Wednesday, September 18, 2013

And Now There are Four

Late last week, the DOE approved the fourth LNG export facility for export to non-Free Trade Agreement countries.  Dominion's Cove Point facility in Maryland received approval to export 21.8 million cubic meters per day from its existing (and quiet) import facility on the Chesapeake Bay in Lusby, MD.  The project will cost $3.8 billion and will funnel gas from the Marcellus Shale region to India and Japan.

This fourth approval brings the amount of approved capacity to 180.4 MMcm/day.  Previous DOE studies estimated that the quantity of exported gas that would not materially impact the domestic price of gas to be in the range of 170 to 340 MMcm/day.  While some are calling for a time out in approvals, many analysts believe there will be another three projects approved before year end, including a small expansion at the already approved Freeport LNG, Sempra's Cameron, LA facility and Veresen's Jordan Cove project in Oregon.  Approving these projects would bring the export total to 262.5 MMcm/day, which is in the middle of the DOE's range.  The Oregon project is very controversial in the state, so I wouldn't bet too many marbles that it will be approved in this coming round, but in general the news is good for natural gas.

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