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LNG: Regulatory and Regional Considerations

LNG: Regulatory and Regional Considerations. The Energy Council’s LNG/CNG Workshop Biloxi, Mississippi April 8, 2005 Robert Cupina, Deputy Director, Office of Energy Projects. Adequate Infrastructure OEP. Effective Market Rules OMTR. Competitive Market FERC. Market Oversight OMOI.

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LNG: Regulatory and Regional Considerations

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  1. LNG: Regulatory and Regional Considerations The Energy Council’s LNG/CNG Workshop Biloxi, Mississippi April 8, 2005 Robert Cupina, Deputy Director, Office of Energy Projects

  2. Adequate Infrastructure OEP Effective Market Rules OMTR Competitive Market FERC Market Oversight OMOI FERCHelping Markets Work

  3. FERC Organizational Structure

  4. Major Interstate and Canadian Pipelines and Gas Production Areas

  5. Natural Gas Act NATURAL GAS ACT Section 3 Import/Export Section 7(c) Interstate Case Specific Blanket Authority Case Specific Automatic Prior Notice

  6. Natural Gas Act • Case Specific Section 7(c) and 3 • Conduct a full review of proposal including engineering, rate, accounting, and market analysis • Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement

  7. Georgia Straits (96) 1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (135,270) 5. Algonquin (140) 6. Transcontinental (105) 6. CIG (282,92) 7. CIG (118) 8. TransColorado (125) 9. WIC (116) Northwest (162,113) Northwest (224) Iroquois(70) WBI (80) ANR (220,107,143) NFS/DTI (150) 5 1 Northwest (191) Tuscarora (96) 2 3 6 7 Cheyenne Plains (560,170) 9 TETCO(223) 4 Questar (102) TETCO(250) 8 6 Cove Point (445) Kern River (886) Greenbrier (600) El Paso (140) East Tennessee (510) Kern River (282) Transwestern (375) Transco (323) North Baja (500) TETCO (197) SCG Pipeline (190) El Paso (320) Petal (600) Southern (330) Discovery (150) Trunkline (200) Calypso (832) Trunkline(1,500) Cheniere Sabine (2,600) Ocean Express (842) Tennessee (320) Major Pipeline Projects Certificated (MMcf/d)January 2002 to March 2005 17.1 BCF/D Total 2,911 Miles

  8. Algonquin BG LNG (500) Rendezvous (300) Northern Border (Chicago III) (130) Mill River (800) Entrega (EnCana) (1,500) WIC (350) Logan Lateral (Texas Eastern) (900) TransColorado (300) CIG (105) El Paso (502) CenterPoint(113) Golden Pass (2,000) Dominion Southern (200) San Patricio (1,000) McMoRan (1,500) Cheniere Corpus Christi (2,600) Seafarer Pipeline (El Paso) (800) Compass Pass (1,000) Pearl Crossing (2,000) Vista Del Sol (1,100) Major Pipeline ProjectsPending (MMcf/d)March 2005 17.7 BCF/D Total 930 Miles

  9. Wyckoff (6.0) SemGas (5.5) Bluewater (27.0) Seneca (0.8) KM (6.5) Dominion (9.4) Tennessee (5.0) Dominion (5.6) Texas Gas (8.2) Saltville (5.8) Columbia (12.4) Natural (10.0) Port Barre (10.5) County Line (6.0) CenterPoint (15.0) Freebird (6.1) Copper Eagle (3.2) Caledonia (11.7) Natural (10.7) Sabine (40.0) Falcon MoBay (20.0) EnCana (8.0) Falcon Hill-Lake (3.0) SG Resources (12.0) Starks (19.2) Petal (8.0) Certificated Since 6/1/01 Copiah (3.3) Liberty (17.0) Currently Pending Petal (5.0) Gulf South (18.5) Pine Prarie (24.0) On The Horizon Storage Projects(Capacity in Bcf)March 2005

  10. Balancing Interests

  11. Environmental Review FERC Review Process Public Interest Review (Traditional Process) Notice of Intent Notice of Application Scoping Meetings & Site Visit Interventions Protests LNG Cryogenic Design & Safety Review Data Requests Analysis Agency Coordination Data Requests Analysis Tech Conference (Optional) Preliminary Determination (Optional) DEIS FEIS Authorization / Rejection

  12. Traditional vs. NEPA Pre-Filing Process Develop Study Corridor File At FERC Announce Open Season Prepare Resource Reports Traditional - Applicant Conduct Scoping Issue Draft EIS Issue Final EIS Issue Order Traditional - FERC Announce Open Season Develop Study Corridor File At FERC Prepare Resource Reports NEPA Pre-Filing - Applicant Conduct Scoping Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final EIS Issue Order NEPA Pre-Filing - FERC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (months)

  13. NPC Study • Align the conflicting policies • - Policies that encourage consumption • - Policies that inhibit gas supply

  14. LNG – Two Points • Natural gas is the economic/environmental fuel of choice. • 96% of natural gas reserves are outside North America.

  15. How Much Natural GasIs Out There? Total World Gas Reserves as of 1/1/03: 6,127 Trillion Cubic Feet Source: EIA, World Oil

  16. NORTH AMERICA RESERVES 4% WORLD PROVED RESERVES 2003: 6,127 TCF Where Are the Export Facilities? Global LNG Supply Facilities Global LNG Supply Existing Under Construction Proposed • LNG supply growing • Multiple LNG supply proposals announced • Long term LNG supply outlook robust Source: Cedigaz, NPC 16 Office of Energy Projects

  17. LNG Supply Stream -- From Production to Distribution Natural Gas Pipelines Dock Dock Natural Gas Production Storage and Vaporization Facility Liquefaction and Storage Facility

  18. FERC Economic Oversight – Access to LNG Terminal Liquid to Vapor Flow LNG Buyers A LNG Suppliers B B Open Access At Delivery of Vapor into Interstate Pipeline System A Open Access At Delivery of Liquid to Terminal 18 Office of Energy Projects

  19. CONSTRUCTED A. Everett, MA : 1.035 Bcfd (Tractebel - DOMAC) B. Cove Point, MD : 1.0 Bcfd (Dominion - Cove Point LNG) C. Elba Island, GA : 0.68 Bcfd (El Paso - Southern LNG) D. Lake Charles, LA : 1.0 Bcfd (Southern Union - Trunkline LNG) E. Gulf of Mexico: 0.5 Bcfd, (Gulf Gateway Energy Bridge - Excelerate Energy) APPROVED BY FERC 1. Lake Charles, LA: 1.1 Bcfd (Southern Union - Trunkline LNG) 2. Hackberry, LA : 1.5 Bcfd, (Sempra Energy) 3. Bahamas : 0.84 Bcfd, (AES Ocean Express)* 4. Bahamas : 0.83 Bcfd, (Calypso Tractebel)* 5. Freeport, TX : 1.5 Bcfd, (Cheniere/Freeport LNG Dev.) 6. Sabine, LA : 2.6 Bcfd (Cheniere LNG) 7. Elba Island, GA: 0.54 Bcfd (El Paso - Southern LNG) APPROVED BY MARAD/COAST GUARD 8. Port Pelican: 1.6 Bcfd, (Chevron Texaco) 9. Louisiana Offshore : 1.0 Bcfd (Gulf Landing - Shell) PROPOSED TO FERC 10. Fall River, MA : 0.8 Bcfd, (Weaver's Cove Energy/Hess LNG) 11. Long Beach, CA : 0.7 Bcfd, (Mitsubishi/ConocoPhillips - Sound Energy Solutions) 12. Corpus Christi, TX : 2.6 Bcfd, (Cheniere LNG) 13. Corpus Christi, TX : 1.0 Bcfd (Vista Del Sol - ExxonMobil) 14. Sabine, TX : 1.0 Bcfd (Golden Pass - ExxonMobil) 15. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG - BP) 16. Bahamas : 0.5 Bcfd, (Seafarer - El Paso/FPL ) 17. Corpus Christi, TX: 1.0 Bcfd (Ingleside Energy - Occidental Energy Ventures) 18.Providence, RI : 0.5 Bcfd (Keyspan & BG LNG) 19. Port Arthur, TX: 1.5 Bcfd (Sempra) 20. Cove Point, MD : 0.8 Bcfd (Dominion) 21. LI Sound, NY: 1.0 Bcfd (Broadwater Energy - TransCanada/Shell) 22.Pascagoula, MS: 1.0 Bcfd (Gulf LNG Energy LLC) 23. Bradwood, OR: 1.0 Bcfd (Northern Star LNG - Northern Star Natural Gas LLC) 24.Pascagoula, MS: 1.3 Bcfd (Casotte Landing - ChevronTexaco) 25. Cameron, LA: 3.3 Bcfd (Creole Trail LNG - Cheniere LNG) 26. Port Lavaca, TX: 1.0 Bcfd (Calhoun LNG - Gulf Coast LNG Partners) PROPOSED TO MARAD/COAST GUARD 27. California Offshore: 1.5 Bcfd (Cabrillo Port - BHP Billiton) 28. So. California Offshore : 0.5 Bcfd, (Crystal Energy) 29. Louisiana Offshore : 1.0 Bcfd (Main Pass McMoRan Exp.) 30. Gulf of Mexico: 1.0 Bcfd (Compass Port - ConocoPhillips) 31. Gulf of Mexico: 2.8 Bcfd (Pearl Crossing - ExxonMobil) 32. Gulf of Mexico: 1.5 Bcfd (Beacon Port Clean Energy Terminal - ConocoPhillips) POTENTIAL SITES IDENTIFIED BY PROJECT SPONSORS 33. Coos Bay, OR: 0.13 Bcfd, (Energy Projects Development) 34. Somerset, MA: 0.65 Bcfd (Somerset LNG) 35. California - Offshore: 0.75 Bcfd, (Chevron Texaco) 36. Pleasant Point, ME : 0.5 Bcf/d (Quoddy Bay, LLC) 37. St. Helens, OR: 0.7 Bcfd (Port Westward LNG LLC) 38. Offshore Boston, MA: 0.8 Bcfd (Northeast Gateway - Excelerate Energy) 39. Galveston, TX: 1.2 Bcfd (Pelican Island - BP) 40. Philadelphia, PA: 0.6 Bcfd (Freedom Energy Center - PGW) 41. Astoria, OR: 1.0 Bcfd (Skipanon LNG - Calpine) 42. Freeport, TX: 1.5 Bcfd, (Cheniere/Freeport LNG Dev. - Expansion) 43. Offshore Boston, MA: 0.4 Bcfd (Neptune LNG - Tractebel) CANADIAN APPROVED AND POTENTIAL TERMINALS 44. St. John, NB : 1.0 Bcfd, (Canaport - Irving Oil) 45. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Anadarko) 46. Quebec City, QC : 0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France) 47. Rivière-du- Loup, QC: 0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada) 48. Kitimat, BC: 0.61 Bcfd (Galveston LNG) 49. Prince Rupert, BC: 0.30 Bcfd (WestPac Terminals) 50. Goldboro, NS 1.0 Bcfd (Keltic Petrochemicals) MEXICAN APPROVED AND POTENTIAL TERMINALS 51. Altamira, Tamulipas : 0.7 Bcfd, (Shell/Total/Mitsui)** 52. Baja California, MX : 1.0 Bcfd, (Sempra & Shell)** 53. Baja California - Offshore : 1.4 Bcfd, (Chevron Texaco) 54. Lázaro Cárdenas, MX : 0.5 Bcfd (Tractebel/Repsol) 55. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific LNG) FERC Existing, Proposed and Potential North American LNG Terminals 49 48 47 45 46 50 44 36 41 43 23 A 37 18 38 10 33 34 21 15 40 B 20 27 11 28 C 7 35 52 16 22 53 6 D,1 2 25 24 3 4 5,42 55 14 1 12 31 30 19 29 13 17 E 32 9 26 39 8 US Jurisdiction FERC US Coast Guard 51 54 As of March 25, 2005 * US pipeline approved; LNG terminal pending in Bahamas ** These projects have been approved by the Mexican and Canadian authorities

  20. North East LNG Terminals Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Pleasant Point, ME (36) Everett, MA (A) Offshore Boston - Excelerate (38) Offshore Boston - Tractebel (43) Providence, RI (18) Fall River, MA (10) Somerset, MA (34) March 31, 2005

  21. Mid-Atlantic LNG Terminals Long Island Sound, NY (21) Philadelphia, PA (40) Logan Township, NJ (15) Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Cove Point, MD (B/20) March 31, 2005

  22. South East LNG Terminals Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Elba Island, GA (C/7) Bahamas (3/4/16) (Pipelines only) March 31, 2005

  23. Gulf Coast LNG Terminals Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Pascagoula, MS (22/24) Lake Charles, LA (D/1) Port Arthur (19) Sabine Pass, LA (6) Cameron (25) Golden Pass (14) Hackberry (2) Galveston, TX (39) Freeport McMoran (29) Freeport, TX (5/42) Compass Port(30) Port Lavaca, TX (26) Gulf Landing (9) Corpus Christi, TX (12) Vista Del Sol (13)Ingleside LNG (17) Beacon Port (32) Pearl Crossing (31) Gulf Gateway (E) Port Pelican (8) March 31, 2005

  24. Southwest LNG Terminals Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Long Beach, CA (11) California Offshore (27/28/35) BHP Billiton (27) Crystal Energy (28) March 31, 2005 Chevron Texaco (35)

  25. North West LNG Terminals Astoria, OR (41) Legend: Existing Terminal Approved Terminal Proposed Terminal: Pre-Filing Proposed Terminal: Filed Working on DEIS Working on FEIS Potential Terminal Bradwood, OR, Northern Star(23) St. Helens, OR (37) Coos Bay, OR (33) March 31, 2005 Office of Energy Projects 25

  26. LNG Properties andSafety • LNG is natural gas that in its liquid state at -259º Fahrenheit - it is commonly stored and shipped at slightly above atmospheric pressure. • LNG is odorless, colorless, non-toxic - it neither explodes nor burns as a liquid. • LNG vapors are flammable only in concentrations of 5% to 15% with air and will not explode in an unconfined environment - the ignition temperature is more than 500º Fahrenheit higher than gasoline. • In the past 40 years there have been more than 33,000 LNG ship voyages without a significant accident or cargo spillage.

  27. LNG TerminalSiting Issues • Safety • Take Away Capacity • Local acceptance • Federal and State approvals

  28. The FERC Process: We Issue Notice of the Application Project Sponsor Sends Landowner Notification Package SCOPING = We Issue Notice of Intent to Prepare the NEPA Document Public Meeting(s) Public Input: File an Intervention Contact the project sponsor w/questions, concerns; contact FERC Send letters expressing concerns about environmental impact Attend scoping meetings Opportunities for Public Involvement

  29. The FERC Process: Issue Notice of Availability of the DEIS Public Meetings on DEIS Issue a Commission Order Public Input: File comments on the adequacy of DEIS Attend public meetings to give comments on DEIS Interveners can file a request for Rehearing of a Commission Order Opportunities for PublicInvolvement

  30. Recent Events • ABS Study • Skikda Accident • Reorganization for Safety • Fire Marshal Interaction • Sandia Study • Regional Planning

  31. Outlook/Issues Associatedwith LNG Development • States are attempting to assert economic jurisdiction in the post-Hackberry environment. • Disinformation about safety. • Legislative/Judicial Action

  32. US Natural Gas Balance

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