Port Arthur LNG, L.P., 061906 FERC, CP05-83-000

Docket Nº:CP05-83-000, CP05-84-000, CP05-84-001, CP05-85-000, CP05-86-000
Party Name:Port Arthur LNG, L.P. Port Arthur Pipeline, L.P.
Judge Panel:Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell, and Suedeen G. Kelly. Magalie R. Salas, Secretary.
Case Date:June 19, 2006
Court:Federal Energy Regulatory Commission
 
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Port Arthur LNG, L.P.

Port Arthur Pipeline, L.P.

Nos. CP05-83-000, CP05-84-000, CP05-84-001, CP05-85-000, CP05-86-000

United States of America, Federal Energy Regulatory Commission

June 19, 2006

Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell, and Suedeen G. Kelly.

ORDER GRANTING AUTHORITY UNDER SECTION 3 OF THE NATURAL GAS ACT AND ISSUING CERTIFICATES

1. On February 28, 2005, Port Arthur LNG, L.P. (Port Arthur LNG) filed in Docket No. CP05-83-000, an application under section 3 of the Natural Gas Act (NGA) requesting authority to site, construct and operate a liquefied natural gas (LNG) terminal near Port Arthur, Texas. Concurrently, in Docket No. CP05-84-000, Port Arthur Pipeline, L.P. (Port Arthur Pipeline)1filed an application under NGA section 7(c) and Part 157 of the Commission’s regulations for authorization to construct and operate two natural gas pipelines consisting of a 70-mile, 36-inch diameter pipeline from the outlet of Port Arthur LNG’s proposed LNG terminal to an interconnection with the interstate facilities of Transcontinental Gas Pipe Line Corporation (Transco) in Beauregard Parish, Louisiana, and a 3-mile, 36-inch diameter pipeline from the outlet of the proposed LNG terminal to an interconnection with the interstate facilities of Natural Gas Pipeline Company of America (NGPL) in Jefferson County, Texas.

2. In Docket No. CP05-85-000, Port Arthur Pipeline requests a blanket certificate under Part 157 subpart F of the Commission’s regulations to perform routine construction activities and operations. In Docket No. CP05-86-000, Port Arthur Pipeline requests a blanket certificate under Part 284 subpart G of the Commission’s regulations to provide open-access transportation services for its customers.

3. On September 2, 2005, in Docket No. CP05-84-001, Port Arthur Pipeline filed an amendment to its pending proposal to reflect certain changes to its pro forma tariff in order to improve service to potential customers.

Proposals

A. Port Arthur LNG’s Proposal

4. Port Arthur LNG proposes to construct and operate an LNG terminal near Port Arthur, Texas that will import, store and vaporize foreign source LNG. Port Arthur LNG’s proposed LNG terminal will be located on 198 acres of a 540-acre site owned by Sempra on the western shore of the Port Arthur Ship Channel. The proposed facility is designed to vaporize and send out 1.5 billion cubic feet (Bcf) per day of vaporized LNG in Phase I, increasing to 3.0 Bcf per day in Phase II.2Port Arthur LNG seeks authority under section 3 of the NGA to site, construct and operate: (1) an LNG receiving terminal, (2) an LNG storage and vaporization facility; and (3) associated utilities, infrastructure and support systems. More specifically, Port Arthur LNG requests authority to site, construct and operate the following facilities:

LNG Marine Terminal and Transfer Lines:

(1) a new marine terminal basin connected to the Port Arthur Channel that would include a ship maneuvering area and two protected berths to unload up to 180 ships per year during Phase I and up to 360 ships per year during Phase II with a ship capacity ranging from 125, 000 m³ to 250, 000 m³ of LNG;

(2) five 16-inch unloading arms per berth, three of which would be dedicated to LNG transfer from the berth facilities to the LNG storage tanks, one which would be dedicated to vapor return to the LNG ship and one hybrid arm which could be used for either LNG transfer or vapor return service; and

(3) other controls, safety devices, appurtenances and accessories.

LNG Storage Facilities:

(1) an LNG storage system consisting of a total of three full-containment LNG storage tanks each with a nominal working volume of approximately 160, 000 m³ (1, 006, 000 barrels) constructed during Phase I and 3 additional storage tanks constructed during Phase II;

(2) three in-tank pumps per LNG storage tank, each capable of discharging 2, 976 gallons per minute (gpm); and

(3) eight send-out pumps (one being a spare) constructed during Phase I and eight additional pumps (one being a spare) during Phase II, each capable of discharging 1, 964 gpm.

Vaporization and Gas Processing:

(1) six shell-and-tube vaporizers (one being a spare) constructed during Phase I and six additional vaporizers (one being a spare) constructed during Phase II. The heat source to the vaporizers would be heated water;

(2) a hot water system consisting of four gas-fired hot water heaters and three circulation pumps (one being a spare) constructed during Phase I and four additional hot water heaters and three additional circulation pumps (one being a spare) constructed during Phase II;

(3) a boil-off gas recovery system consisting of 3 reciprocating boil-off gas compressors, two return gas blowers, and one direct-contact recondenser constructed in Phase I and one additional boil-off gas compressor and two additional return gas blowers constructed in Phase II; and

Utilities, Infrastructure, Service Facilities and Support Systems:

(1) an emergency vent system; an LNG spill containment system; a fire water system; fuel gas, nitrogen, instrument/plant air and service water utility systems; various hazard detection, control, and prevention systems, cryogenic piping, electrical and instrumentation systems;

(2) utilities, buildings and support facilities;

(3) metering facilities, pig launchers and receivers and safety systems.

5. The LNG terminal will be located near Port Arthur, Texas. The construction and permanent operation of the LNG terminal will use approximately 198 acres of a 2, 900-acre tract of land owned by Sempra. An additional 65 acres within the Sempra property will be used temporarily during construction.

B. Port Arthur Pipeline’s Proposal

6. Port Arthur Pipeline proposes to construct and operate pipeline facilities to transport vaporized LNG from Port Arthur LNG’s facility to interconnections with interstate pipeline companies. Port Arthur Pipeline proposes to construct and operate two 36-inch diameter natural gas pipelines, one extending 70 miles from the Port Arthur LNG terminal to an interconnection with Transco at its Compressor No. 45 in Beauregard Parish, Louisiana. Port Arthur Pipeline plans to construct this leg of the pipeline project during Phase I and place the facilities in-service during the winter heating season of 2008-2009. The second leg would extend 3 miles from the Port Arthur LNG terminal to an interconnection with NGPL in Jefferson County, Texas. Port Arthur Pipeline plans to construct this leg of the pipeline project during Phase II and place the facilities in service as early as 2010, but no later than 2015. Port Arthur Pipeline estimates that its proposed facilities will cost approximately $216, 900, 000.

7. Port Arthur Pipeline requests a Part 284, subpart G open-access blanket transportation certificate under which it proposes to offer cost-based firm transportation service under Rate Schedule FT and interruptible transportation service under Rate Schedule IT. Port Arthur Pipeline has proposed initial recourse rates and will also offer negotiated rates. Port Arthur Pipeline held an open season from February 18 to April 4, 2005 for its proposed pipeline. Port Arthur Pipeline states that ten out of the eleven respondents requested 20-year contract terms with start dates ranging from Fourth Quarter 2008 to Fourth Quarter 2009.

8. Port Arthur Pipeline also requests a Part 157, subpart F blanket certificate to perform routine activities in connection with the construction, maintenance, and operation of the proposed facilities.

Notice and Interventions

9. Notice of the applications in Docket No. CP05-83-000, et al., was published in the Federal Register on March 16, 2005 (70 Fed. Reg. 12, 862). Cheniere LNG, Inc., Duke Energy Field Services, LP, ExxonMobil Gas & Power Marketing Company, Freeport LNG Development, L.P., KeySpan Delivery Companies, NGPL, TIN, Inc., and Transco filed timely motions to intervene. Timely, unopposed motions to intervene are granted by operation of Rule 214 of the Commission’s Rules of Practice and Procedure.3BP Energy Company (BP Energy) filed an untimely motion to intervene. The Commission finds that granting the late-filed motion to intervene will not delay, disrupt, or otherwise prejudice this proceeding, or place an additional burden on existing parties. Therefore, for good cause shown, we will grant the late-filed motion to intervene.4No protests were filed. Notice of the application in Docket No. CP05-84-001, was published in the Federal Register on September 19, 2005 (70 Fed. Reg. 54, 919). No further interventions or comments were filed.

Discussion

A. Port Arthur LNG’s Proposed Terminal

10. Because the proposed LNG terminal facilities will be used to import gas from foreign countries, the construction and operation of the facilities and site of their location require approval by the Commission under NGA section 3.5The Commission’s authority over facilities constructed and operated under section 3 includes the authority to apply terms and conditions as necessary and appropriate to ensure that the proposed construction and siting is in the public interest.6Section 3 provides that the Commission “shall issue such order on application…” if it finds that the proposal “will not be inconsistent with the public interest.”

11. The Commission has chosen to exercise a less intrusive degree of regulation for new LNG import terminals, and does not require the applicant to offer open-access service or to maintain a tariff or rate schedules for its terminalling service.7On August 8, 2005, the Energy Policy Act of 2005 (EPAct 2005) was signed into law.8Section 311 of EPAct 2005 amends section 3 of the NGA regarding...

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