Office of Fossil Energy of the Department of Energy Issues Notice of Proposed Rulemaking That Will Automatically Authorize Certain Applications To Export Small Volumes of Natural Gas
On Sept. 1, the Office of Fossil Energy of the Department of Energy (DOE/FE) issued a notice inviting public comment on a proposal which, if adopted, will authorize automatically applications to export small volumes of natural gas to non-Free Trade Agreement nations. 82 Fed. Reg. 41,570 (Notice). As DOE/FE describes its proposal:
[T]he proposed rule provides that DOE, upon receipt of any complete application to export natural gas (including LNG) to non-FTA countries, will grant the application provided that it satisfies the following two criteria: (1) The application proposes to export natural gas in a volume up to and including 0.14 Bcf/d; and (2) DOE’s approval of the application does not require an EIS or EA under NEPA—that is, the application is eligible for a categorical exclusion under DOE’s NEPA regulations.
82 Fed. Reg. at 41,572-73. DOE/FE will not issue notice of nor receive public comment on any such application.
In its Notice, DOE/FE noted the development of a “small-scale export market” consisting chiefly of South American, Central American, and Caribbean nations. While there is a demand in this market for American-produced natural gas, this demand is not sufficient to support exports from large-scale LNG terminals using conventional LNG tankers. According to DOE/FE, the participants involved in this market typically view “small-scale” to be exports of less than 1.0 million metric tons per annum. This computes to the 0.14 Bcf per day chosen by DOE/FE as the cutoff. In support of its conclusion that these “small-scale” exports are in the public interest and may be automatically authorized, DOE/FE referred to a series of studies that the agency has commissioned since 2011 which show generally that increased exports of natural gas will likely generate economic benefits for the United States (e.g., job creation, enhanced tax revenues, and improved balance of trade) and that domestic supplies will be adequate to meet increased domestic demand and increased exports. Further, increased exports into this small-scale market will enable electric generation to move from diesel and heavy fuel oil to natural gas with reduced GHG emissions and possible stronger demand for American-origin generating equipment.
Comments on DOE/FE’s proposal are due on Oct. 16. Note also that DOE/FE’s proposal does not address whether the facilities involved in small-scale LNG projects are within the jurisdiction of the Federal Energy Regulatory Commission (FERC) and require FERC approval, which involves a separate, fact-specific analysis.