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DOE authorizes Alaska LNG Project exports Conditional approval to non-Free Trade Agreement countries matches up with approval granted last year for exports to FTA countries Kristen Nelson Petroleum News
The Office of Fossil Energy of the U.S. Department of Energy issued a conditional authorization May 28 for the Alaska LNG Project to export the equivalent of 2.55 billion cubic feet per day of LNG for 30 years to countries that do not have a Free Trade Agreement with the United States. The project received authorization to export to FTA countries in November.
The authorization is for “long-term, multi-contract” export of LNG produced from Alaska sources. The volume of some 929 bcf per year is the equivalent of some 20 million metric tons per annum, the agency said.
Standards for export approval include consideration of domestic need for natural gas, whether exports pose a threat to the security of domestic natural gas supplies, whether the arrangement is consistent with the agency’s policy of promoting market competition and any other factors bearing on the public interest.
For Alaska those criteria were applied “to the unique regional characteristics of the natural gas market” within the state, the agency said.
Not additive DOE/FE said the 929 bcf per year in this application “is not additive” to the 929 bcf authorized for FTA countries in November.
Alaska LNG “seeks to export LNG on its own behalf or as an agent for other entities that hold title to the LNG, after registering each such entity with DOE/FE,” the agency said.
“Alaska LNG contemplates that the title holder at the point of export may likely be another party other than itself, such as the respective affiliates of its members or other third parties pursuant to a LNG sales and purchase contract,” the agency said.
Environmental review DOE/FE is a cooperating agency in the environmental review headed by the Federal Energy Regulatory Commission. The DOE/FE export authorization is conditional pending satisfactory completion of the environmental review and approval of the terminal.
As a condition of the export authorization the environmental review process must be satisfactorily completed and Alaska LNG must comply with any and all preventative mitigating measures imposed at the terminal by federal or state agencies. “When the environmental review is complete, DOE/FE will reconsider this conditional authorization in light of the information gathered as part of that review,” the agency said.
Regional need for natural gas The Alaska LNG Project said in its application that Alaska’s geographic isolation means Alaska reserves and resources should be analyzed separately from the Lower 48, and DOE/FE said it has determined that “domestic need” should be focused specifically on the regional need for the natural gas.
Alaska LNG asked DOE/FE “to take note that the North Slope gas that is proposed to be exported may not reach consumers in the population centers of south central and south east Alaska if the Project is not constructed,” because, unlike the Lower 48, there is no existing infrastructure in Alaska to move the gas from the North Slope.
The project commissioned a study on the impact of the project in Alaska and that study found that the project would lead to lower natural gas prices in Alaska.
Benefits to the state would include competitively priced, reliable in-state natural gas, job creation and “infrastructure to enhance exploration and production opportunities.”
12 years to first gas DOE/FE said “the available evidence confirms that, because the Alaska LNG Project will access stranded gas, the Project will improve rather than worsen the supply of gas available to consumers in Alaska.”
The agency also said the project requested - and it agreed - that because of the “complexity and expansive scope” of the project, the authorization would begin “on the earlier date of the first export or 12 years from the date of the issuance of this Order,” requiring commercial export operations to begin within 12 years.
The Alaska LNG Project called receipt of the non-FTA export authorization “another significant milestone” in the project.
“We are very pleased with the progress this represents,” Alaska LNG Senior Project Manager Steve Butt said in a statement. “As with any large scale LNG project, access to as many markets as possible will improve the commercial viability of the proposed project.”
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