HOUSTON (Dow Jones)
The U.S. Department of Energy said Thursday it has granted approval to Cheniere Energy Partners LP's (CQP) bid to export liquefied natural gas produced in North America from a terminal in Louisiana.
The approval, granted Sept. 7, puts the terminal in Cameron Parish, La., one step closer to becoming the first facility to export natural gas produced in the Lower 48 states, drawing supply from the burgeoning unconventional gas fields in Texas, Louisiana, Arkansas and Oklahoma.
The proposal underscores how the natural-gas supply picture in the U.S. has turned from scarcity to overabundance, thanks to the exploitation of rock formations called shales.
It also marks a radical shift in the plans of companies such as Cheniere, which once planned to profit from building multi-billion-dollar liquefaction terminals in different U.S. coastal locations. But the natural-gas shale boom brought those plans to a halt. North America's new gas wealth has prompted other export projects, such as Apache Corp.'s (APA) proposed facility in British Columbia, which aims to supply Asia with large quantities of Canadian natural gas. Natural gas, usually shipped through pipelines, has traditionally been a regional market; but when it is converted into liquid it can be shipped overseas.
Through its Sabine Pass Liquefaction subsidiary, Cheniere asked the Department of Energy in early August for permission to export up to 16 million metric tons annually for 30 years. It also filed an application with the Federal Energy Regulatory Commission to build, in phases, a liquefaction facility that would eventually handle an average of 2.6 billion cubic feet a day from four liquefied natural gas, or LNG, trains.
The Department of Energy's approval allows Cheniere's subsidiary to export LNG to any nation that currently has the capacity to import the fuel and with which the U.S. currently has entered, or may in the future enter, into a Free Trade Agreement, including Canada, Mexico, Chile and Singapore, according to the order from the Department of Energy.
Gas-bearing rock formations known as shales have changed the view that domestic U.S. natural-gas output would decline and that new supplies would have to come into the U.S. from other countries. In fact, these new supplies have depressed gas prices, discouraging gas imports that were once thought critical to feed growing demand for the fuel.
Prolific onshore gas fields in Texas and Oklahoma, and the well-documented unconventional gas fields in the Barnett, Haynesville, Eagle Ford, Fayetteville, Woodford and Bossier basins in Texas and Louisiana, would represent the most likely sources of physical supply for the Sabine Pass, Cheniere's unit said in its application.
The Sabine Pass LNG terminal is already an import facility. With a total send-out capacity of four billion cubic feet a day and 16.8 billion cubic feet of storage capacity, it is the largest receiving terminal, by regasification capacity, in the world, according to Cheniere's website.
The FERC recently allowed Sabine Pass to use the terminal for the additional purpose of exporting foreign-sourced LNG.
Cheniere will soon file a separate application for authorization to export LNG to countries with which a Free Trade Agreement applicable to natural gas and LNG isn't in effect, according to the application it filed in August. The second application will be subject to more rigorous public-interest review and analysis by the Department of Energy, the company has said in the application.
(Jason Womack contributed to this article.)
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