On August 7, 2012, the Office of Fossil Energy of the Department of Energy (“DOE”) issued a Final Opinion and Order, Order No. 2961-A, granting long-term authorization to Sabine Pass Liquefaction LLC (“Sabine Pass”) to export liquefied natural gas (“LNG”) from the Sabine Pass LNG terminal in Cameron Parish, Louisiana to non-Free Trade Agreement (“non-FTA”) nations.

This remains the only long-term authorization issued by DOE to export LNG to non-FTA nations.  There are currently 9 other non-FTA export applications that are being held in abeyance by DOE until the completion and review of two studies evaluating the impacts of LNG exports on U.S. gas supplies, prices, and markets. 

DOE’s Order No. 2961-A finalizes the long-term authorization granted to Sabine Pass to export domestically-sourced LNG to non-FTA nations, and is the first such authorization issued by DOE.  The Sabine Pass project has now received authorization from both FERC and DOE.  The FERC authorization is subject to judicial review by Sierra Club to litigate its NEPA arguments concerning the sufficiency of the EA.  Sierra Club may also seek rehearing of DOE’s denial of intervention.  Sierra Club is likely to continue to pursue its NEPA arguments about the need to broadly consider the cumulative and indirect environmental impacts of upstream shale gas production in DOE and FERC proceedings involving other LNG export projects.  Judicial review of these orders could have broader implications regarding the scope of agencies’ analyses of indirect and cumulative impacts under NEPA.

The nine LNG export projects pending before DOE face other uncertainties as well.  Processing of these export applications is on hold at DOE pending issuance of a second study that was commissioned by DOE to evaluate the macroeconomic impacts associated with export of U.S. domestic natural gas supplies.  The first such study, performed by the U.S. Energy Information Administration, was released in January of 2012.  The second study is due out in late summer of this year, and will be posted for public review and comment.  Recently, a bi-partisan group of lawmakers including 10 Democrats and 34 Republicans from Texas, Louisiana, Arkansas and Oklahoma sent a joint letter to DOE urging the agency to proceed with processing pending applications.  DOE will review the studies and comments, and then determine what action, if any, to take concerning the pending applications, such as imposing a volumetric cap or percentage of supply limit on the amount of LNG that can be exported from the U.S.