Cameron LNG, LLC, 011807 FERC, CP06-422-000

Docket Nº:CP06-422-000
Party Name:Cameron LNG, LLC
Judge Panel:Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. Magalie R. Salas, Secretary.
Case Date:January 18, 2007
Court:Federal Energy Regulatory Commission

Cameron LNG, LLC

No. CP06-422-000

United States of America, Federal Energy Regulatory Commission

January 18, 2007

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.


1. On July 18, 2006, Cameron LNG, LLC (Cameron LNG) filed an application pursuant to section 3(a) of the Natural Gas Act (NGA) and Part 153 of the Commission’s regulations to expand the liquefied natural gas (LNG) import terminal previously authorized by the Commission in Docket No. CP02-378-000 et al. and currently under construction near Hackberry, Louisiana.1 Cameron LNG’s instant application seeks authority to: (1) increase the send-out rate of the LNG terminal from 1, 500, 000 dekatherms (Dth) of natural gas per day, or the equivalent of 1.5 billion cubic feet (Bcf) of natural gas, to 1.8 Bcf per day on an interim basis and, ultimately, to 2.65 Bcf per day; (2) increase the LNG storage capacity through the addition of a fourth storage tank; (3) increase the LNG unloading rate at each berth; and (4) construct facilities to produce and inject inert gas into send-out natural gas as an optional method of controlling its British thermal unit (Btu) content (the Expansion Project).

2. In this order, the Commission finds that Cameron LNG's proposal is consistent with the public interest and grants its requested authorization under section 3 of the NGA to construct and operate the Expansion Project, subject to the conditions discussed herein.

I. Background

3. Cameron LNG is a wholly-owned subsidiary of Sempra LNG. Sempra LNG, a wholly-owned subsidiary of Sempra Global, was formed for the purpose of developing, owning, and operating LNG terminal facilities. Sempra Global is a wholly-owned subsidiary of Sempra Energy.

4. On May 30, 2002, Hackberry LNG Terminal, L.L.C. (Hackberry LNG) filed an application in Docket No. CP02-374-000 et al. requesting authorization to site, construct and operate an LNG terminal providing service at market-based rates, authorization to construct and operate a 35.4-mile long, 36-inch diameter pipeline from the tailgate of the LNG terminal to Transcontinental Gas Pipe Line Corporation's compressor station in Beauregard Parish, Louisiana, issuance of a Part 284 subpart G blanket transportation certificate, and issuance of a Part 157 subpart F blanket construction certificate.

5. On December 18, 2002, the Commission issued a preliminary determination on non-environmental issues finding that Hackberry LNG's proposal would be consistent with the public interest, subject to the conditions set forth therein and completion of favorable environmental review.2 The Commission granted Hackberry LNG authority to provide terminalling service at the rates, terms, and conditions mutually agreed to with its customer and affiliate, Dynegy Marketing & Trade (Dynegy Marketing), which had entered into a 30-year binding precedent agreement for 100 percent of the proposed LNG terminalling capacity. The Commission did not require Hackberry to offer firm and interruptible open-access terminalling service or to maintain a tariff and rate schedule for that service.

6. After issuance of the preliminary determination, Sempra Energy acquired all of the membership interests of Hackberry LNG and changed the name of the company to Cameron LNG. By acquiring the interests of Hackberry LNG, Cameron LNG became the project sponsor of both the LNG terminal development projects and the pipeline and, thus, became the applicant in that proceeding.3

7. In an order issued on September 11, 2003, the Commission authorized Cameron LNG to site, construct, and operate the LNG terminal pursuant to NGA section 3(a), and to construct, own, and operate the takeaway pipeline pursuant to NGA section 7(c).4This order required Cameron LNG to complete construction within five years.

8. On April 13, 2005, in Docket No. CP02-378-002, the Commission issued an order amending Cameron LNG’s authorization to allow it to modify the configuration of the terminal berthing facilities to enable such facilities to accommodate larger LNG tankers.5

9. On May 22, 2006, in Docket No. CP02-378-004, the Commission issued an order further amending Cameron LNG’s authorization so that the early stages of construction of its LNG terminal, which already had commenced, could incorporate certain design modifications in anticipation of the Expansion Project proposed in this proceeding.6 At the time, this Expansion Project was still in the pre-filing process in Docket No. PF06-10-000.

II. Proposal

10. Cameron LNG proposes to modify its LNG terminal to:

• Expand the capacity of its LNG terminal facilities to increase the authorized send-out rate from 1, 500, 000 Dth per day to an ultimate send-out rate of 2.65 Bcf per day;

• Authorize an interim send-out rate of up to 1.80 Bcf per day while the Expansion Project facilities are under construction, so that customers who have contracted for long-term processing capacity can benefit from the increased vaporization capabilities of the LNG terminal as soon as practical;

• Increase the LNG storage capacity from 480, 000 cubic meters to 640, 000 cubic meters by adding a fourth full-containment storage tank with a capacity of 160, 000 cubic meters, similar to the previously authorized tanks;

• Increase the LNG unloading rate at each berth from 12, 000 cubic meters per hour to 17, 500 cubic meters per hour; and

• Modify the Btu control facilities to permit the option of diluting send-out gas with an inert gas stream composed of 95 percent nitrogen and 5 percent oxygen. This methodology will be an alternative to, rather than a replacement for, the natural gas liquids (NGL) extraction technology using the previously authorized facilities.

11. Cameron LNG states that the interim increase in the authorized send-out rate from 1, 500, 000 Dth per day to up to 1.8 Bcf per day will be accomplished by using the installed spare process equipment and the design margin of the installed vaporization equipment. Cameron LNG explains that detailed engineering of the LNG terminal determined that the spares and the design margin can be used to increase the send-out rate to up to 1.8 Bcf per day while the Expansion Project facilities are under construction, thereby increasing the efficiency of the terminal and the value of the services provided to long-term customers of the LNG terminal.

12. Cameron LNG states that while construction of the fourth LNG storage tank will require approximately 36 months, construction of the balance of the Expansion Project will require only 12 to 15 months. Cameron LNG proposes to install the equipment necessary to increase the send-out rate to 2.65 Bcf per day during the first 15 months of construction in order to increase the send-out capacity of the tanks previously authorized, while waiting for the completion of the new storage tank. Cameron LNG explains further that the expanded terminal will have the capability to unload two LNG ships simultaneously, at a maximum rate of 12, 000 cubic meters per hour at each berth, for a maximum of 24, 000 cubic meters per hour. However, states Cameron LNG, if only one ship is unloaded at a time, the expanded facilities at each berth will be capable of an unloading rate of 17, 500 cubic meters per hour. As a result of the Expansion Project, the number of LNG vessels utilizing the LNG terminal will increase.

13. In addition, Cameron LNG states that the nitrogen for injection to reduce the Btu context of the mixture of gases will be produced on site by compressing air to 190 pounds per square inch atmosphere (psia) and then processing the compressed air in a membrane. Cameron LNG explains that the membrane will remove oxygen and water vapor from the compressed mixture. The inert gas mixture exits the membrane at 167 psia. Conventional electric motor driven reciprocating compressors will compress the nitrogen from 167 psia to pipeline discharge pressure. The volume of nitrogen mixed with the send-out gas will be controlled by a flow ratio controller. The set point of the flow ratio controller will be reset by an on-stream gas chromatograph.

14. With respect to the proposed project facilities, Cameron LNG states that the increased send-out rate to 2.65 Bcf per day will be accomplished by the addition of the fourth LNG storage tank, in-tank pumps, send-out pumps, submerged combustion vaporizers, unloading arms, a hot water heating system consisting of natural gas fired hot water heaters, water circulation pumps, and a shell and tube heat exchanger. Cameron LNG proposes to install the following specific facilities:

• Two (2) LNG 16-inch unloading arms, one for each berth, added to the LNG terminal unloading system;

• One (1) full-containment LNG storage tank with a net working capacity of 160, 000 cubic meters (1, 006, 000 barrels), equipped with three (3) can-type fully submerged LNG in-tank pumps sized for 4, 037 gallons per minute (gpm) each;

• One (1) reciprocating boil-off gas (BOG) compressor identical to the three BOG compressors included in the previously authorized LNG terminal facilities and two (2) vapor return blowers, each sized for 9, 300 scf per minute, added to the LNG terminal BOG recovery system;

• An LNG transfer system to transfer LNG from the BOG recondenser to the send-out pumps and on to the LNG vaporizers. The transfer system will consist of six (6) LNG send-out pumps (one being a spare), each sized for 2, 034 gpm, that are being integrated with the LNG terminal’s eight (8) send-out pumps for a new total of fourteen (14) send-out pumps (with two designated as spares);

• An LNG vaporization system consisting of eight (8) submerged combustion vaporizers...

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