# Presentation: 028031

## LNG: Regulatory and Regional Considerations 

**The Energy Council’s LNG/CNG Workshop**
**Biloxi, Mississippi**
**April 8, 2005**
**Robert Cupina, Deputy Director, Office of Energy Projects**

## FERCHelping Markets Work

## FERC Organizational Structure

##    Major Interstate and Canadian Pipelines and Gas Production Areas

**Notes:**
THIS SLIDE SHOWS THE MAJOR INTERSTATES AND CANADIAN PIPELINES AND THEIR PROXIMITY TO GAS PRODUCTION AREAS

THERE’S ABOUT 212,000 MILES OF PIPELINE UNDER FERC JURISDICTION

YOU’LL NOTICE THE HEAVY CONCENTRATION OF PIPELINES IN GAS PRODUCTION AREAS AS INTERSTATES RECEIVE GAS FROM GATHERING LINES AND THEN MOVE TO MARKET AREAS

## Natural Gas Act

**NATURAL GAS ACT**

**Section 3 Import/Export**

**Case**
**Specific**

**Case**
**Specific**

**Blanket**
**Authority**

**Automatic**

**Prior**
**Notice**

**Section 7(c)**
**Interstate**

## Natural Gas Act

-   including engineering, rate, accounting,
-   and market analysis

**• **Conduct an environmental review by
-   preparing an Environmental Assessment
-   or an Environmental Impact Statement

- Case Specific Section 7(c) and 3

## Major Pipeline Projects Certificated (MMcf/d)January 2002 to March 2005

**Major Pipeline Projects ****Certificated (MMcf/d)****January 2002 to March 2005**

**17.1 BCF/D Total**
**2,911 Miles**

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

**Major Pipeline Projects****Pending (MMcf/d)****March 2005**

**17.7 BCF/D Total**
**930 Miles**

## Storage Projects(Capacity in Bcf)March 2005

**Storage Projects****(Capacity in Bcf)****March 2005**

## Balancing Interests

## FERC

**Public Interest Review**

- Notice of Intent

-      Data Requests
-           Analysis
- Agency Coordination

- Scoping Meetings
- & Site Visit

- Data Requests
-      Analysis

- Interventions
-     Protests

- Notice of Application

- Preliminary Determination
-              (Optional)

**Authorization / Rejection**

- Tech Conference
-       (Optional)

- Cryogenic Design &
-     Safety Review

- DEIS

- FEIS

**FERC**
**Review**
**Process**

**(Traditional Process)**

- LNG

## Traditional vs. NEPA Pre-Filing Process

- Announce
- Open
- Season

- Announce
- Open
- Season

- Develop
- Study
- Corridor

- Develop
- Study
- Corridor

- Conduct
- Scoping

- Conduct
- Scoping

- 0  1   2   3   4   5   6   7    8   9   10   11   12   13   14   15   16   17   18   19   20   21   22   23   24   25   26   27   28

-  Review Draft
- Resource Reports
- & Prepare DEIS

- Issue
- Draft
- EIS

- Issue
- Draft
- EIS

- File
- At
- FERC

- Issue
- Order

- Issue
- Order

- File
- At
- FERC

- Prepare Resource
- Reports

- Prepare Resource
- Reports

- Issue
- Final
- EIS

- Issue
- Final
- EIS

- (months)

**Traditional - Applicant**

**Traditional - FERC**

**NEPA Pre-Filing - Applicant**

**NEPA Pre-Filing - FERC**

## NPC Study

- Align the conflicting policies
- - Policies that encourage consumption
- - Policies that inhibit gas supply

**Notes:**
THE NPC STUDY STATES THAT THERE ARE CONFLICTING ENERGY POLICIES IN THE US

	- Policies that encourage consumption
	- Policies that inhibit supply

NATURAL GAS IS THE ECONOMIC AND ENVIRONMENTAL FUEL OF CHOICE

THESE CONFLICTING POLICIES MUST BE ALIGNED THROUGH THE EXPANSION OF DOMESTIC SUPPLY SOURCES IN ALASKA AND THE RESTRICTED AREAS IN THE LOWER 48 INCLUDING THE ROCKIES.

HOWEVER, SINCE 96% OF THE WORLD’S NATURAL GAS RESOURCES ARE OUTSIDE OF NORTH AMERICA, WE MUST LOOK TO LNG FROM OVERSEAS SOURCES TO MEET OUR FUTURE DEMAND.

## LNG – Two Points

**  ****Natural gas is the economic/environmental fuel of choice.**

**  ****96% of natural gas reserves are outside North America.**

## How Much Natural GasIs Out There?

- How Much Natural GasIs Out There?

- Source:  EIA, World Oil

**Total World Gas Reserves as of 1/1/03:  6,127 Trillion Cubic Feet**

## Where Are the Export Facilities?

*Office of Energy Projects*

-  LNG supply growing
-  Multiple LNG supply proposals announced
-  Long term LNG supply outlook robust

**Global LNG Supply**

- Source: Cedigaz, NPC

**Existing**
**Under Construction**
**Proposed**

**Global LNG Supply Facilities**

**Notes:**
LOOKING BRIEFLY AT THE WORLD SUPPLY OF NATURAL GAS....
IN 2002, WORLD GAS RESERVES WERE ESTIMATED TO BE ABOUT 6.3 TCF.

ONLY 4% OF THESE RESERVES WERE LOCATED IN NORTH AMERICA.  AND ONLY 183 TCF, OR 3%, OF THE WORLD’S RESERVES WERE LOCATED IN THE US.

ACCORDING TO EIA, THE US PRODUCED 21.3% OF THE WORLD’S GAS PRODUCTION IN 2001 AND CONSUMED 25% OF THE WORLD’S GAS PRODUCTION.

TO MEET OUR INCREASED DEMANDS WE WILL HAVE TO RELY MORE ON IMPORTS, NOT ONLY FROM CANADA, BUT ALSO THOSE IMPORTS WHICH CAN ONLY BE DELIVERED IN THE FORM OF LNG.

## LNG Supply Stream -- From Production to Distribution

**Natural Gas Pipelines**

**Storage and Vaporization Facility**

**Liquefaction and Storage Facility**

**Natural Gas Production**

**Dock**

**Dock**

**Notes:**
The costs involved in the chain of transportation break down as follows:
Gas Production		25%
Liquefaction		33%
Shipping			33%
Receiving Terminal		  8%

(According to Trunkline LNG to deliver LNG from West Africa to the US Gulf Coast.)

## A

**Economic Oversight – Access to LNG Terminal**

**A**
**Open Access At Delivery of Liquid to Terminal**

**LNG**
**Suppliers**

-   **LNG**
**Buyers**

**A**

**B**

**B**
**Open Access At Delivery of Vapor into Interstate Pipeline System**

**Liquid to Vapor Flow**

*FERC*

*Office of Energy Projects*

**Notes:**
THE HACKBERRY, OR CAMERON, DECISION APPROVED THE FIFTH LNG TERMINAL IN THE LOWER 48.

THE DECISION SUBSTANTIALLY ALTERED THE REGULATORY TREATMENT THAT HAD HISTORICALLY BEEN ACCORDED LNG TERMINALS.  

IN THE PAST, THE COMMISSION TREATED THE LNG TERMINAL AS AN OPEN ACCESS FACILITY SUBJECT TO SECTIONS 7 AND 4 OF THE NATURAL GAS ACT, IN ADDITION TO SECTION 3.

HACKBERRY ESSENTIALLY TREATS LNG TERMINALS AS PRODUCTION FACILITIES, MEANING THAT THE COMMISSION, OTHER THAT SITING TERMINALS UNDER SECTION 3, ONLY TAKES RATE AND SERVICE JURISDICTION AT THE OUTLET OF THE PLANT, NOT AT THE DOCK.

THIS DEVELOPMENT, IN COMBINATION WITH THE NEED FOR MORE GAS SUPPLY, HAS RESULTED IN A DRAMATIC INCREASE OF ACTIVITY IN POTENTIAL LNG TERMINALS IN NORTH AMERICA.

## Existing, Proposed and Potential North American

- 26

_**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:**  1.1 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)
_**APPROVED BY MARAD/COAST GUARD**_
**8. Port Pelican:** 1.6 Bcfd,  (Chevron Texaco)
**9. ****Louisiana Offshore : ** 1.0 Bcfd (Gulf Landing - Shell)
_**PROPOSED TO FERC**_
**10. Fall River, MA :** 0.8 Bcfd,  (Weaver's Cove Energy/Hess LNG)
**11. Long Beach, CA :** 0.7 Bcfd,  (Mitsubishi/ConocoPhillips - Sound Energy Solutions)
**12. Corpus Christi, TX : ** 2.6 Bcfd,  (Cheniere LNG)
**13. Corpus Christi, TX :  **1.0 Bcfd (Vista Del Sol - ExxonMobil)
**14. Sabine, TX :  **1.0 Bcfd (Golden Pass - ExxonMobil)
**15. Logan Township, NJ :  **1.2 Bcfd (Crown Landing LNG - BP)
**16. Bahamas : ** 0.5 Bcfd,  (Seafarer - El Paso/FPL )
**17. Corpus Christi, TX**:  1.0 Bcfd (Ingleside Energy - Occidental Energy Ventures)
**18.** **Providence, RI :  **0.5 Bcfd (Keyspan & BG LNG)
**19.**** Port Arthur, TX:**  1.5 Bcfd (Sempra)
**20. Cove Point, MD :  **0.8 Bcfd  (Dominion)
**21. LI Sound, NY:  **1.0 Bcfd (Broadwater Energy - TransCanada/Shell)
**22.** **Pascagoula, MS:**  1.0 Bcfd (Gulf LNG Energy LLC)
**23. Bradwood, OR:**  1.0 Bcfd (Northern Star LNG - Northern Star Natural Gas LLC)
**24.** **Pascagoula, MS:**  1.3 Bcfd (Casotte Landing - ChevronTexaco)
**25. Cameron, LA:  **3.3 Bcfd (Creole Trail LNG - Cheniere LNG)
**26. Port Lavaca, TX:  **1.0 Bcfd (Calhoun LNG - Gulf Coast LNG Partners)
_**PROPOSED TO MARAD/COAST GUARD**_
**27. California Offshore**: 1.5 Bcfd (Cabrillo Port - BHP Billiton)
**28. So. California Offshore :** 0.5 Bcfd,  (Crystal Energy)
**29. Louisiana Offshore : ** 1.0 Bcfd (Main Pass McMoRan Exp.)
**30. Gulf of Mexico:**  1.0 Bcfd (Compass Port - ConocoPhillips)
**31. ****Gulf of Mexico:**  2.8 Bcfd (Pearl Crossing - ExxonMobil)
**32. Gulf of Mexico:  **1.5 Bcfd (Beacon Port Clean Energy Terminal** - **ConocoPhillips)
_**POTENTIAL SITES IDENTIFIED BY PROJECT SPONSORS**_
**33. Coos Bay, OR:  **0.13 Bcfd,  (Energy Projects Development)
**34. Somerset, MA: ** 0.65 Bcfd (Somerset LNG)
**35. California - Offshore:**  0.75 Bcfd,  (Chevron Texaco)
**36. Pleasant Point, ME :**  0.5 Bcf/d (Quoddy Bay, LLC)
**37. St. Helens, OR:**  0.7 Bcfd (Port Westward LNG LLC)
**38. Offshore Boston, MA:**  0.8 Bcfd (Northeast Gateway - Excelerate Energy)
**39. Galveston, TX:**  1.2 Bcfd (Pelican Island - BP)
**40. Philadelphia, PA:**  0.6 Bcfd (Freedom Energy Center - PGW)
**41. Astoria, OR:  **1.0 Bcfd (Skipanon LNG - Calpine)
**42. Freeport, TX: ** 1.5 Bcfd, (Cheniere/Freeport LNG Dev. - Expansion)
**43. Offshore Boston, MA:**  0.4 Bcfd (Neptune LNG - Tractebel)
_**CANADIAN APPROVED AND POTENTIAL TERMINALS**_
**44. St. John, NB :**  1.0 Bcfd,  (Canaport - Irving Oil)
**45. Point Tupper, NS**  1.0 Bcf/d  (Bear Head LNG - Anadarko)
**46. Quebec City, QC :  **0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France)
**47. Rivière-du- Loup, QC:**  0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada)
**48. Kitimat, BC:**  0.61 Bcfd (Galveston LNG)
**49. Prince Rupert, BC:** 0.30 Bcfd (WestPac Terminals)
**50. Goldboro, NS**  1.0 Bcfd (Keltic Petrochemicals)
_**MEXICAN APPROVED AND POTENTIAL TERMINALS**_
**51. Altamira, Tamulipas : ** 0.7 Bcfd,  (Shell/Total/Mitsui)**
**52. ****Baja California, MX :**  1.0 Bcfd,  (Sempra & Shell)**
**53. Baja California - Offshore :**  1.4 Bcfd,  (Chevron Texaco)
**54. Lázaro Cárdenas, MX :  **0.5 Bcfd (Tractebel/Repsol)
**55. Puerto Libertad, MX:  **1.3 Bcfd (Sonora Pacific LNG)

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

**As of March 25, 2005**

*FERC*

- A

- 3

- 4

- 44

- 16

- 51

- 12

- 27

- 11

- 29

- 28

- 45

- 46

- 36

- 54

- 9

- 52

- 53

- 18

- B

- 35

- 33

- 1

- 20

- 47

- 30

- 17

- 55

- US Jurisdiction
-     FERC
-        US Coast Guard

- 49

- 48

- *    *US pipeline approved; LNG terminal pending in Bahamas*
*** These projects have been approved by the Mexican and Canadian authorities*

- 50

- 22

- 10

- 34

- 21

- 40

- 15

- 25

- 41

- 7

- C

- 2

- D,1

- 19

- 14

- 31

- 32

- 8

- 5,42

- 13

- 6

- 39

- 43

- 38

- 23

- 37

- E

## North East LNG Terminals

**Pleasant Point, ME (36)**

**Everett, MA (A)**

**Providence, RI (18)**

**Offshore Boston - Tractebel (43)**

**Fall River, MA (10)**

**Somerset, MA (34)**

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**North East LNG Terminals**

**March 31, 2005**

**Offshore Boston - Excelerate (38)**

## Mid-Atlantic LNG Terminals

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**Cove Point, MD (B/20)**

**Logan Township, NJ (15)**

**Mid-Atlantic LNG Terminals**

**Long Island Sound, NY (21)**

**Philadelphia, PA (40)**

**March 31, 2005**

## South East LNG Terminals

**South East LNG Terminals**

**Elba Island, GA (C/7)**

**Bahamas (3/4/16)**

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**(Pipelines only)**

**March 31, 2005**

## Gulf Coast LNG Terminals

**Corpus Christi, TX (12)  Vista Del Sol (13)****                              ****Ingleside LNG (17)**

**Lake Charles, LA (D/1)**

**Port Pelican (8)**

**Pearl Crossing (31)**

**Freeport, TX (5/42)**

**Golden Pass (14)**

**Port Lavaca, TX (26)**

**Port Arthur (19)**

**Sabine Pass, LA (6)**

**Gulf Coast LNG Terminals**

**Freeport **
**McMoran (29)      **

**Hackberry (2)**

**Gulf Landing **
**(9)**

**Compass **
**Port**** ****(30)**

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**Galveston, TX (39)**

**Pascagoula, MS (22/24)**

**Cameron (25)**

**Beacon**
**Port **
**(32)**

**March 31, 2005**

**Gulf Gateway (E)**

## Southwest LNG Terminals

**Long Beach, CA (11)**

**California Offshore (27/28/35)**

**Southwest LNG Terminals**

**Chevron Texaco (35)**

**BHP Billiton (27)**

**Crystal Energy (28)**

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**March 31, 2005**

## North West LNG Terminals

**North West LNG Terminals**

**Coos Bay, OR (33)**

**Bradwood, OR, Northern Star(23)**

- 	**Legend:**
- 	Existing Terminal
- 	Approved Terminal
- 	Proposed Terminal: Pre-Filing
- 	Proposed Terminal: Filed
- 		Working on DEIS
- 		Working on FEIS
- 	Potential Terminal

**Astoria, OR (41)**

**St. Helens, OR (37)**

**March 31, 2005**

## LNG Properties andSafety

- LNG is natural gas that in its liquid state at -259o Fahrenheit - it is commonly stored and shipped at slightly above atmospheric pressure.
- LNG is odorless, colorless, non-toxic - it neither explodes nor burns as a liquid.
- LNG vapors are flammable only in concentrations of 5% to 15% with air and will not explode in an unconfined environment - the ignition temperature is more than 500o Fahrenheit higher than gasoline.
- In the past 40 years there have been more than 33,000 LNG ship voyages without a significant accident or cargo spillage.

## LNG TerminalSiting Issues

- Safety
- Take Away Capacity
- Local acceptance
- Federal and State approvals

**Notes:**
SAFETY
the FERC looks st the marine and land-based safety issues duing its review.  we coordinate with dot and the coast guard during the review.
[note: we are currently working on an interagency agreement with both to make each agency’s role clear.]
Proximity to residential and commercial areas raises public safety concerns.
	the calculations of thermal and flammable exclusion zones for the on-shore lng facilities are based on the dimensions of the proposed impoundment system and the design spill volumes.
DOT/OPS enforces security.
FERC performs pre- and post-certificate reviews of LNG terminals.
Biennial reviews continue for life of terminal.
Coast Guard enforces offshore ship safety.
TAKEAWAY
Is there an existing pipeline with takeaway capacity?
Does the project require new pipeline construction?  NEPA requires an analysis of the cumulative effects.  Can not have an lng terminal without takeaway capacity.
LOCAL ACCEPTANCE
Has the project sponsor interacted with the local population?
Entertain concerns.  Make adjustments or accommodations to the project.
FEDERAL/STATE APPROVALS
Must get approvals:  FERC – NGA Approval; DOT/OPS – Exclusion Zones; Coast Guard – Vessel Operating Plan; Corps of Engineers – Dredging, Wetland Filling, Alternative Sites; NMFS, FWS – Endangered Species Act; Coastal Zone Consistency Determination; State Agency Requirements

## The FERC Process:
We Issue Notice of the Application
Project Sponsor Sends Landowner Notification Package
SCOPING = We Issue Notice of Intent to Prepare the NEPA  Document
Public Meeting(s)

- We Issue Notice of the Application
- Project Sponsor Sends Landowner Notification Package
- SCOPING = We Issue Notice of Intent to Prepare the NEPA  Document
- Public Meeting(s)

- _Public Input:_
- File an Intervention
- Contact the project sponsor w/questions, concerns; contact FERC
- Send letters expressing concerns about  environmental impact
- Attend scoping meetings

- Opportunities for Public Involvement

## The FERC Process:
Issue Notice of Availability of the DEIS 
Public Meetings on DEIS

Issue a Commission Order

- Issue Notice of Availability of the DEIS
- Public Meetings on DEIS
- Issue a Commission Order

- _Public Input:_
- File comments on the adequacy of DEIS
- Attend public meetings to give comments on DEIS
- Interveners can file a request for Rehearing of a Commission Order

- Opportunities for PublicInvolvement

## Recent Events 

- ABS Study
- Skikda Accident
- Reorganization for Safety
- Fire Marshal Interaction
- Sandia Study
- Regional Planning

## Outlook/Issues Associatedwith LNG Development

- States are attempting to assert economic jurisdiction in the post-Hackberry environment.
- Disinformation about safety.
- Legislative/Judicial Action

## US Natural Gas Balance