U.S. permit approved for Cameron plant expansion

Sempra International says it has received the final Energy Department permit it needs for a proposed expansion of its Cameron liquefied natural gas terminal in Hackberry.

Approval is still needed from the Federal Energy Regulatory Commission, company spokesman J.C. Thomas in San Diego said Tuesday. A public hearing is scheduled Thursday in Sulphur on a draft environmental impact statement, he said.

Sempra wants to add liquification plants and other facilities to turn the import terminal into an export terminal. The expansion would cost up to $10 billion, with up to $7 billion of it in capital construction costs.

The Energy Department approval, draft environmental impact statement and commercial agreements put Sempra on track for construction to start this year, with full commercial operation in 2019, Octavio M.C. Simoes, president of Sempra LNG, said in a news release Tuesday.

The Energy Department has now approved six LNG export projects — three in southwest Louisiana, two in Freeport, Texas, and one in Maryland — with applications pending for another 20, according to the American Petroleum Institute. Those still in line include eight in Louisiana, six in Texas, two in Oregon, one each in Georgia and Mississippi, and two in the Gulf of Mexico — one south of Cameron Parish and the other south of Pascagoula, Miss., and east of the Mississippi River’s mouth.

Experts agree that not all will be built, said Eric Milito, upstream director for the American Petroleum Institute.

The Energy Department already had approved exports from Cameron LNG to countries that have free-trade agreements with the United States. The 152-page document released Tuesday covers all other countries.

The department said it got four public comments supporting Sempra’s plant and two organizations, the Sierra Club and the American Public Gas Association, opposed it in a different procedure. APGA argued that exporting natural gas would push prices too high, jeopardizing the use of natural gas as a “bridge fuel” away from coal-fired power. The Sierra Club argued, among other contentions, that the plant would increase the potential for a downturn in what it described as the industry’s “boom or bust” cycle in local communities.

The department said it agreed with arguments that natural gas prices are unlikely to reach international levels because it would be hard to sell exports that cost as much as the competition. As for the boom-or-bust argument, it said, it was more likely “that Cameron’s ability to export to non-FTA countries will deepen and diversify the market for U.S.-produced natural gas, making the potential for a precipitous price-driven downturn in production activities less likely, not more likely.”

Japan and Eastern Europe are major non-free trade markets for LNG and have been lobbying for approval of the proposed U.S. plants, Milito said.

He said the world market is currently close to 40 billion cubic feet of LNG imports and exports a day, with likely total capacity of up to 75 bcf a day. The six projects approved so far by DoE and another 20 that have applied could produce a total of 25 to 35 bcf per day, but proposed projects outside the United States would total nearly 100 billion cubic feet per day, Milito said.

The department should act quickly on remaining applications, he said. “Every day puts the United States further behind when it comes to competing in a global market.”