# Presentation: 784779

## LNG Regulatory Update

- 2nd Annual Global LNG Outlook
- October 27, 2005
- Houston, Texas
- Jeff C. Wright, Chief
- Energy Infrastructure Policy Group
- Office of Energy Policy
- Federal Energy Regulatory Commission

## Alan GreenspanChairman of the Board of Governorsof the Federal Reserve System. 

_*July 20, 2005*_
- “...the current and prospective expansion of U.S. capability to import liquefied natural gas will help ease longer-term natural gas stringencies and perhaps bring natural gas prices in the United States down to world levels.”
_*June 10, 2003*_
- “...we cannot, on the one hand, encourage the use of environmentally desirable natural gas in this country while being conflicted on larger imports of LNG.”

**Notes:**
This is only the latest statement on LNG from the Fed Chairman.  On June 10, 2003, Chairman Greenspan, in his testimony before the Committee on Energy and Commerce, U.S. House of Representatives noted the conflict between promoting gas as the environmental fuel of choice and limiting LNG imports.  He stated,
“Creating a price-pressure safety valve through larger import capacity of LNG need not unduly expose us to potentially unstable sources of imports. There are still numerous unexploited sources of gas production in the United States. We have been struggling to reach an agreeable tradeoff between environmental and energy concerns for decades. I do not doubt we will continue to fine-tune our areas of consensus. But it is essential that our policies be consistent. For example, we cannot, on the one hand, encourage the use of environmentally desirable natural gas in this country while being conflicted on larger imports of LNG. Such contradictions are resolved only by debilitating spikes in price.” [emphasis added]

## Energy Policy Actof 2005 - LNG

- Process coordination
- State and local considerations
- Pre-filing is mandatory
- Hackberry policy is now codified
- Cooperation with Dept. of Defense

## Energy Policy Actof 2005 - LNGProcess Coordination

- FERC is the exclusive siting authority and lead agency for processing
- FERC record is the one record upon which all appeals of Federal actions are based
- Judicial streamlining

## Governor shall appoint a state agency for consultation
FERC must consult with this agency
State may file a safety advisory report and FERC must review and respond
State agency may conduct safety inspections
FERC order must require an Emergency Response Plan which includes a cost-sharing plan

- FERC must consult with this agency
- State may file a safety advisory report and FERC must review and respond
- State agency may conduct safety inspections
- FERC order must require an Emergency Response Plan which includes a cost-sharing plan

- Energy Policy Actof 2005 - LNG*State and Local Considerations*

**Notes:**
THESE POINTS ARE BEING ADDRESSED REGARDING THE SES LNG PROJECT:
The Draft EIS/EIR on SES’ Long Beach LNG Import Project was issued earlier in October.  The public comment period is currently underway.  The comment period is 60 days (instead of 45) to accommodate some additional public meetings that our joint-lead agency (Port of Long Beach) is going to have.  The two lead agencies will have a joint comment meeting on November 14 in Long Beach.
Gov Schwarzenegger appointed the CA Energy Commission (CEC) to consult with FERC
The CEC filed a Safety Advisory Report on Sept 7 
Draft EIS states FERC will respond specifically to the issues raised in the report before the Commission issues an Order authorizing the proposal
David Maul of the CEC visited staff In Washington on Oct 19 to discuss the procedures of our response and the continued review of the SES application
The Draft EIS has a condition requiring SES to submit both an Emergency Response Plan and a Cost-Sharing Plan.  SES has already publicly committed to fund all necessary equipment and personnel costs for security and emergency management.

## Regulations issued on October 7th
Pre-filing is mandatory for all new LNG terminals and related facilities
Mandatory pre-filing for expansions, if deemed appropriate
Federal, state and local consideration/cooperation

- Pre-filing is mandatory for all new LNG terminals and related facilities
- Mandatory pre-filing for expansions, if deemed appropriate
- Federal, state and local consideration/cooperation

- Energy Policy Actof 2005 - LNG*Pre-Filing*

## FERC cannot deny an application on the basis that the LNG terminal will not be open access
Sunsets on January 1, 2015
Expansion of an existing LNG terminal will not result in subsidization of expansion capacity, degradation of service or undue discrimination to existing customers

- Sunsets on January 1, 2015
- Expansion of an existing LNG terminal will not result in subsidization of expansion capacity, degradation of service or undue discrimination to existing customers

- Energy Policy Actof 2005 - LNG*Hackberry Decision Codified*

## MOU with Department of Defense

Concurrence of Secretary of Defense

- Concurrence of Secretary of Defense

- Energy Policy Actof 2005 - LNG*Dept. of Defense*

**Notes:**
FERC must enter into an MOU to consult and coordinate with DOD on LNG facilities which may affect an active military installation

FERC must obtain concurrence of DOD before authorizing an LNG facility affecting training or activities of an active military installation

## Convene at least three forums within next year
Identify and develop best practices for issues associated with LNG

- Identify and develop best practices for issues associated with LNG

- Energy Policy Actof 2005 - LNG*LNG Forums*

## Major Pipeline ProjectsPending (MMcf/d) October 2005

**McMoRan (1,500)**

**Compass Pass**
**(1,000)**

**Algonquin**
**(800)**

**Pearl Crossing (2,000)**

**Golden**
**Pass**
**(2,000)**

**Logan Lateral**
**(Texas Eastern)**
**(900) **

**Seafarer Pipeline**
**(El Paso) (800)**

**Dominion Southern**
**(200)**

- Major Pipeline ProjectsPending (MMcf/d) *October 2005*

**15.4 BCF/D Total**
**879 Miles**

**Dominion**
**(700) **

**Cameron**
**(1,500)**

**Columbia (172)**

**Cheniere**
**Creole Trail (3,300)**

**ANR**
**(168)**

**Midwestern**
**(120) **

**Point Comfort**
**(1,000)**

**Cypress Pipeline**
**(Southern Natural) (500)**

**NE ConneXion**
**(Tennessee)**
**(800)**

**Jewell Ridge**
**(East Tennessee)**
**(235)**** **

**Triple-T Extension**
**(Tennessee) (200)**

**Florida Gas**
**(160) **

**Notes:**
15.4 Bcf/day of capacity
879 miles of pipe
132,275 HP of compression
Estimated cost of $2.5 billion
Trends:
Primarily short pipe to get gas from LNG terminals to pipeline grid
NO projects in the West

## Storage Projects(Capacity in Bcf) October 2005

**Caledonia (11.7)**

**Falcon MoBay (20.0)**

**County Line (6.0)**

**Copper Eagle**
**(3.2)**

**EnCana (8.0)**

**Bluewater**
**(27.0)**

**Saltville**
**(5.8)**

**Columbia (12.4)**

**Pine Prairie (24.0)**

**Natural (10.0)**

**Dominion (9.4)**

**Texas Gas (8.2)**

**Freebird (6.1)**

**CenterPoint (15.0)**

**Starks (19.2)**

**Falcon Hill-Lake (10.4)**

**Liberty (17.0)**

**Petal (5.0)**

**Port Barre (10.5)**

**SemGas (5.5)**

**Certificated Since 1/1/04**

**On The Horizon**

**Currently Pending **

- Storage Projects(Capacity in Bcf) *October 2005*

**Falcon Worsham-Steed (12.0)**

**Unocal Windy Hill**
**(6.0)**

**Columbia (16.4)**

**Natural (10.0)**

**Notes:**
Storage Certificated:
5 Bcf/day of deliverability
110 Bcf of storage capacity
144,197 HP of compressoin
Estimated cost of $420 million
Storage Pending
1.3 Bcf/day of deliverability
40 Bcf of capacity
47,220 HP of Compression
Estimated cost of $171 million
On The Horizon
5.4 Bcf/day of deliverability
138 Bcf of storage capacity
Trends:
Most of the action takes place in the Gulf
Will store LNG
Little activity in the West

## Existing and Proposed 

_**CONSTRUCTED**_
**A. Everett, MA :  **1.035 Bcfd  (Tractebel - DOMAC)
**B. Cove Point, MD :  **1.0 Bcfd  (Dominion - Cove Point LNG)
**C. Elba Island, GA :  **0.68 Bcfd  (El Paso - Southern LNG)
**D. Lake Charles, LA :  **1.0 Bcfd  (Southern Union - Trunkline LNG)
**E. Gulf of Mexico:** 0.5 Bcfd,  (Gulf Gateway Energy Bridge - Excelerate Energy)
_**APPROVED BY FERC**_
**1. Lake Charles, LA:**  0.8 Bcfd (Southern Union - Trunkline LNG)** **
**2. Hackberry, LA : **1.5 Bcfd,  (Sempra Energy)
**3. Bahamas : ** 0.84 Bcfd,  (AES Ocean Express)*
**4. Bahamas : ** 0.83 Bcfd,   (Calypso Tractebel)*
**5. Freeport, TX : ** 1.5 Bcfd,   (Cheniere/Freeport LNG Dev.)
**6. Sabine, LA :  **2.6 Bcfd (Cheniere LNG)
**7. Elba Island, GA:  **0.54 Bcfd (El Paso - Southern LNG)
**8. Corpus Christi, TX: **2.6 Bcfd, (Cheniere LNG)
**9. ****Corpus Christi, TX :  **1.0 Bcfd (Vista Del Sol - ExxonMobil)
**10. Fall River, MA :** 0.8 Bcfd,  (Weaver's Cove Energy/Hess LNG)
**11. Sabine, TX :  **1.0 Bcfd (Golden Pass - ExxonMobil)
**12. Corpus Christi, TX**:  1.0 Bcfd (Ingleside Energy - Occidental Energy Ventures)
_**APPROVED BY MARAD/COAST GUARD**_
**13. Port Pelican:** 1.6 Bcfd,  (Chevron Texaco)
**14. ****Louisiana Offshore : ** 1.0 Bcfd (Gulf Landing - Shell)
_**CANADIAN APPROVED TERMINALS**_
**15. St. John, NB :  **1.0 Bcfd,  (Canaport - Irving Oil)
**16. Point Tupper, NS  **1.0 Bcf/d  (Bear Head LNG - Anadarko)
_**MEXICAN APPROVED TERMINALS**_
**17. Altamira, Tamulipas :  **0.7 Bcfd,  (Shell/Total/Mitsui)
**18. Baja California, MX :  **1.0 Bcfd,  (Sempra)
**19. Baja California - Offshore :**  1.4 Bcfd,  (Chevron Texaco)
_**PROPOSED TO FERC**_
**20. Long Beach, CA :** 0.7 Bcfd,  (Mitsubishi/ConocoPhillips - Sound Energy Solutions)
**21. Logan Township, NJ :  **1.2 Bcfd (Crown Landing LNG - BP)
**22. Bahamas : ** 0.5 Bcfd,  (Seafarer - El Paso/FPL )
**23.**** Port Arthur, TX:**  1.5 Bcfd (Sempra)
**24. Cove Point, MD :  **0.8 Bcfd  (Dominion)
**25. LI Sound, NY:  **1.0 Bcfd (Broadwater Energy - TransCanada/Shell)
**26.** **Pascagoula, MS:**  1.0 Bcfd (Gulf LNG Energy LLC)
**27. Bradwood, OR:**  1.0 Bcfd (Northern Star LNG - Northern Star Natural Gas LLC)
**28.** **Pascagoula, MS:**  1.3 Bcfd (Casotte Landing - ChevronTexaco)
**29. Cameron, LA:  **3.3 Bcfd (Creole Trail LNG - Cheniere LNG)
**30. Port Lavaca, TX:  **1.0 Bcfd (Calhoun LNG - Gulf Coast LNG Partners)
**31. Freeport, TX: ** 2.5 Bcfd (Cheniere/Freeport LNG Dev. - Expansion)
**32. Sabine, LA:  **1.4 Bcfd (Cheniere LNG - Expansion)
_**PROPOSED TO MARAD/COAST GUARD**_
**33. California Offshore**: 1.5 Bcfd (Cabrillo Port - BHP Billiton)
**34. So. California Offshore :** 0.5 Bcfd,  (Crystal Energy)
**35. Louisiana Offshore : ** 1.0 Bcfd (Main Pass McMoRan Exp.)
**36. Gulf of Mexico:**  1.0 Bcfd (Compass Port - ConocoPhillips)
**37. ****Gulf of Mexico:**  2.8 Bcfd (Pearl Crossing - ExxonMobil)
**38. Gulf of Mexico:  **1.5 Bcfd (Beacon Port Clean Energy Terminal** - **ConocoPhillips)
**39. Offshore Boston, MA:**  0.4 Bcfd (Neptune LNG - Tractebel)
**40. Offshore Boston, MA:**  0.8 Bcfd (Northeast Gateway - Excelerate Energy)

**Existing and Proposed **
**North American LNG Terminals**

**As of October 24, 2005**

*FERC*

*Office of Energy Projects*

- A

- 3

- 4

- 22

- 33

- 20

- 35

- 34

- 14

- B

- 1

- 24

- 36

- US Jurisdiction
-     FERC
-        US Coast Guard

- *    *US pipeline approved; LNG terminal pending in Bahamas*

- 26

- 10

- 25

- 21

- 7

- C

- 2

- D

- 37

- 38

- 13

- 5,31

- 9

- 6,32

- 39

- 27

- E

- 15

- 17

- 16

- 18

- 19

- 40

- 8

- 12

- 30

- 11

- 23

- 29

- 1

**Notes:**
This growth in LNG terminal activity is evidenced by this map.
Currently, the US has about 4.2 Bcf/day of deliverability from the 5 LNG terminals that bring gas into the Lower 48.
  - This includes the new Gulf Gateway offshore terminal that came on line in March 2005
FERC has approved another 12 Bcf/day of deliverability at 8 new terminals and 1.3 Bcfd of expansions at 2 existing terminals.
  - We’ve also approved 1.7 Bcf/day of pipeline capacity (2 projects) that would transport Bahamian LNG.
  - All together, FERC has approved 15.0 Bcf/day of deliverability
The Maritimes Administration and Coast Guard have approved 2.6 Bcf/day of deliverability at two offshore locations.
2 sites totaling 2 Bcf/d of deliverability have received regulatory approval in Canada. 
3 sites in Mexico totaling 3.1 Bcf/d of deliverability have received all regulatory approvals, 2 of which are under construction – Altamira and Baja (Sempra). 

There are proposals pending at FERC for 16.7 Bcf/d of deliverability at new and existing terminals.  Also, there’s another 0.5 Bcf/d of pipeline capacity pending to transport Bahamian LNG.
9.5 Bcf/d of deliverability is pending before the Coast Guard and Maritimes Administration at new offshore sites.

## Potential North American

_**POTENTIAL U.S. SITES IDENTIFIED BY PROJECT SPONSORS**_
**41. Coos Bay, OR:  **0.13 Bcfd,  (Energy Projects Development)
**42. ****California - Offshore:**  0.75 Bcfd,  (Chevron Texaco)
**43. Pleasant Point, ME :**  0.5 Bcfd (Quoddy Bay, LLC)
**44. St. Helens, OR:**  0.7 Bcfd (Port Westward LNG LLC)
**45. Galveston, TX:**  1.2 Bcfd (Pelican Island - BP)
**46. Philadelphia, PA:**  0.6 Bcfd (Freedom Energy Center - PGW)
**47. Astoria, OR:  **1.0 Bcfd (Skipanon LNG - Calpine)
**48. Robbinston, ME:  **0.5 Bcfd (Downeast LNG - Kestrel Energy/Dean Girdis)
**49. Boston, MA:**  0.8 Bcfd (AES Battery Rock LLC**  - **AES Corp.)
**50. Calais, ME:**  ? Bcfd (BP Consulting LLC)
_**POTENTIAL CANADIAN SITES IDENTIFIED BY PROJECT SPONSORS**_
**51. Quebec City, QC :  **0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France)
**52. Rivière-du- Loup, QC:**  0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada)
**53. Kitimat, BC:**  0.61 Bcfd (Galveston LNG)
**54. Prince Rupert, BC:** 0.30 Bcfd (WestPac Terminals)
**55. Goldboro, NS**  1.0 Bcfd (Keltic Petrochemicals)
_**POTENTIAL MEXICAN SITES IDENTIFIED BY PROJECT SPONSORS**_
**56. Lázaro Cárdenas, MX :  **0.5 Bcfd** **(Tractebel/Repsol)
**57. Puerto Libertad, MX:  **1.3 Bcfd** **(Sonora Pacific LNG)
**58. Offshore Gulf, MX:  **1.0 Bcfd** **(Dorado - Tidelands)
**59. Manzanillo, MX:  **0.5 Bcfd
**60. Topolobampo, MX:  **0.5 Bcfd

**Potential North American**
**LNG Terminals**

**As of October 24, 2005**

*FERC*

*Office of Energy Projects*

- 42

- 41

- US Jurisdiction
-     FERC
-        US Coast Guard

- 42

- 46

- 45

- 44

- 47

- 58

- 51

- 52

- 54

- 53

- 55

- 56

- 57

- 59

- 60

- 49

- 43

- 48

- 50

**Notes:**
There are other potential sites totaling about
-  6 Bcf/d of deliverability in the U.S.
-  2.9 Bcf/d of deliverability in Canada
-  3.8 Bcf/d of deliverability in Mexico

## Maximum LNGDeliverability Growth

- Maximum LNGDeliverability Growth

- +

- +

- +

- +

**Notes:**
Just to give some sense of perspective ....When consumption of gas is about 23 tcf, average daily consumption is about 63 Bcf.  In a 30 Tcf market, average daily consumption is about 82 Bcf.

The US-based projects are represented in this graph.  The deliverability from all LNG terminals currently in-service, those that have been approved, those that are under analysis and potential projects total a daily deliverability of over 50 Bcf per day.  The Canadian and Mexican LNG projects would add another 10 Bcf per day.

Of course, not all of these projects will be built, but the Energy Information Administration does project that by 2020 over 18% of U.S. gas supply will come from LNG.  Based on this, LNG will account for about 15 Bcf of U.S. Daily demand in a 30 Tcf per year market.  

## US Natural Gas Balance

**Notes:**
Looking at the future gas balance ....

The U.S. cannot meet projected demand in the coming years without LNG unless we shed more industrial load.  This is not a demand reduction program we want to follow.

Further, Arctic gas will not solve the problem.  At the present time, it would probably be 2015, at the earliest, before we would see Alaskan gas.

In the short-term, we need the capacity made available from the existing LNG facilities.  But in the mid to long-term, we will require additional LNG capacity to meet our needs and to provide the stability to calm price volatility and assure industrial customers.

While LNG has made a marginal contribution to the U.S. Gas supply over the last 30 years, it is poised to make a major contribution in the future.
The red horizontal line intersects the vertical bars at a point indicating that new terminals or increased deliverability at existing terminals will be needed by 2008-2009.

What is not shown here is the potential contribution of Canadian and Mexican LNG to help meet us demand.  This could amount to another 1.5 to 2 Bcf per day.