Energy Dept. Approves Second LNG Export Facility - Freeport LNG
The U.S. Energy Department conditionally approved the Freeport LNG project in Texas to export natural gas to countries that don’t have free-trade agreements with the U.S.
The development, which is partly owned by ConocoPhillips (COP), Dow Chemical Co. (DOW) and Osaka Gas Co., is only the second the department has approved for sales overseas. Exports are already permitted to countries that have free-trade agreements with the U.S.
“The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country,” the department said in its news release.
Bill Gibbons, a department spokesman, said the administration was addressing the issue “in a responsible way” and would weigh applications on a case-by-case basis.
If all 20 projects were to win approval, they could ship the equivalent of 41 percent of the total U.S. production this year, according to Energy Department data.
After a preliminary review, it seems “the order provides us everything that we requested in terms of the authorization and we commend the Department of Energy on the thoroughness of their review and consideration of exports and getting to the right result,” John Tobola, general counsel of Freeport, said in a phone interview today.
The Freeport LNG project must still win approval from the Federal Energy Regulatory Commission.
The big hurdle was thought to be the Energy Department, which must decide if the projects are in the national interest. The department said its review of the Freeport facility was extensive and careful.
It found that exports from the facility are “likely to yield net economic benefits” to the U.S.
Freeport would be able to export up to 1.4 billion cubic feet of natural gas a day for 20 years. In May 2011, the department conditionally approved Cheniere Energy Inc.’s Sabine Pass LNG Terminal in Louisiana for a rate of up to 2.2 bcf.
The company still must win approval from the Federal Energy Regulatory Commission to convert its existing Quintana Island, Texas import terminal into a facility capable of liquefying natural gas and shipping it overseas.
Yea yea yea. Passive aggressive. I am going to study XL. I will make a decision tomorrow.
That is why there was no reaction in the futures market. Where line sells natural gas.
Au contraire NG futures jumped 12 cents immediately on the news.
"It is an historic moment for the United States," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "From a price standpoint this is definitely going to put some upward pressure on prices, further out in 2015 to 2018."