170
public disclosure, and DOE/FE determines it will be afforded confidential treatment in
accordance with 10 C.F.R. § 1004.11.
407
DOE/FE will require that Delfin file or cause to be filed with DOE/FE any relevant long-
term commercial agreements, including liquefaction tolling agreements, pursuant to which
Delfin exports LNG as agent for a Registrant.
DOE/FE finds that the submission of all such agreements or contracts within 30 days of
their execution using the procedures described below will be consistent with the “to the extent
practicable” requirement of section 590.202(b). By way of example and without limitation, a
“relevant long-term commercial agreement” would include an agreement with a minimum term
of two years, an agreement to provide natural gas processing or liquefaction services at the
Delfin Liquefaction Facility, a long-term sales contract involving natural gas or LNG stored or
liquefied at the Delfin Liquefaction Facility, or an agreement to provide export services from the
Delfin Liquefaction Facility.
In addition, DOE/FE finds that section 590.202(c) of DOE/FE’s regulations
408
requires
that Delfin file, or cause to be filed, all long-term contracts associated with the long-term supply
of natural gas to the Delfin Liquefaction Facility, whether signed by Delfin or the Registrant,
within 30 days of their execution.
DOE/FE recognizes that some information in Delfin’s or a Registrant’s long-term
commercial agreements associated with the export of LNG, and/or long-term contracts
associated with the long-term supply of natural gas to the Delfin Liquefaction Facility, may be
commercially sensitive. DOE/FE therefore will provide Delfin the option to file or cause to be
filed either unredacted contracts, or in the alternative (A) Delfin may file, or cause to be filed,
407
Id. § 590.202(e).
408
Id. § 590.202(c).
171
long-term contracts under seal, but it also will file either: i) a copy of each long-term contract
with commercially sensitive information redacted, or ii) a summary of all major provisions of the
contract(s) including, but not limited to, the parties to each contract, contract term, quantity, any
take or pay or equivalent provisions/conditions, destinations, re-sale provisions, and other
relevant provisions; and (B) the filing must demonstrate why the redacted information should be
exempted from public disclosure.
To ensure that DOE/FE destination and reporting requirements included in this Order are
conveyed to subsequent title holders, DOE/FE will include as a condition of this authorization
that future contracts for the sale or transfer of LNG exported pursuant to this Order shall include
an acknowledgement of these requirements.
G.
Export Quantity
In the Application, Delfin sought authorization to export up 657.5 Bcf/yr of natural gas
(1.8 Bcf/d), which is within the maximum liquefaction capacity of the Delfin Liquefaction
Facility as approved by MARAD.
409
As set forth herein, this Order authorizes the export of
LNG in the full amount requested, up to the equivalent of 657.5 Bcf/yr of natural gas.
H.
Combined FTA and Non-FTA Export Authorization Volumes
Delfin is currently authorized in DOE/FE Order No. 3393 to export domestically
produced LNG to FTA countries in a volume equivalent to approximately 657.5 Bcf/yr of natural
gas. Because the source of LNG for that FTA order and this Order is the Delfin Liquefaction
Facility, Delfin may not treat the volumes as additive to one another.
409
See MARAD ROD at 10-11; Final EIS at xxii, 2-1.
172
XIV.
FINDINGS
On the basis of the findings and conclusions set forth above, we find that it has not been
shown that a grant of the requested authorization will be inconsistent with the public interest, and
we further find that Delfin’s Application should be granted subject to the Terms and Conditions
set forth herein. The following Ordering Paragraphs reflect current DOE/FE practice.
XV.
ORDER
Pursuant to section 3 of the Natural Gas Act, it is ordered that:
A. Delfin LNG LLC (Delfin) is authorized to export domestically produced LNG by
vessel from the proposed floating Delfin Liquefaction Facility, to be located in West Cameron
Block 167 in the Gulf of Mexico, offshore of Cameron Parish, Louisiana. Delfin is authorized to
export this LNG in a volume equivalent to 657.5 Bcf/yr of natural gas on its own behalf and as
agent for other entities that hold title to the natural gas, pursuant to one or more long-term
contracts (a contract greater than two years).
B. The 20-year authorization period will commence when Delfin commences
commercial export of domestically sourced LNG from the Delfin Liquefaction Facility, but not
before. Delfin may export Commissioning Volumes prior to the commencement of the terms of
this Order, pursuant to a separate short-term export authorization. The Commissioning Volumes
will not be counted against the maximum level of volumes previously authorized in Delfin’s
FTA order (DOE/FE Order No. 3393) or in this Order.
C. Delfin may continue exporting for a total of three years following the end of the 20-
year export term, solely to export any Make-Up Volume that it was unable to export during the
original export period. The three-year Make-Up Period allowing the export of Make-Up
Volumes does not affect or modify the maximum volume of LNG authorized for export in
Delfin’s existing FTA order (DOE/FE Order No. 3393) or in this Order. Insofar as Delfin may
173
seek to export additional volumes not previously authorized for export, it will be required to
obtain appropriate authorization from DOE/FE.
D. Delfin must commence export operations using the planned liquefaction facilities no
later than seven years from the date of issuance of this Order.
E. The LNG export quantity authorized in this Order is equivalent to 657.5 Bcf/yr of
natural gas. This quantity is not additive to the export volume in Delfin’s existing FTA order, set
forth in DOE/FE Order No. 3393.
F. This LNG may be exported to any country with which the United States does not have
a FTA requiring the national treatment for trade in natural gas, which currently has or in the
future develops the capacity to import LNG, and with which trade is not prohibited by United
States law or policy.
G. Delfin shall ensure that all transactions authorized by this Order are permitted and
lawful under United States laws and policies, including the rules, regulations, orders, policies,
and other determinations of the Office of Foreign Assets Control of the United States
Department of the Treasury, MARAD, and FERC. Failure to comply with this requirement
could result in rescission of this authorization and/or other civil or criminal remedies.
H. Delfin shall ensure compliance with all terms and conditions described by MARAD
in its Record of Decision dated March 13, 2017, and/or imposed in MARAD’s forthcoming
deepwater port license for Delfin.
Additionally, this authorization is conditioned on Delfin’s
receipt of all connected local, state, and federal permits (including FERC’s authorization under
Section 7 of the Natural Gas Act for the Delfin Onshore Facility), and on Delfin’s on-going
compliance with any other preventative and mitigative measures at the Delfin Liquefaction
Facility imposed by MARAD or any other federal or state agencies.
174
I. (i) Delfin shall file, or cause others to file, with the Office of Regulation and
International Engagement a non-redacted copy of all executed long-term contracts associated
with the long-term export of LNG as agent for other entities from the Delfin Liquefaction
Facility. The non-redacted copies may be filed under seal and must be filed within 30 days of
their execution. Additionally, if Delfin has filed the contracts described in the preceding
sentence under seal or subject to a claim of confidentiality or privilege, within 30 days of their
execution, Delfin shall also file, or cause others to file, for public posting either: (a) a redacted
version of the contracts described in the preceding sentence, or (b) major provisions of the
contracts. In these filings, Delfin shall state why the redacted or non-disclosed information
should be exempted from public disclosure.
(ii) Delfin shall file, or cause others to file, with the Office of Regulation and
International Engagement a non-redacted copy of all executed long-term contracts associated
with the long-term supply of natural gas to the Delfin Liquefaction Facility. The non-redacted
copies may be filed under seal and must be filed within 30 days of their execution. Additionally,
if Delfin has filed the contracts described in the preceding sentence under seal or subject to a
claim of confidentiality or privilege, within 30 days of their execution, Delfin shall also file, or
cause others to file, for public posting either: i) a redacted version of the contracts described in
the preceding sentence, or ii) major provisions of the contracts. In these filings, Delfin shall state
why the redacted or non-disclosed information should be exempted from public disclosure.
J. Delfin, or others for whom Delfin acts as agent, shall include the following provision
in any agreement or other contract for the sale or transfer of LNG exported pursuant to this Order
and any other applicable DOE/FE authorization:
Customer or purchaser acknowledges and agrees that it will resell or transfer U.S.-
sourced natural gas in the form of LNG purchased hereunder for delivery only to
175
countries identified in Ordering Paragraph F of DOE/FE Order No. 4028, issued
June 1, 2017, in FE Docket No. 13-147-LNG and/or to purchasers that have agreed
in writing to limit their direct or indirect resale or transfer of such LNG to such
countries. Customer or purchaser further commits to cause a report to be provided
to Delfin LNG LLC that identifies the country of destination (or countries) into
which the exported LNG or natural gas was actually delivered and/or received for
end use, and to include in any resale contract for such LNG the necessary conditions
to insure that Delfin LNG LLC is made aware of all such actual destination
countries.
K. Delfin is permitted to use its authorization in order to export LNG as agent for other
entities, after registering such entities with DOE/FE. Registration materials shall include an
acknowledgement and agreement by the Registrant to supply Delfin with all information
necessary to permit Delfin to register that person or entity with DOE/FE, including: (1) the
Registrant’s agreement to comply with this Order and all applicable requirements of DOE/FE’s
regulations at 10 C.F.R. Part 590, including but not limited to destination restrictions; (2) the
exact legal name of the Registrant, state/location of incorporation/registration, primary place of
doing business, and the Registrant’s ownership structure, including the ultimate parent entity if
the Registrant is a subsidiary or affiliate of another entity; (3) the name, title, mailing address, e-
mail address, and telephone number of a corporate officer or employee of the Registrant to
whom inquiries may be directed; and (4) within 30 days of execution, a copy of any long-term
contracts not previously filed with DOE/FE, described in Ordering Paragraph I of this Order.
L. Each registration submitted pursuant to this Order shall have current information on
file with DOE/FE. Any changes in company name, contact information, change in term of the
long-term contract, termination of the long-term contract, or other relevant modification, shall be
filed with DOE/FE within 30 days of such change(s).
M. As a condition of this authorization, Delfin shall ensure that all persons required by
this Order to register with DOE/FE have done so. Any failure by Delfin to ensure that all such
176
persons or entities are registered with DOE/FE shall be grounds for rescinding in whole or in part
the authorization.
N. Within two weeks after the first export of domestically produced LNG occurs from
the Delfin Liquefaction Facility, Delfin shall provide written notification of the date that the first
export of LNG authorized in Ordering Paragraph A above occurred.
O. Delfin shall file with the Office of Regulation and International Engagement, on a
semi-annual basis, written reports describing the progress of the Delfin Liquefaction Facility.
The reports shall be filed on or by April 1 and October 1 of each year, and shall include
information on the progress of the Delfin Liquefaction Facility, the date the Liquefaction Facility
is expected to be operational, and the status of the long-term contracts associated with the long-
term export of LNG and any long-term supply contracts.
P. With respect to any change in control of the authorization holder, Delfin must comply
with DOE/FE’s Procedures for Change in Control Affecting Applications and Authorizations to
Import or Export Natural Gas.
410
For purposes of this Ordering Paragraph, a “change in control”
shall include any change, directly or indirectly, of the power to direct the management or policies
of Delfin, whether such power is exercised through one or more intermediary companies or
pursuant to an agreement, written or oral, and whether such power is established through
ownership or voting of securities, or common directors, officers, or stockholders, or voting trusts,
holding trusts, or debt holdings, or contract, or any other direct or indirect means.
411
Q. Monthly Reports: With respect to the LNG exports authorized by this Order, Delfin
shall file with the Office of Regulation and International Engagement, within 30 days following
the last day of each calendar month, a report indicating whether exports of LNG have been made.
410
See Procedures for Changes in Control at 65,541-42.
411
See id. at 65,542.
Document Outline - DEPARTMENT OF ENERGY
- OFFICE OF FOSSIL ENERGY
- OPINION AND ORDER GRANTING LONG-TERM, MULTI-CONTRACT AUTHORIZATION TO EXPORT LIQUEFIED NATURAL GAS
- BY VESSEL FROM A PROPOSED FLOATING LIQUEFACTION PROJECT
- AND DEEPWATER PORT 30 MILES OFFSHORE OF LOUISIANA
- TO NON-FREE TRADE AGREEMENT NATIONS
- DOE/FE ORDER NO. 4028
- I. INTRODUCTION
- II. SUMMARY OF FINDINGS AND CONCLUSIONS
- III. PUBLIC INTEREST STANDARD
- IV. DESCRIPTION OF REQUEST
- A. Description of Applicant
- B. Proposed Liquefaction Facility
- C. Procedural History
- D. Business Model
- E. Source of Natural Gas
- V. APPLICANT’S PUBLIC INTEREST ANALYSIS
- A. Unique Benefits of the Liquefaction Facility
- B. Adequacy of Domestic Supply
- C. Impact on Domestic Natural Gas Prices
- D. Domestic Benefits of LNG Exports
- VI. CURRENT PROCEEDING BEFORE DOE/FE
- A. Overview
- B. API’s Motion to Intervene and Comments
- C. V4EI’s Motion to Intervene and Protest
- D. APGA’s Motion to Intervene and Protest
- E. Sierra Club’s Motion to Intervene, Protest, and Comments
- 1. Alleged Scope of Environmental Impact Statement
- 2. Alleged Environmental Impacts from the Requested Authorization
- 3. Alleged Economic Impacts from the Requested Authorization
- F. Delfin’s Consolidated Response
- G. Sierra Club’s Renewed Motion to Reply and Reply
- VII. DOE/FE’S LNG EXPORT STUDIES
- A. 2012 LNG Export Study
- B. 2014 EIA LNG Export Study, Effect of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy Markets
- 1. Methodology
- 2. Scope of EIA Study
- 3. Results of the 2014 EIA LNG Export Study
- 4. Increased Natural Gas Prices
- 5. Increased Natural Gas Production and Supply
- 6. Decreased Domestic Natural Gas Consumption
- 7. Energy-Related Carbon Dioxide Emissions
- 8. Increased End-User Natural Gas and Electricity Delivered Prices
- 9. Increased Gross Domestic Product
- C. 2015 LNG Export Study, The Macroeconomic Impact of Increasing U.S. LNG Exports
- 1. Overview of Rice-Oxford’s Findings in the 2015 Study
- 2. Methodology
- 3. Natural Gas Market Assumptions Across International Demand Scenarios
- 4. The Rice World Gas Trade Model
- 5. The Oxford Global Economic Model and Global Industry Model
- 6. Results of the 2015 LNG Export Study
- VIII. COMMENTS ON THE 2014 AND 2015 LNG EXPORT STUDIES AND DOE/FE ANALYSIS
- A. Data Inputs and Estimates of Natural Gas Demand
- B. Distributional Impacts
- 1. Gross Domestic Product (GDP)
- a. Comments
- b. DOE/FE Analysis
- 2. Sectoral Impacts
- a. Comments
- b. DOE/FE Analysis
- 3. Household and Distributional Impacts
- a. Comments
- b. DOE/FE Analysis
- 4. Regional Impacts
- a. Comments
- b. DOE/FE Analysis
- C. Estimates of Domestic Natural Gas Supplies
- 1. Comments
- 2. DOE/FE Analysis
- a. Measures of Supply
- b. Supply Impacts
- c. Supply Impacts Related to Renewable Energy Sources
- D. Modeling the LNG Export Business
- 1. Comments
- 2. DOE/FE Analysis
- E. Cost of Environmental Externalities
- 1. Comments
- 2. DOE/FE Analysis
- F. Prices and Volatility
- 1. Natural Gas Price Volatility
- a. Comments
- b. DOE/FE Analysis
- 2. Linking the Domestic Price of Natural Gas to World Prices
- a. Comments
- By contrast, API argues that natural gas prices will not rise to global prices because the market will limit the amount of U.S. natural gas that will be exported, since liquefaction, transportation, and regasification costs act as a cushion. API argu...
- b. DOE/FE Analysis
- IX. DOE/FE ADDENDUM TO ENVIRONMENTAL REVIEW DOCUMENTS CONCERNING EXPORTS OF NATURAL GAS FROM THE UNITED STATES
- A. Water Resources
- 1. Water Quantity
- 2. Water Quality
- B. Air Quality
- C. GHG Emissions
- D. Induced Seismicity
- E. Land Use
- X. DOE/FE LIFE CYCLE GREENHOUSE GAS PERSPECTIVE ON EXPORTING LIQUEFIED NATURAL GAS FROM THE UNITED STATES
- A. Description of LCA GHG Report
- 1. Purpose of the LCA GHG Report
- 2. Study Scenarios
- 3. GHGs Reported as Carbon Dioxide Equivalents
- 4. Natural Gas Modeling Approach
- 5. Coal Modeling Approach
- 6. Key Modeling Parameters
- 7. Results of the LCA GHG Report
- B. Comments on the LCA GHG Report and DOE/FE Analysis
- 1. Study Conclusions
- a. Comments
- b. DOE/FE Analysis
- 2. Boundaries of the LCA GHG Report
- a. Comments
- b. DOE/FE Analysis
- 3. Natural Gas Transport between Regasification and Power Plants
- a. Comments
- b. DOE/FE Analysis
- 4. Data Quality for LNG Infrastructure, Natural Gas Extraction, and Coal Mining
- a. Comments
- b. DOE/FE Analysis
- (1) Liquefaction Data
- (2) Natural Gas Methane Data
- (3) Coal Methane Data
- 5. Methane Leakage Rate Used in the LCA GHG Report
- a. Comments
- b. DOE/FE Analysis
- 6. The Uncertainty Bounds of the LCA GHG Report
- a. Comments
- b. DOE/FE Analysis
- 7. The LCA GHG Report and the NEPA Approval Process
- a. Comments
- b. DOE/FE Analysis
- XI. MARAD PROCEEDING AND GRANT OF DEEPWATER PORT LICENSE
- A. Statutory Background
- 1. The Deepwater Port Act of 1974
- 2. NEPA
- B. MARAD’s Procedural History
- C. MARAD’s Record of Decision
- XII. DISCUSSION AND CONCLUSIONS
- A. Motions to Intervene
- B. Non-Environmental Issues
- 1. Delfin’s Application
- 2. Regional Impacts
- 3. Price Impacts
- 4. Significance of the 2014 and 2015 LNG Export Studies
- 5. Benefits of International Trade
- C. Environmental Issues
- 1. Adoption of MARAD’s Final EIS
- 2. Scope of NEPA Review
- 3. Cumulative Environmental Impacts
- 4. Environmental Impacts Associated with Induced Production of Natural Gas
- 5. Compliance with the Endangered Species Act
- 6. Greenhouse Gas Impacts Associated with U.S. LNG Exports
- a. Domestic Environmental Impacts Associated with Increased Natural Gas Prices
- b. International Impacts Associated with Energy Consumption in Foreign Nations
- D. Other Considerations
- E. Conclusion
- XIII. TERMS AND CONDITIONS
- A. Term of the Authorization
- B. Commencement of Operations Within Seven Years
- C. Commissioning Volumes
- D. Transfer, Assignment, or Change in Control
- E. Agency Rights
- F. Contract Provisions for the Sale or Transfer of LNG to be Exported
- G. Export Quantity
- H. Combined FTA and Non-FTA Export Authorization Volumes
- XIV. FINDINGS
- XV. ORDER
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