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[Federal Register: July 1, 2010 (Volume 75, Number 126)]
[Notices]               
[Page 38093-38095]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy10-63]                         

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DEPARTMENT OF ENERGY

[FE Docket No. 10-63-LNG]

 
ConocoPhillips Alaska Natural Gas Corporation and Marathon Oil 
Company; Application for Blanket Authorization To Export Liquefied 
Natural Gas

AGENCY: Office of Fossil Energy, DOE.

ACTION: Notice of application.

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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy 
(DOE) gives notice of receipt of an application, filed jointly on June 
8, 2010, by ConocoPhillips Alaska Natural Gas Corporation (CPANGC) and 
Marathon Oil Company (Marathon) (collectively Applicants), requesting 
blanket authorization to export a quantity of liquefied natural gas 
(LNG) equal to the difference between the 99 trillion British thermal 
units (TBtus) authorized in DOE/FE Order Nos. 2500 and 2500-A, and the 
cumulative volume that is ultimately exported by Applicants under their 
currently-effective blanket authorization from April 1, 2009, through 
March 31, 2011. Applicants seek blanket authorization to export this 
volume of LNG from facilities located near Kenai, Alaska, to Japan and/
or one or more other countries globally with which trading is not 
prohibited by U.S. law for a two-year period commencing April 1, 2011, 
and terminating March

[[Page 38094]]

31, 2013. The application was filed under section 3 of the Natural Gas 
Act (NGA), as amended by section 201 of the Energy Policy Act of 1992, 
and 10 CFR part 590 of DOE's regulations. Protests, motions to 
intervene, notices of intervention, and written comments are invited.

DATES: Protests, motions to intervene or notices of intervention, as 
applicable, requests for additional procedures, and written comments 
are to be filed at the address listed below in ADDRESSES no later than 
4:30 p.m., eastern time, August 2, 2010.

ADDRESSES: U.S. Department of Energy (FE-34), Office of Oil and Gas 
Global Security and Supply, Office of Fossil Energy, Forrestal 
Building, Room 3E-042, 1000 Independence Avenue, SW., Washington, DC 
20585.

FOR FURTHER INFORMATION CONTACT: 
Larine Moore or Marc Talbert, U.S. Department of Energy (FE-34), Office 
of Oil and Gas Global Security and Supply, Office of Fossil Energy, 
Forrestal Building, Room 3E-042, 1000 Independence Avenue, SW., 
Washington, DC 20585. (202) 586-9478; (202) 586-7991.
Edward Myers, U.S. Department of Energy, Office of the Assistant 
General Counsel for Electricity and Fossil Energy, Forrestal Building, 
Room 6B-159, 1000 Independence Ave., SW., Washington, DC 20585. (202) 
586-3397.

SUPPLEMENTARY INFORMATION:

Background

    CPANGC, a Delaware corporation with its principal place of business 
in Anchorage, Alaska, is a wholly-owned subsidiary of ConocoPhillips 
Company, a publicly-traded Delaware corporation. Marathon is an Ohio 
corporation with its principal place of business in Houston, Texas. 
CPANGC and Marathon are not affiliated. Applicants are joint indirect 
owners of natural gas liquefaction and marine terminal facilities near 
Kenai, Alaska, (Kenai LNG Facility) \1\ on Cook Inlet in Southcentral 
Alaska.
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    \1\ The Kenai LNG Facility is owned by the Kenai LNG 
Corporation. CPANGC has a 70% ownership interest and Marathon has a 
30% ownership interest in Kenai LNG Corporation.
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Existing Blanket Authorization

    On June 3, 2008, in DOE/FE Order No. 2500, FE granted Applicants 
blanket authorization to export up to 99 TBtus of LNG (the equivalent 
of 98.1 Billion cubic feet (Bcf) of natural gas) from the Kenai LNG 
Facility to Japan and/or one or more countries on either side of the 
Pacific Rim for a two-year term, which extends through March 31, 2011. 
DOE/FE denied rehearing of DOE/FE Order No. 2500 in DOE/FE Order No. 
2500-A issued on July 30, 2008.

Current Application

    In the instant application, Applicants seek a two-year blanket 
authorization commencing April 1, 2011, and terminating March 31, 2013, 
for a quantity of LNG equal to the difference between the 99 TBtus (the 
equivalent of 98.1 billion cubic feet (Bcf) of natural gas) that FE 
authorized Applicants to export in DOE/FE Order No. 2500, and the 
cumulative volume of LNG that is ultimately exported by Applicants 
under their currently-effective blanket authorization from April 1, 
2009, through March 31, 2011, as reflected in the monthly export 
reports filed with FE by Applicants. Applicants note that they do not 
seek blanket authorization to export volumes of LNG beyond those 
authorized by DOE/FE Order No. 2500, but seek authorization that would, 
in effect, allow an additional two years to export the currently-
authorized volume.
    Applicants expect to continue exporting LNG to Japan and/or one or 
more countries globally with which trade is not prohibited by U.S. law, 
acting on their own behalf or as agent for others, pursuant to the 
requested blanket authorization.
    Applicants state that the application is being filed to ensure 
Applicants will have necessary blanket authorization should they elect 
to continue LNG exports after March 31, 2011. Applicants state that 
whether they ultimately continue LNG exports after March 31, 2011, 
could be impacted by: (1) LNG market conditions; (2) the ability to 
secure LNG shipping at economic rates; and (3) strategic decisions 
regarding the future role of the Kenai LNG Facility. Further background 
information on the Applicant's prior long-term authorizations to export 
LNG and exports under Order No. 2500 can be found in the application.

Public Interest Considerations

    In support of their application, Applicants state that under 
section 3 of the NGA, FE must authorize an export of natural gas from 
the United States to a foreign country unless there is a finding that 
the export ``will not be consistent with the public interest.'' \2\ 
Applicants state that FE found that section 3 of the NGA creates a 
statutory presumption in favor of approval of a properly-framed export 
application, which opponents bear the burden of overcoming.\3\ 
Applicants state that FE's public interest determination is guided by 
DOE Delegation Order No. 0204-111, which ``designates domestic need for 
the natural gas proposed to be exported as the only explicit criterion 
that must be considered in determining the public interest.'' \4\ 
Applicants state that FE has found the regional need for the natural 
gas proposed to be exported to be the principal focus of its review for 
an application for authorization to export LNG from the State of 
Alaska.\5\ Applicants also state that FE has in turn evaluated regional 
need by determining whether there is sufficient evidence that regional 
natural gas supplies will be adequate to meet both regional needs and 
the proposed LNG export during the relevant export period, and that FE 
has also considered other factors to the extent they are shown to be 
relevant to the public interest determination for an export 
authorization.
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    \2\ 15 U.S.C. 717b. Natural gas is defined to include LNG in 10 
CFR part 590.102(i) (2010).
    \3\ DOE/FE Order No. 1473 at p. 13, citing, Panhandle Producers 
and Royalty Owners Association v. ERA, 822 F.2d 1105, 1111 (DC Cir. 
1987); the court found Section 3 of the NGA ``requires an 
affirmative showing of inconsistency with the public interest to 
deny an application'' and that a ``presumption favoring * * * 
authorization * * * is completely consistent with, if not mandated 
by, the statutory directive.'' See also Independent Petroleum 
Association v. ERA, 870 F.2d 168, 1 72 (5th Cir. 1989); Panhandle 
Producers and Royalty Owners Association v. ERA, 847 F.2d 1168, 1176 
(5th Cir. 1988).
    \4\ Order No. 1473 at p. 14 citing, Delegation Order No. 0204-
111, 49 FR 6684 (Feb 22, 1984).
    \5\ Order No. 1473 at p. 15, n. 48; DOE/FE Order No. 2500 at pp. 
44-45.
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    Finally, Applicants state that the application is not inconsistent 
with the public interest for the following reasons, as well as more 
detailed reasons set forth in the application:
    First, the Applicants contend that the natural gas to be exported 
has already been determined to be surplus to regional needs on a 
reserve basis by FE in DOE/FE Order No. 2500. Therefore, according to 
the Applicants, the LNG to be exported during the two-year period will 
not be needed to satisfy regional demand for natural gas;
    Second, the Applicants allege that allowing them to have an 
additional two years to complete the export of these volumes will not 
jeopardize service to the local markets into which this natural gas 
might otherwise be sold; to the contrary, it will serve to enhance the 
supply security of these markets on a day-by-day basis during the 
export term in the following ways:
    (a) The Kenai LNG Facility will continue to provide a critical 
back-up natural gas supply service for the local market in times of 
peak needs on the coldest days of the year; and

[[Page 38095]]

    (b) During the summer months, the Kenai LNG Facility's base level 
of demand will ensure that production from natural gas wells are not 
curtailed or shut-in, thereby protecting reserves and well 
deliverability to serve utility demand during the colder months.
    Third, the Applicants maintain that in the longer term, the 
maintenance of the Kenai LNG Facility creates options for future uses 
that would enhance natural gas supplies for local consumption, 
including possible retrofitting of the facility to provide 
regasification capacity so that it could function as a storage 
facility; conversion into an import and LNG regasification terminal; 
and use of the existing terminal for exports to support the economic 
viability of a ``bullet line'' from Alaska's North Slope.
    Fourth, the Applicants submit that a number of studies of natural 
gas reserves support the conclusion that there are sufficient supplies 
to satisfy local demand and the proposed export authorization.
    Fifth, with the recent execution of two natural gas supply 
contracts with local utilities, the Applicants maintain that virtually 
all of the local utilities' projected gas needs through the term of the 
requested authorization will be satisfied; and Applicants, as suppliers 
to these utilities, will take their supply obligations into account in 
determining the extent to which to use their requested export 
authorization.
    Sixth, the Applicants contend that the Kenai LNG Facility provides 
local economic benefits, including as an employer and as a source of 
royalties and taxes for the State of Alaska and the Kenai Peninsula 
Borough.

Request for Expedited Action

    Applicants request that FE act upon their application as 
expeditiously as possible, preferably within 90 days.

Environmental Impact

    Applicants state that approval of the requested export 
authorization is not a major Federal action significantly affecting the 
quality of the human environment within the meaning of the National 
Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq., and no 
environmental impact statement or environmental assessment is required. 
Applicants state that the proposed export of LNG would not require any 
changes to the Kenai LNG Facility. Applicants state that the LNG 
manufacturing and storage facilities that will be utilized during the 
blanket authorization already exist and have been operated safely 
without major disruption of supply or accident from their startup in 
1969.

DOE/FE Evaluation

    This export application will be reviewed pursuant to section 3 of 
the NGA, as amended, and the authority contained in DOE Delegation 
Order No. 00-002.00I (Nov. 10, 2009) and DOE Redelegation Order No. 00-
002.04D (Nov. 6, 2007). In reviewing this LNG export application, DOE 
will consider domestic need for the gas, as well as any other issues 
determined to be appropriate, including whether the arrangement is 
consistent with DOE's policy of promoting competition in the 
marketplace by allowing commercial parties to freely negotiate their 
own trade arrangements. Parties that may oppose this application should 
comment in their responses on these issues.
    The National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et 
seq., requires DOE to give appropriate consideration to the 
environmental effects of its proposed decisions. No final decision will 
be issued in this proceeding until DOE has met its NEPA 
responsibilities.

Public Comment Procedures

    In response to this notice, any person may file a protest, motion 
to intervene, or notice of intervention and written comments, as 
provided in DOE's regulations at 10 CFR 590.301, et seq. Any person 
wishing to become a party to the proceeding and to have their written 
comments considered as a basis for any decision on the application must 
file a motion to intervene or notice of intervention, as applicable. 
The filing of a protest with respect to the application will not serve 
to make the protestant a party to the proceeding, although protests and 
comments received from persons who are not parties will be considered 
in determining the appropriate action to be taken on the application. 
All protests, motions to intervene, notices of intervention, and 
written comments must meet the requirements specified by the 
regulations in 10 CFR part 590. Protests, motions to intervene, notices 
of intervention, requests for additional procedures, and written 
comments shall be filed with the Office of Oil and Gas Global Security 
and Supply at the address listed above.
    A decisional record on the application will be developed through 
responses to this notice by parties, including the parties' written 
comments and replies thereto. Additional procedures will be used as 
necessary to achieve a complete understanding of the facts and issues. 
A party seeking intervention may request that additional procedures be 
provided, such as additional written comments, an oral presentation, a 
conference, or trial-type hearing. Any request to file additional 
written comments should explain why they are necessary. Any request for 
an oral presentation should identify the substantial question of fact, 
law, or policy at issue, show that it is material and relevant to a 
decision in the proceeding, and demonstrate why an oral presentation is 
needed. Any request for a conference should demonstrate why the 
conference would materially advance the proceeding. Any request for a 
trial-type hearing must show that there are factual issues genuinely in 
dispute that are relevant and material to a decision and that a trial-
type hearing is necessary for a full and true disclosure of the facts.
    If an additional procedure is scheduled, notice will be provided to 
all parties. If no party requests additional procedures, a final 
Opinion and Order may be issued based on the official record, including 
the application and responses filed by parties pursuant to this notice, 
in accordance with 10 CFR 590.316.
    The application filed by Applicants is available for inspection and 
copying in the Office of Oil and Gas Global Security and Supply docket 
room, 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585. The 
docket room is open between the hours of 8 a.m. and 4:30 p.m., Monday 
through Friday, except Federal holidays. The application is also 
available electronically by going to the following Web address: http://www.fe.doe.gov/programs/gasregulation/index.html.

    Issued in Washington, DC on June 28, 2010.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas 
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2010-16042 Filed 6-30-10; 8:45 am]
BILLING CODE 6450-01-P
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