and salt dome storage caverns; and construction, installation, and operation of floating liquefaction storage and offloading vessels (FLVs) to be used for the on-site liquefaction and exportation of LNG from the MPEHTM Port.
According to FME, the MPEHTM Port will utilize five large existing interconnected platforms and three smaller satellite platforms. FME states that these platforms will house the gas conditioning facilities, gas metering facilities, quarters for on-site employees, and gas storage and compression equipment. FME further states that, in addition to the platform-based facilities, the MPEHTM Port will consist of six FLVs, each capable of producing up to 4 mtpa of LNG, for a total production capacity at the MPEHTM Port of 24 mtpa of LNG. FME states that each FLV will be moored using a buoy system and will be capable of liquefying 537 million cubic feet per day of natural gas, storing 200,000 cubic meters of LNG, and delivering LNG to off-taking LNG carriers utilizing a ship-to-ship process.
According to FME, the amount of LNG sought to be exported from the MPEHTM Port in the current Application is the same amount for which FME's affiliate MPEH LLC obtained an export authorization in January 2013, in DOE/FE Docket No. 12-114-LNG. Specifically, in DOE/FE Order No. 3220, DOE/FE authorized MPEH LLC to export from the MPEHTM Port up to 1,175 Bcf/y of natural gas (which MPEH LLC stated was the equivalent of the requested 24 mtpa of LNG) to any country with which the United States currently has, or in the future will have, a FTA requiring the national treatment for trade in natural gas, pursuant to section 3(c) of the Natural Gas Act (NGA), 15 U.S.C. 717b(c).
In the current Application, FME requests both FTA and non-FTA authorizations for the same quantity of LNG, stating that only 24 mtpa of LNG will be exported in any year from the proposed MPEHTM Port (which DOE/FE notes is equivalent to 1,175 Bcf/y of natural gas).
Subsequently, in DOE/FE Order No. 3290, DOE granted the portion of FME's Application seeking FTA export authorization.
In that order issued on May 24, 2013, DOE/FE authorized FME to export domestically produced LNG by vessel to FTA nations from the proposed MPEHTM Port up to the equivalent of 1,175 Bcf/y of natural gas for a 30-year term.
DOE/FE explained that, although FME's Application states that 24 mtpa is “approximately equivalent to 1,176 Bcf . . . per year,” 
DOE/FE granted FME's FTA authorization in an amount equivalent to 1,175 Bcf/y of natural gas to retain consistency with the FTA authorization granted to MPEH LLC in DOE/FE Order No. 3220.
FME asserts that any export authorizations issued to MPEH LLC and FME are meant to be coincidental rather than cumulative, and that, before any exports occur, it will inform DOE/FE as to how the 24 mtpa of LNG exports will be allocated between all export authorizations applicable to the MPEHTM Port.
FME requests authorization to export domestically produced LNG in an amount up to of 24 mtpa, which it states is the equivalent of 1,176 Bcf/y of natural gas (equal to 3.22 Bcf/day of natural gas), from the proposed MPEHTM Port to be located 16 miles offshore of Louisiana to: (1) Any country with which the United States currently has, or in the future will have, a Free Trade Agreement (FTA) requiring the national treatment for trade in natural gas, and (2) as relevant here, any country with which the United States does not have an FTA requiring national treatment for trade in natural gas (non-FTA countries) with which trade is not prohibited by U.S. law or policy.
FME seeks authorization to export the LNG for a 30-year term, commencing on the earlier of the date of first export or 10 years from the date the authorization is issued. FME requests this authorization both on its behalf and as agent for other parties who hold title to the LNG at the time of export. FME states that it will comply with all DOE/FE requirements for exports and agents, as established in Freeport LNG Development, L.P. and FLNG Liquefaction, LLC, DOE/FE Order No. 2913, including the registration requirements.
FME further states that, when acting as agent, it will register with DOE/FE each LNG title holder for which FME seeks to export LNG as agent.
The portion of FME's Application that seeks authorization to export domestically produced LNG to non-FTA countries will be reviewed pursuant to NGA section 3(a), 15 U.S.C. 717b(a), and is the subject of this Notice. As stated above, DOE/FE already granted the portion of FME's Application that sought authorization to export the same quantity of domestically produced LNG to FTA countries pursuant to NGA section 3(c).
FME states that the MPEHTM Port will export natural gas available in the U.S. natural gas supply and transmission system. FME states that the sources of natural gas will include the vast supplies of natural gas available from the Gulf Coast producing regions, including onshore and offshore resources. FME further states that the proposed MPEHTM Port has the potential to access nine major natural gas pipelines, with indirect access to the entire national gas pipeline grid. The MPEHTM Port will draw gas from the domestic market through a pipeline connecting the offshore facilities to the onshore interstate pipeline network and from off-shore gathering and transmission systems in the Gulf of Mexico. FME asserts that it holds a sulphur and salt lease in Block 299, which it will use to construct salt-dome storage caverns to store natural gas prior to liquefaction. FME states that the natural gas intake at the MPEHTM Port will not exceed 4 Bcf/d.
FME states that the MPEHTM Port will be strategically located on the OCS, which it characterizes as a prolific and highly productive area. According to Start Printed Page 34086FME, its parent company (MMR Exploration Co.) is one of the largest acreage holders on the OCS and is engaged in exploration and development activities with the potential to unlock more than 100 trillion cubic feet of natural gas over a 200-mile area in the shallow waters of the Gulf of Mexico and onshore Louisiana.
FME contends that the onshore and offshore resources available to the MPEHTM Port through its numerous potential pipeline interconnections will provide more than sufficient gas quantities to support the proposed LNG exports over the term of the requested authorization. FME further notes that, given the size of traditional gas resources in close proximity to the proposed MPEHTM Port, as well as rapid growth of gas resources in the region, FME's customers will have a diverse, reliable choice of gas supplies from the most liquid natural gas market in the world.
FME asserts that the long-term authorization requested in this Application is necessary to permit it to incur the substantial capital and other costs of developing the MPEHTM Port and to secure customer contracts. FME states that terms for the use of the liquefaction and other offshore deepwater port facilities will be set forth in agreements with customers of the MPEHTM Port.
As explained below, FME states that this Application will include a complete environmental review of the proposed MPEHTM Port. The U.S. Maritime Administration (MARAD), in coordination with the U.S. Coast Guard, will act as the lead agency for environmental review of the proposed MPEHTM Port, with DOE acting as a cooperating agency. FME asks that DOE/FE issue the export authorization conditioned on MARAD's completion of the environmental review and approval of the facility construction.
Finally, FME asks that DOE/FE consider the Application separately from the processing parameters established for non-FTA applications before the Deepwater Port Act of 1974 was amended in December 20, 2012.
FME states that it had been in discussions with MARAD about the proposed MPEHTM Port project since July 2012, and submitted to MARAD a Letter of Intent to Submit Application on October 3, 2012. According to FME, MARAD's jurisdiction to license an LNG export facility under the Deepwater Port Act was not clear before that Act was amended on December 20, 2012. FME further states that, following discussions with DOE/FE, FME was unable to submit a non-FTA application until the amendments were enacted. Therefore, FME contends that it should not be subject to the previously established processing parameters.
Public Interest Considerations
FME states that its proposed non-FTA authorization should be granted by DOE/FE because it is not inconsistent with the public interest, as set forth in NGA section 3(a). FME quotes DOE/FE in stating that, “ `Section 3(a) of the NGA creates a rebuttable presumption that proposed exports of natural gas are in the public interest, and [that] DOE must grant such an application unless those who oppose the application overcome that presumption.' ” 
FME states that DOE/FE, in evaluating the public interest pursuant to its Policy Guidelines and Delegation Orders Relating to the Regulation of Imported Natural Gas, examines whether “`domestic supply shortages or domestic security needs overcome the statutory presumption that a proposed export is not inconsistent with the public interest.' ” 
FME states that, although the Policy Guidelines address imports of natural gas, DOE/FE has found that the same principles apply to exports.
FME asserts that the main focus of DOE/FE's public interest analysis has been the projected domestic need for the gas to be exported. FME states that, during the period of the export authorization requested by FME, U.S. reserves and recoverable resources will be far in excess of total gas demand. FME further asserts that multiple, independent analyses, including that of Navigant Consulting, Inc. and Deloitte MarketPoint, have concluded that exports will not cause a significant increase in domestic natural gas prices. Therefore, FME maintains that its requested export authorization will not have a detrimental impact on the domestic supply of natural gas and is not inconsistent with the public interest.
Addressing domestic natural gas supply, FME contends that the U.S. natural gas supply is more than adequate to meet both the future U.S. domestic demand and FME's proposed export volumes over the term of the requested authorization. FME discusses the impact of increased shale production on domestic supply, stating that dry gas production in 2013 is expected to be 24 Trillion Cubic Feet (Tcf), a 13 percent increase from 2010.
Addressing domestic natural gas demand, FME states that U.S. natural gas available for supply far exceeds demand. According to FME, EIA estimates that domestic natural gas demand will grow from 25.63 Tcf per year in 2012 to 28.71 Tcf per year in 2035, and that cumulative domestic gas consumption from 2012 through 2035 will be 643 Tcf.
FME states that its requested export authorization would increase demand by a maximum of 1.46 Tcf per year. FME recognizes that other applications to export domestic LNG are pending before DOE and additional applicants may seek export authorization. As noted above, FME also observes that a number of groups—including Navigant, Deloitte, and the Brookings Energy Security Initiative—have considered the cumulative effects of LNG exports on natural gas demand and pricing.
Focusing on the Navigant study, FME states that Navigant considered two scenarios of relevance to FME's Application: an “Aggregate Exports Case” and a “High Demand Base Case.” The Aggregate Exports Case assumes a total of 7.7 Bcf per day of LNG exports, split between Gulf Coast exports (4.7 Bcf/day), Pacific Coast exports (2.5 Bcf/day), and Atlantic Coast (0.5 Bcf/day)—an assumption that could reflect the proposed MPEHTM Port operating at full capacity. The High Demand Base Case assumes a total of 7.2 Bcf/day of LNG exports (excluding the Atlantic Coast exports), but includes increased domestic demand for natural gas, such as through natural gas vehicles.
FME Start Printed Page 34087notes Navigant's conclusion that LNG exports would have a mild stimulating effect on U.S. natural gas production. Under the Aggregate Exports Case and High Demand Base Case, FME states that U.S. gas supply would increase slightly more than would be expected without exports.
FME states that Deloitte also prepared a study that considered a number of export scenarios, including exports of 1.33 Bcf/day, 3 Bcf/day, 6 Bcf/day, 9 Bcf/day, and 12 Bcf/day.
FME asserts that the analyses from Navigant and Deloitte are applicable to the proposed MPEHTM Port because the Port will be located near traditional and shale reserves in the Gulf of Mexico in a location where other projects are being considered.
Taking into account these studies and EIA data, FME maintains that: (1) The United States has more than enough supply to support domestic gas needs and proposed LNG export volumes, and (2) natural gas producers will be able to anticipate new demand and ramp up production in advance, such that the commencement of LNG exports will not shock the market.
Turning to potential impacts on U.S. natural gas market prices, FME contends that the effect of LNG exports on natural gas prices will be limited. As support for this position, FME cites analyses performed by EIA, Navigant, and Deloitte. FME concludes that potential increases in natural gas prices resulting from LNG exports are not large enough, and are sufficiently offset by several resulting benefits (such as limiting volatility in the market), so as not to merit a determination that the MPEHTM Port is not in the public interest.
FME next asserts that the requested authorization will benefit local, regional, and national economies and is therefore in the public interest. FME quotes the LNG export study conducted by NERA, which concluded that “ `the U.S. would experience net economic benefits from increased LNG exports' ” and that “ `U.S. economic welfare consistently increases as the volume of natural gas exports increased.' ” 
Among other economic benefits, FME states that the requested authorization would result in the creation of new jobs and would be consistent with President Obama's National Export Initiative signed in 2010.
FME states that, during the five-year build phase, it is estimated that the proposed MPEHTM Port will create about 3,000 to 4,000 jobs. Upon full operation, the Port will employ approximately 250 to 500 people on-site. According to FME, a corollary to the creation of these jobs will be the additional taxes paid by the MPEHTM Port and associated workforce.
FME further states that granting the authorization would positively impact the U.S. balance of trade. FME asserts that, in 2011, the U.S. trade deficit was $559.9 billion—an increase of $65.1 billion from the 2010 figure.
FME states that, depending on the price of gas, exports from the MPEHTM Port could reduce the trade imbalance by approximately $12 billion per year. FME observes that DOE/FE, in approving export applications, has acknowledged the positive impact that LNG exports can have on the balance of trade with destination countries.
Additionally, FME explains that, in processing natural gas in preparation for exports, it will derive ethane, propane, and other liquids condensate for sale, which will further help the U.S. balance of trade by increasing domestic supply and thus reducing imports. FME states that, in DOE/FE Order No. 2961, DOE/FE found that a facility exporting 803 Bcf of gas per year would produce 46.7 million barrels per year of liquids and improve the trade balance by $1.7 billion annually.
FME states that the MPEHTM Port, by analogy, should produce 68.3 million barrels of liquids and improve the balance of trade by approximately $2.5 billion annually by offsetting imports. FME states that these domestically produced natural gas liquids will be of particular benefit to chemical manufacturers that use these liquids as chemical feedstocks.
Additionally, FME asserts that the requested authorization is consistent with U.S. obligations under the General Agreement on Tariffs and Trade (GATT), would promote free and open trade, and could have wider geopolitical benefits.
Finally, in addition to providing economic benefits, FME states that LNG exports can have significant environmental benefits. FME contends that natural gas is cleaner burning than other fossil fuels, such as coal-fired generation.
Additional details can be found in FME's Application, which is posted on the DOE/FE Web site at: http://www.fossil.energy.gov/programs/gasregulation/authorizations/2013_applications/13_26_lng_fta.pdf.
According to FME, MARAD previously approved an earlier form of the MPEHTM Port as a deepwater port for the importation and regasification of LNG, the conditioning of natural gas to produce natural gas liquids, and the storage of natural gas in salt caverns. FME states that, as part of MARAD's approval process, the MPEHTM LNG import project underwent an extensive analysis under the National Environmental Policy Act (NEPA), 42 U.S.C. 431 et seq., including preparation of an Environmental Impact Statement and a review by several other federal agencies including the U.S. Coast Guard, the U.S. Environmental Protection Agency, the U.S. Army Corps of Engineers, among others. FME states that this analysis resulted in a favorable Record of Decision by MARAD in January 2007.
In connection with this Application, FME states that MARAD, in coordination with the U.S. Coast Guard, will act as the lead agency for environmental review, with DOE acting as a cooperating agency. FME asserts that it initiated discussions with MARAD in October 2012 about developing an application for the proposed MPEHTM Port. FME states that it is currently performing scoping studies to determine which federal, state, or local agencies need to be involved and the additional studies that need to be performed in conjunction with the construction of the proposed MPEHTM Port, including the FLVs. FME requests that DOE/FE issue this export authorization conditioned on MARAD's completion of the NEPA review and approval of the facility construction. FME states that the DOE/FE routinely issues orders with such a condition.
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The Application will be reviewed pursuant to section 3(a) of the NGA, 15 U.S.C. 717b(a), and the authority contained in DOE Delegation Order No. 00-002.00L (April 29, 2011) and DOE Redelegation Order No. 00-002.04E (April 29, 2011). In reviewing this LNG export Application, DOE will consider any issues required by law or policy. To the extent determined to be relevant or appropriate, these issues will include the impact of LNG exports associated with this Application, and the cumulative impact of any other application(s) previously approved, on domestic need for the gas proposed for export, adequacy of domestic natural gas supply, U.S. energy security, and any other issues, including the impact on the U.S. economy (GDP), consumers, and industry, job creation, U.S. balance of trade, international considerations, and whether the arrangement 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 any other issues deemed relevant to the Application.
NEPA requires DOE to give appropriate consideration to the environmental effects of its proposed 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 firstname.lastname@example.org with FE Docket No. 13-26-LNG in the title line; (2) mailing an original and three paper copies of the filing to the Office 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 filings must include a reference to FE Docket No. 13-26-LNG.
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 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. 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.
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Issued in Washington, DC, on May 31, 2013.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2013-13418 Filed 6-5-13; 8:45 am]
BILLING CODE 6450-01-P