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Elba Island LNG gets federal authorization to export widely

Kinder Morgan Inc.'s Elba Island LNG project, under construction near Savannah, Ga., received authorization from the U.S. Department of Energy to export 0.36 Bcf/d of natural gas to countries with which the U.S. does not have a free trade agreement.

The Dec. 16 order from the Energy Department came after FERC denied on Dec. 9 a request by the Sierra Club to rehear the commission's authorization to construct and operate the $2 billion, 0.35 Bcf/d liquefaction and export facility. The project already had Energy's permission to export up to 0.5 Bcf/d to FTA countries. (DOE docket 12-100-LNG)

The authorized volume is lower than the roughly 0.5 Bcf/d that Elba Island developer Southern LNG Co. LLC, a Kinder Morgan company, requested in its initial application to export to non-FTA countries. The Energy Department said the "authorization is estimated by DOE to be equivalent to the maximum annual liquefaction capacity of the export project." Southern LNG applied to the Energy Department in 2012 for authorization to export to non-FTA countries.

Royal Dutch Shell plc has a 20-year contract for 100% of the project's liquefaction capacity and shiploading services.

The Elba Island LNG export project was approved by FERC in June. It is being built on the site of an existing LNG receiving terminal. Kinder Morgan CEO Steven Kean said in an October earnings call that developers Southern LNG and Elba Liquefaction Co. LLC were going to start construction on the facility Nov. 1. Kinder Morgan has said it expects to put the first of 10 liquefaction units in service in the second quarter of 2018. The rest are supposed to go online before the end of that year.

The LNG industry is hopeful that if former Texas Gov. Rick Perry is confirmed to head the Energy Department after he being tapped by President-elect Donald Trump, he would expedite the approval process for LNG exports. A similar effort to speed up approvals was made in Congress but died with the energy bill.