[Federal Register Volume 75, Number 126 (Thursday, July 1, 2010)]
[Notices]
[Pages 38093-38095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-16042]
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DEPARTMENT OF ENERGY
[FE Docket No. 10-63-LNG]
ConocoPhillips Alaska Natural Gas Corporation and Marathon Oil
Company; Application for Blanket Authorization To Export Liquefied
Natural Gas
AGENCY: Office of Fossil Energy, DOE.
ACTION: Notice of application.
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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice of receipt of an application, filed jointly on June
8, 2010, by ConocoPhillips Alaska Natural Gas Corporation (CPANGC) and
Marathon Oil Company (Marathon) (collectively Applicants), requesting
blanket authorization to export a quantity of liquefied natural gas
(LNG) equal to the difference between the 99 trillion British thermal
units (TBtus) authorized in DOE/FE Order Nos. 2500 and 2500-A, and the
cumulative volume that is ultimately exported by Applicants under their
currently-effective blanket authorization from April 1, 2009, through
March 31, 2011. Applicants seek blanket authorization to export this
volume of LNG from facilities located near Kenai, Alaska, to Japan and/
or one or more other countries globally with which trading is not
prohibited by U.S. law for a two-year period commencing April 1, 2011,
and terminating March
[[Page 38094]]
31, 2013. The application was filed under section 3 of the Natural Gas
Act (NGA), as amended by section 201 of the Energy Policy Act of 1992,
and 10 CFR part 590 of DOE's regulations. Protests, motions to
intervene, notices of intervention, and written comments are invited.
DATES: Protests, motions to intervene or notices of intervention, as
applicable, requests for additional procedures, and written comments
are to be filed at the address listed below in ADDRESSES no later than
4:30 p.m., eastern time, August 2, 2010.
ADDRESSES: U.S. Department of Energy (FE-34), Office of Oil and Gas
Global Security and Supply, Office of Fossil Energy, Forrestal
Building, Room 3E-042, 1000 Independence Avenue, SW., Washington, DC
20585.
FOR FURTHER INFORMATION CONTACT:
Larine Moore or Marc Talbert, U.S. Department of Energy (FE-34), Office
of Oil and Gas Global Security and Supply, Office of Fossil Energy,
Forrestal Building, Room 3E-042, 1000 Independence Avenue, SW.,
Washington, DC 20585. (202) 586-9478; (202) 586-7991.
Edward Myers, U.S. Department of Energy, Office of the Assistant
General Counsel for Electricity and Fossil Energy, Forrestal Building,
Room 6B-159, 1000 Independence Ave., SW., Washington, DC 20585. (202)
586-3397.
SUPPLEMENTARY INFORMATION:
Background
CPANGC, a Delaware corporation with its principal place of business
in Anchorage, Alaska, is a wholly-owned subsidiary of ConocoPhillips
Company, a publicly-traded Delaware corporation. Marathon is an Ohio
corporation with its principal place of business in Houston, Texas.
CPANGC and Marathon are not affiliated. Applicants are joint indirect
owners of natural gas liquefaction and marine terminal facilities near
Kenai, Alaska, (Kenai LNG Facility) \1\ on Cook Inlet in Southcentral
Alaska.
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\1\ The Kenai LNG Facility is owned by the Kenai LNG
Corporation. CPANGC has a 70% ownership interest and Marathon has a
30% ownership interest in Kenai LNG Corporation.
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Existing Blanket Authorization
On June 3, 2008, in DOE/FE Order No. 2500, FE granted Applicants
blanket authorization to export up to 99 TBtus of LNG (the equivalent
of 98.1 Billion cubic feet (Bcf) of natural gas) from the Kenai LNG
Facility to Japan and/or one or more countries on either side of the
Pacific Rim for a two-year term, which extends through March 31, 2011.
DOE/FE denied rehearing of DOE/FE Order No. 2500 in DOE/FE Order No.
2500-A issued on July 30, 2008.
Current Application
In the instant application, Applicants seek a two-year blanket
authorization commencing April 1, 2011, and terminating March 31, 2013,
for a quantity of LNG equal to the difference between the 99 TBtus (the
equivalent of 98.1 billion cubic feet (Bcf) of natural gas) that FE
authorized Applicants to export in DOE/FE Order No. 2500, and the
cumulative volume of LNG that is ultimately exported by Applicants
under their currently-effective blanket authorization from April 1,
2009, through March 31, 2011, as reflected in the monthly export
reports filed with FE by Applicants. Applicants note that they do not
seek blanket authorization to export volumes of LNG beyond those
authorized by DOE/FE Order No. 2500, but seek authorization that would,
in effect, allow an additional two years to export the currently-
authorized volume.
Applicants expect to continue exporting LNG to Japan and/or one or
more countries globally with which trade is not prohibited by U.S. law,
acting on their own behalf or as agent for others, pursuant to the
requested blanket authorization.
Applicants state that the application is being filed to ensure
Applicants will have necessary blanket authorization should they elect
to continue LNG exports after March 31, 2011. Applicants state that
whether they ultimately continue LNG exports after March 31, 2011,
could be impacted by: (1) LNG market conditions; (2) the ability to
secure LNG shipping at economic rates; and (3) strategic decisions
regarding the future role of the Kenai LNG Facility. Further background
information on the Applicant's prior long-term authorizations to export
LNG and exports under Order No. 2500 can be found in the application.
Public Interest Considerations
In support of their application, Applicants state that under
section 3 of the NGA, FE must authorize an export of natural gas from
the United States to a foreign country unless there is a finding that
the export ``will not be consistent with the public interest.'' \2\
Applicants state that FE found that section 3 of the NGA creates a
statutory presumption in favor of approval of a properly-framed export
application, which opponents bear the burden of overcoming.\3\
Applicants state that FE's public interest determination is guided by
DOE Delegation Order No. 0204-111, which ``designates domestic need for
the natural gas proposed to be exported as the only explicit criterion
that must be considered in determining the public interest.'' \4\
Applicants state that FE has found the regional need for the natural
gas proposed to be exported to be the principal focus of its review for
an application for authorization to export LNG from the State of
Alaska.\5\ Applicants also state that FE has in turn evaluated regional
need by determining whether there is sufficient evidence that regional
natural gas supplies will be adequate to meet both regional needs and
the proposed LNG export during the relevant export period, and that FE
has also considered other factors to the extent they are shown to be
relevant to the public interest determination for an export
authorization.
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\2\ 15 U.S.C. 717b. Natural gas is defined to include LNG in 10
CFR part 590.102(i) (2010).
\3\ DOE/FE Order No. 1473 at p. 13, citing, Panhandle Producers
and Royalty Owners Association v. ERA, 822 F.2d 1105, 1111 (DC Cir.
1987); the court found Section 3 of the NGA ``requires an
affirmative showing of inconsistency with the public interest to
deny an application'' and that a ``presumption favoring * * *
authorization * * * is completely consistent with, if not mandated
by, the statutory directive.'' See also Independent Petroleum
Association v. ERA, 870 F.2d 168, 1 72 (5th Cir. 1989); Panhandle
Producers and Royalty Owners Association v. ERA, 847 F.2d 1168, 1176
(5th Cir. 1988).
\4\ Order No. 1473 at p. 14 citing, Delegation Order No. 0204-
111, 49 FR 6684 (Feb 22, 1984).
\5\ Order No. 1473 at p. 15, n. 48; DOE/FE Order No. 2500 at pp.
44-45.
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Finally, Applicants state that the application is not inconsistent
with the public interest for the following reasons, as well as more
detailed reasons set forth in the application:
First, the Applicants contend that the natural gas to be exported
has already been determined to be surplus to regional needs on a
reserve basis by FE in DOE/FE Order No. 2500. Therefore, according to
the Applicants, the LNG to be exported during the two-year period will
not be needed to satisfy regional demand for natural gas;
Second, the Applicants allege that allowing them to have an
additional two years to complete the export of these volumes will not
jeopardize service to the local markets into which this natural gas
might otherwise be sold; to the contrary, it will serve to enhance the
supply security of these markets on a day-by-day basis during the
export term in the following ways:
(a) The Kenai LNG Facility will continue to provide a critical
back-up natural gas supply service for the local market in times of
peak needs on the coldest days of the year; and
[[Page 38095]]
(b) During the summer months, the Kenai LNG Facility's base level
of demand will ensure that production from natural gas wells are not
curtailed or shut-in, thereby protecting reserves and well
deliverability to serve utility demand during the colder months.
Third, the Applicants maintain that in the longer term, the
maintenance of the Kenai LNG Facility creates options for future uses
that would enhance natural gas supplies for local consumption,
including possible retrofitting of the facility to provide
regasification capacity so that it could function as a storage
facility; conversion into an import and LNG regasification terminal;
and use of the existing terminal for exports to support the economic
viability of a ``bullet line'' from Alaska's North Slope.
Fourth, the Applicants submit that a number of studies of natural
gas reserves support the conclusion that there are sufficient supplies
to satisfy local demand and the proposed export authorization.
Fifth, with the recent execution of two natural gas supply
contracts with local utilities, the Applicants maintain that virtually
all of the local utilities' projected gas needs through the term of the
requested authorization will be satisfied; and Applicants, as suppliers
to these utilities, will take their supply obligations into account in
determining the extent to which to use their requested export
authorization.
Sixth, the Applicants contend that the Kenai LNG Facility provides
local economic benefits, including as an employer and as a source of
royalties and taxes for the State of Alaska and the Kenai Peninsula
Borough.
Request for Expedited Action
Applicants request that FE act upon their application as
expeditiously as possible, preferably within 90 days.
Environmental Impact
Applicants state that approval of the requested export
authorization is not a major Federal action significantly affecting the
quality of the human environment within the meaning of the National
Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq., and no
environmental impact statement or environmental assessment is required.
Applicants state that the proposed export of LNG would not require any
changes to the Kenai LNG Facility. Applicants state that the LNG
manufacturing and storage facilities that will be utilized during the
blanket authorization already exist and have been operated safely
without major disruption of supply or accident from their startup in
1969.
DOE/FE Evaluation
This export application will be reviewed pursuant to section 3 of
the NGA, as amended, and the authority contained in DOE Delegation
Order No. 00-002.00I (Nov. 10, 2009) and DOE Redelegation Order No. 00-
002.04D (Nov. 6, 2007). In reviewing this LNG export application, DOE
will consider domestic need for the gas, as well as any other issues
determined to be appropriate, including whether the arrangement is
consistent with DOE's policy of promoting competition in the
marketplace by allowing commercial parties to freely negotiate their
own trade arrangements. Parties that may oppose this application should
comment in their responses on these issues.
The National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et
seq., requires DOE to give appropriate consideration to the
environmental effects of its proposed decisions. No final decision will
be issued in this proceeding until DOE has met its NEPA
responsibilities.
Public Comment Procedures
In response to this notice, any person may file a protest, motion
to intervene, or notice of intervention and written comments, as
provided in DOE's regulations at 10 CFR 590.301, et seq. Any person
wishing to become a party to the proceeding and to have their written
comments considered as a basis for any decision on the application must
file a motion to intervene or notice of intervention, as applicable.
The filing of a protest with respect to the application will not serve
to make the protestant a party to the proceeding, although protests and
comments received from persons who are not parties will be considered
in determining the appropriate action to be taken on the application.
All protests, motions to intervene, notices of intervention, and
written comments must meet the requirements specified by the
regulations in 10 CFR part 590. Protests, motions to intervene, notices
of intervention, requests for additional procedures, and written
comments shall be filed with the Office of Oil and Gas Global Security
and Supply at the address listed above.
A decisional record on the application will be developed through
responses to this notice by parties, including the parties' written
comments and replies thereto. Additional procedures will be used as
necessary to achieve a complete understanding of the facts and issues.
A party seeking intervention may request that additional procedures be
provided, such as additional written comments, an oral presentation, a
conference, or trial-type hearing. Any request to file additional
written comments should explain why they are necessary. Any request for
an oral presentation should identify the substantial question of fact,
law, or policy at issue, show that it is material and relevant to a
decision in the proceeding, and demonstrate why an oral presentation is
needed. Any request for a conference should demonstrate why the
conference would materially advance the proceeding. Any request for a
trial-type hearing must show that there are factual issues genuinely in
dispute that are relevant and material to a decision and that a trial-
type hearing is necessary for a full and true disclosure of the facts.
If an additional procedure is scheduled, notice will be provided to
all parties. If no party requests additional procedures, a final
Opinion and Order may be issued based on the official record, including
the application and responses filed by parties pursuant to this notice,
in accordance with 10 CFR 590.316.
The application filed by Applicants is available for inspection and
copying in the Office of Oil and Gas Global Security and Supply docket
room, 3E-042, 1000 Independence Avenue, SW., Washington, DC 20585. The
docket room is open between the hours of 8 a.m. and 4:30 p.m., Monday
through Friday, except Federal holidays. The application is also
available electronically by going to the following Web address: http://www.fe.doe.gov/programs/gasregulation/index.html.
Issued in Washington, DC on June 28, 2010.
John A. Anderson,
Manager, Natural Gas Regulatory Activities, Office of Oil and Gas
Global Security and Supply, Office of Fossil Energy.
[FR Doc. 2010-16042 Filed 6-30-10; 8:45 am]
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