Feds hand key LNG export license to Cheniere’s Corpus Christi project

An artist rendering of Cheniere Energy's proposed LNG export terminal in Corpus Christi.
An artist rendering of Cheniere Energy’s proposed LNG export terminal in Corpus Christi. (Cheneire)

WASHINGTON — The Obama administration has delivered a critical natural gas export license to Cheniere Energy’s proposed liquefaction terminal in Corpus Christi, marking the first such approval for a greenfield project that would not be built on the footprint of an older LNG facility.

With the move late Tuesday, the Energy Department is allowing Cheniere to export as much as 2.1 billion cubic feet per day of liquefied natural gas over the next 20 years from the planned facility to countries with which the United States does not have free trade agreements.

The company announced Wednesday that its board of directors had made a final investment decision in the project, authorizing Bechtel Oil, Gas and Chemicals to construct two liquefaction trains to covert natural gas so it can be carried by tankers to customers overseas. The overall project is designed to have up to three trains with the capacity to produce as much as 13.5 million tons per year of LNG.

The facility will be located on the La Quinta Channel, on the northeast side of Corpus Christi Bay, about 15 nautical miles from the coast. A 22-mile pipeline will feed the plant with natural gas.

The head of the Corpus Christi port commission told Congress last year that the facility would provide the foundation for thousands of jobs in the region, going well beyond the estimated 225 workers needed to operate it.

With the Energy Department’s permitting decision Tuesday, the Corpus Christi project became the sixth LNG facility to win a critical license to broadly export natural gas around the globe. The first — Cheniere’s Sabine Pass project — is now nearing completion along the Louisiana-Texas border and could launch its first LNG shipments this year.

Other export license holders include Sempra’s Cameron LNG project in Louisiana, the Freeport LNG project on Quintana Island, Texas, and Carib Energy, a small Crowley Maritime Corp. project in Florida that is shipping containerized natural gas. And on May 8, the Department of Energy gave a final non-FTA export license to the Dominion Cove Point LNG project in eastern Maryland.

Related story: Stakes are high for Dominion’s LNG export plan

Dominion’s Cove Point project would add liquefaction capability to a terminal four decades ago built to accept foreign LNG and regasify it for use inside the United States. The company hopes to begin exports in 2017, with Energy Department approval to sell 770 million cubic feet per day to countries that aren’t U.S. free trade partners.

All told, the administration has signed off on exports of up on roughly 9 billion cubic feet per day of natural gas to nations that don’t have free-trade relationships with the United States. That’s about an eighth of the United States’ predicted gas production — 72.4 billion cubic feet per day — in 2015.

Reps. Gene Green and Filemon Vela, both Texas Democrats, jointly praised the Federal Energy Regulatory Commission and the Energy Department for swiftly authorizing the Corpus Christi project.

“We’re hopeful that FERC and DOE will continue to expedite the remaining LNG export applications in the backlog,” they said, “so the United States can capitalize on its abundant domestic supplies of natural gas and capture a large portion of the world market.”

Cheniere’s Corpus Christi project benefited from a change last year in the Energy Department’s approach to prioritize reviews for non-FTA LNG export applications whose underlying projects had already been subject to a legally required environmental review. For onshore projects, that environmental analysis typically happens at FERC; for offshore facilities, it generally falls under the U.S. Maritime Administration.

Related story: Winners and losers in feds’ new gas export review plan

In practice, the Energy Department’s final licenses for onshore LNG export facilities have come only after FERC denies requests to rehear or reconsider its project approvals. In the case of the Corpus Christi project, that meant just six days elapsed between FERC’s decision to deny a rehearing request and the Energy Department’s license award.

For Cove Point, the waiting period between those two milestones was just three days.

But for both projects, it took months for FERC to rule on those rehearing requests. And any delay is too long for some gas export advocates eager to see the United States selling the fossil fuel broadly oversees.

Gas export enthusiasts argue that there is a narrow opportunity for U.S. producers to capitalize on Asia’s hunger for a reliable, relatively low-cost supply of foreign LNG. Some of Asia’s appetite may have lessened amid the recent tumble in crude prices.

Lawmakers on Capitol Hill are pushing legislation aimed at accelerating LNG approvals, by setting a countdown clock for the Energy Department’s export permit decisions as soon as FERC completes environmental reviews of the LNG projects — not potentially months later when the projects are approved and any rehearing requests are resolved.

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