Midweek Energy Updates: September 20, 2017

The full version of these articles will appear in The Foster Report No. 3166, published on September 22, 2017

 

Frontier Aspen Ownership Change Has No Effect on Cases, Pipeline Tells Commission

September 18, 2017

Frontier Aspen LLC (OR17-14; IS17-215) told the Commission on September 15, that it did not object to Tesoro Refining & Marketing Co. LLC’s motion to submit new information about a change in Frontier’s ownership, but that the ownership change wouldn’t have any effect on Tesoro’s cases against Frontier.

Frontier said that, while Holly Energy Partners LP has agreed to acquire a 50% interest in Frontier from Plains Pipeline, the completion of the transaction is subject to Federal Trade Commission review of a separate transaction between Holly Energy and an affiliate of Plains. Until that time, Plains will continue to own the 50% interest in Frontier.

Frontier also noted that the transaction is subject to certain conditions in the agreement, which means that the transaction will probably not be completed for several months, and Frontier said it will notify the Commission when the transaction is complete.

The pipeline challenged Tesoro’s claim that it will be more difficult for Frontier not to favor affiliate HollyFrontier, because the transaction will result in Holly Energy owning 100% of Frontier. Tesoro failed to provide any foundation, justification, or support for its claim, said Frontier, and urged the Commission to disregard Tesoro’s claim as merely speculative.

 

Millennium, Others Sorting Through FERC Order on NYSDEC Water Quality Certificate

September 19, 2017

With state actions on water quality certificates for new pipeline projects becoming the focal point of opposition to new pipelines, FERC’s September 15 decision on Millennium Pipeline Co. LLC’s Valley Lateral project is being parsed by several entities for its implications on their facilities.

Constitution Pipeline Co. LLC and National Fuel Gas Supply Corp. are taking steps to move their projects forward after FERC issued the order that found the New York State Department of Environmental Conservation (NYSDEC) waived its right to act on Millennium’s water quality certificate application by taking too long to issue a decision on Millennium’s Valley Lateral project, representatives of Constitution and National Fuel said.

For its part, the NYSDEC said it is reviewing FERC’s decision “and will consider all legal options to protect public health and the environment.”

Both Constitution and National Fuel have had their water quality certificate applications under Section 401 of the Clean Water Act (CWA) denied by the NYSDEC after lengthy reviews from the state agency. Although FERC has approved both projects, Constitution has not been able to begin construction of its 124-mile pipeline (CP13-499) planned to move natural gas from Pennsylvania through the southern part of New York, while the Northern Access 2016 project (CP15-115) being developed by National Fuel and Empire Pipeline Inc. has been held up following the NYSDEC denial in April 2017.

 

Senate Committee Approves Nominees for FERC, DOE and Interior

September 19, 2017

The Senate Energy and Natural Resources Committee on September 19 approved five nominees from the White House to fill roles at FERC, the Department of Energy (DOE) and Department of Interior (DOI), with few comments from senators opposing any of the nominees.

The vote for Kevin McIntyre, a Republican, and Richard Glick, a Democrat, to join FERC was held in a voice vote along with Joseph Balash and Ryan Nelson to join DOI. McIntyre is nominated to become chairman at FERC if he is approved by the Senate, with Glick joining sitting commissioners Cheryl LaFleur, Robert Powelson, and current chairman Neil Chatterjee.

Balash, from Alaska, is nominated to be assistant secretary for land and minerals management at DOI, while Nelson is tapped to be solicitor at DOI.

The vote for David Jonas to be general counsel at DOE was a roll-call vote, with the committee voting 14-9 in support of the nomination, largely along party lines. Sen. Maria Cantwell (D-Wash.), ranking member on the committee, said she has concerns with Jonas’ nomination but did not elaborate on the reasons during the committee’s business meeting.

A floor vote by the full Senate on the nominees has not been scheduled.

 

LNG Sector Trying to Sort Out Market and Political Uncertainties

September 19, 2017

The LNG market presents plenty of uncertainties as dozens of companies scramble to reach final investment decisions (FID) on billions of dollars in infrastructure in the U.S., with some of those uncertainties tied to domestic politics and others associated with global market dynamics, speakers said at a September 18 event sponsored by the Energy Bar Association (EBA).

Domestic uncertainties include proposed bans on production or pipeline infrastructure in a few states and local jurisdictions, the trade policy of the Trump administration and environmental reviews of projects under the National Environmental Policy Act (NEPA), said Ben Norris, senior counsel at the American Petroleum Institute (API).

Market uncertainties include an oversupply situation with reduced commodity prices, an evolution to more spot market and short-term transactions compared with long-term offtake agreements to support financing LNG infrastructure and a limited window for companies to reach FIDs, said Charlie Riedl, executive director of the Center for LNG.

In the U.S. today, there is one LNG export project operating — Cheniere Energy Inc.’s Sabine Pass facility — five projects under construction and four project owners holding approvals from FERC and the Department of Energy (DOE) but not yet reaching FIDs to gain financing and begin construction, Riedl related. Amid ample natural gas supplies and LNG purchasers enjoying what is a buyer’s market, project owners are not reaching FIDs “largely due to the oversupply of the market,” Riedl said.

 

DOE Approves Eagle Maxville’s Application to Export Small Scale LNG

September 20, 2017

The U.S. Department of Energy (DOE) approved a long- term application from Eagle Maxville LNG Partners Jacksonville II LLC to export LNG in ISO containers to markets in the Caribbean and Central America.

In the September 15 order (No. 4078), DOE approved Eagle Maxville’s request to export 2.8 Bcf/yr (0.01 Bcf/d) of LNG under Sections 3(c) and 3(a) of the Natural Gas Act (NGA) to both Free Trade Agreement (FTA) and non-FTA countries for 20 years.[1]

Eagle Maxville is authorized to export on its own behalf and as an agent for other entities that will hold title to the LNG at the time of export pursuant to one or more long term contracts (those over two years).  The LNG may be exported to any country that has (or in the future develops) the capacity to import LNG in ISO containers, and with which trade is not prohibited by U.S. law or policy.

The 20-year contract period for both the FTA and non-FTA authorizations will begin when Eagle Maxville commences commercial export of domestically sourced LNG from the Maxville facility.

The Maxville facility, which is located in Jacksonville, Florida, is expected to be operational in early October. At full build-out the Maxville facility will have two LNG trains, one LNG storage tank with a capacity of one million gallons, and a truck load out facility for cryogenic transport trailers and the ISO containers.

The containers would then be loaded on to container ships for export at the Port of Jacksonville.

The Maxville facility’s primary purpose will be to supply LNG to Crowley Puerto Rico Services to be used for LNG powered ships that are being introduced to facilitate trade between the mainland U.S. and Puerto Rico. The company also plans to export a small volume of LNG to other markets in the Caribbean and Central America region.

[1] DOE/FE Order No. 4078 (9/15/17).

 

These articles will appear as published in The Foster Report No. 3166, being issued on September 22, 2017

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