Dianne Phillips is a Partner in the Boston office
Following recent developments in liquefied natural gas (LNG) export policy in which we outlined in previous blog posts on June 12, 2018 and June 22, 2018, the Department of Energy (DOE) Office of Fossil Energy issued a Final Rule on July 25, 2018, authorizing presumptive approval of small-scale LNG exports.
Specifically, DOE is revising its regulations, 10 C.F.R. Part 590, to provide that DOE will issue an export authorization upon receipt of any complete application that seeks to export LNG to countries with which the United States has not entered into a free trade agreement (non-FTA countries), provided that the application satisfies the following two criteria:
- the application proposes to export natural gas in a volume up to and including 51.75 billion cubic feet (Bcf) per year (Bcf/yr) (equivalent to 0.14 Bcf per day (Bcf/d)), and
- DOE's approval of the application does not require an environmental impact statement (EIS) or an environmental assessment (EA) under the National Environmental Policy Act of 1969 (NEPA).
The purpose is to expedite the application and approval process for "small-scale" exports of LNG to non-FTA countries, pursuant to section 3(a) of the Natural Gas Act, 15 U.S.C. 717b (NGA). This will allow exports of small volumes of natural gas from the United States to countries primarily in, but not limited to, the Caribbean, Central America and South America.
DOE conducted a public interest evaluation as part of its rulemaking and concluded these small-scale exports were in the public interest. The agency's detailed analysis is laid out in this Final Rule which was subject to notice and public comment. DOE specifically mentioned the economic benefits to the U.S. natural gas industry and the economy in general, as well as the importance of bringing cleaner and more reliable energy sources to other countries in the region.
Shipping LNG in ISO-approved containers has been in the works for several years now and this Final Rule will only increase the market. With the potential changes in shipping LNG by rail which I described in my prior post of May 15, 2018, we may see an integrated supply chain with small-scale liquefaction facilities proposed near natural gas-producing regions of the country in the not-too-distant future.
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