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US DOE finalizes changes to LNG export review process

Highlights

According to a notice posted Thursday, DOE will now wait for the Federal Energy Regulatory Commission to complete its environmental review of an LNG export project, as required by the National Environmental Policy Act, before initiating work on an export authorization request. DOE had been considering applications in the order in which they were filed and issuing conditional approvals given that the projects had yet to receive approval from FERC.

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"DOE will no longer act in the published order of precedence, but will act on applications in the order they become ready for final action," the notice said. "An application is ready for final action when DOE has completed the pertinent NEPA review process and when DOE has sufficient information on which to base a public interest determination."

DOE has issued eight approvals for exporting LNG to non-FTA countries, the notice said, for a total of 10.52 Bcf/d. Most recently, DOE gave Oregon LNG conditional approval to ship 1.25 Bcf/d of LNG to non-FTA countries from a proposed site in Warrenton, Oregon.

The notice is slated to run in the Federal Register on Friday.


DOE makes public interest determinations for energy export projects, while FERC is responsible for reviewing the export facility design, engineering and environmental footprint -- a far more detailed and lengthy review process than DOE's. DOE officials have said that the change, proposed in May, would streamline the process, allowing projects that have received environmental review to move ahead for consideration.

In its notice Thursday, DOE sought to downplay concerns from industry that no longer providing conditional approvals could harm the prospects for proposed projects, given that such approvals provide assurances that have helped companies secure customers.

While acknowledging that conditional approvals "may hold value for some applicants," DOE found that "the justification for issuing conditional decisions before completing NEPA review is much weaker in an environment where applicants are willing to commit resources to NEPA review even without a conditional decision."

Officials found "numerous instances where applicants have proven willing to commit resources to NEPA review before having received a conditional authorization," going on to say that many of the applicants that have received conditional authorizations already "had made substantial progress in preparing resource reports for the NEPA review process" before receiving DOE's approval.

"These examples demonstrate that, broadly speaking, conditional decisions are no longer necessary for applicants to commit substantial resources to the NEPA review process," DOE said.

Industry commenters also called on DOE to set a deadline for acting on applications following the completion of the NEPA process, arguing in part that they would provide regulatory certainty to those involved. While DOE said it was "sympathetic to this concern," it rejected those calls for several reasons.

"First, each application contains novel issues such that a deadline that is reasonable for the majority of cases may be unreasonable in an individual case. Second, DOE lacks control over when the NEPA review for applications is complete. Were the final [environmental impact statement] for several applications to be completed at or around the same time, compliance with a fixed deadline may be unworkable," DOE said.

Bill Cooper, president of the Center for Liquefied Natural Gas, said Thursday that he was "not surprised" with DOE's decision to finalize the proposal with no substantive changes. Given the parameters of DOE's proposal, he said there was not a lot of wiggle room for DOE to adjust its proposal in the face of comments. He said that DOE raised similar points in responding to comments as it did in proposing the changes in May.

In terms of the timing of DOE's decision-making, Cooper argued that the notice and recent comments from officials seem to indicate that DOE does not want to be pinned down to making decisions within a particular time frame. In reference to DOE's comments about several applications coming up for review at the same time, Cooper argued it is unlikely that they would be coming out of FERC in a batch, and that there is no reason why DOE cannot do some of the work around the export of the commodity in advance.

"I'm not sure what comes out of the environmental review that fundamentally affects the export of the commodity itself," Cooper said.

In a research note Thursday, ClearView Energy Partners noted DOE's statements on timing in saying that the new approach is "more of a traffic signal than a timer," highlighting that DOE did not commit itself to a "fixed decision interval" in reviewing applications.

"We anticipate that the DOE could maintain a conservative approach of waiting until rehearing challenges at the FERC have concluded before taking its own final actions," ClearView said. "This stance would allow DOE to begin work on the non-FTA review order (green light) but control the timing of the order's issuance (no timer) and manage its own resources as it chooses."

--Bobby McMahon, bobby.mcmahon@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com