164
and
Floridian orders are both 14.6 Bcf/yr of natural gas (0.04 Bcf/d), yet are not additive to one
another because the source of LNG approved under both orders is from the Floridian Facility.
395
Additionally, the volumes authorized
for export in the Bear Head and
Pieridae US orders are not
additive; together, they are limited to a maximum of 0.81 Bcf/d to reflect the current capacity of
the Maritimes Northeast Pipeline at the U.S.-Canadian border.
396
In sum, the total export
volume is within the range of scenarios analyzed in the 2014 and 2015 LNG Export Studies. The
2015 Study found that in all such scenarios—assuming LNG export volumes totaling 12 Bcf/d
up to 20 Bcf/d of natural gas—the United States would experience net economic benefits.
DOE/FE will continue taking a measured approach in reviewing the other pending
applications to export domestically produced LNG. Specifically, DOE/FE will
continue to
assess the cumulative impacts of each succeeding request for export authorization on the public
interest with due regard to the effect on domestic natural gas supply and demand fundamentals.
In keeping with the performance of its statutory responsibilities, DOE/FE will attach appropriate
and necessary terms and conditions to authorizations to ensure that the authorizations are utilized
in a timely manner and that authorizations are not issued except where the applicant can show
that there are or will be facilities capable of handling the proposed export volumes and existing
and forecast supplies that support that action. Other conditions will be applied as necessary.
The reasons in support of proceeding cautiously are several: (1) the 2014 and 2015 LNG
Export Studies, like any studies based on assumptions and economic projections,
are inherently
395
See Floridian Natural Gas Storage Co., LLC, DOE/FE Order No. 3744, at 22 (stating that the quantity of LNG
authorized for export by Floridian in DOE/FE Order No. 3744 “will be reduced by the portion of the total approved
volume of 14.6 Bcf/yr that is under firm contract directly or indirectly to Carib Energy (USA), LLC”);
see also id. at
21 (Floridian “may not treat the volumes authorized for export in the [
Carib and
Floridian] proceedings as additive
to one another.”).
396
See Bear Head LNG Corporation and Bear Head LNG (USA), DOE/FE Order No. 3770, at 178-79 (stating that
the quantity of LNG authorized for export by Bear Head LNG and Pieridae US “are not additive; together, they are
limited to a maximum of 0.81 Bcf/d to reflect the current capacity of the M&N US Pipeline.”).
165
limited in their predictive accuracy; (2) applications to export significant quantities of
domestically produced LNG are a new phenomena with uncertain impacts; and (3) the market for
natural gas has experienced rapid reversals in the past and is again
changing rapidly due to
economic, technological, and regulatory developments. The market of the future very likely will
not resemble the market of today. In recognition of these factors, DOE/FE intends to monitor
developments that could tend to undermine the public interest in grants of successive
applications for exports of domestically produced LNG and, as previously stated,
to attach terms
and conditions to the authorization in this proceeding and to succeeding LNG export
authorizations as are necessary for protection of the public interest.
XIII.
TERMS AND CONDITIONS
To ensure that the authorization issued by this Order is not inconsistent with the public
interest, DOE/FE has attached the following Terms and Conditions to the authorization. The
reasons for each term or condition are explained below. Delfin must abide by each Term and
Condition or may face rescission of the authorization or other appropriate sanction.
A.
Term of the Authorization
Delfin requests a 20-year term for the authorization commencing from
the date export
operations begin. Specifically, Delfin requests that, in light of the “planned phased
development” of its Facility—with successive trains expected to become operational from 2017
through 2021—DOE/FE construe the “date of first export” on a train-specific basis.
397
Under
this approach, exports from the first train, if placed in operation in 2017, would extend for 20
years from that first export. However, if the third train were placed in operation in 2020, exports
from the third train would be authorized for 20 years from the start of that train’s export
397
Delfin App. at 9.
166
operations (rather than only 17 years, if based on the date of first export from the first train).
Delfin acknowledges that this phased approach has not been previously adopted by DOE/FE but
asserts that it will facilitate the orderly development of its Facility and its customer
contracting.
398
Although a 20-year term is consistent with our practice in the non-FTA export
authorizations issued to date, DOE/FE does not believe that the 20-year term should apply on a
train-specific basis. Nor is such
a phased approach necessary, as DOE/FE is granting Delfin the
opportunity to export Make-Up Volumes, as described below. Therefore, the 20-year term will
begin on the date when Delfin commences commercial export of domestically sourced LNG
from the Delfin Liquefaction Facility, but not before.
B.
Commencement of Operations Within Seven Years
Consistent with our prior non-FTA authorizations to date, DOE/FE will add as a
condition of the authorization that Delfin must commence commercial LNG export operations
from the Delfin Liquefaction Facility no later than seven years from the date of issuance of this
Order. The purpose of this condition is to ensure that other entities that
may seek similar
authorizations are not frustrated in their efforts to obtain those authorizations by authorization
holders that are not engaged in actual export operations.
C.
Commissioning Volumes
Delfin will be permitted to apply for short-term export authorizations to export
Commissioning Volumes prior to the commencement of the first commercial exports of
domestically sourced LNG from the Delfin Liquefaction Facility. “Commissioning Volumes”
are defined as the volume of LNG produced and exported under a short-term authorization
398
See id.