Sempra Energy won final U.S. approval to build an export terminal for liquefied natural gas, becoming the second such facility to win government approval.
The Federal Energy Regulatory Commission voted unanimously Thursday to let Sempra’s (NYSE: SRE) Cameron LNG project in Louisiana move forward. The company said it plans to start building the estimated $9 billion to $10 billion terminal later this year.
“This is a landmark project that will bring economic prosperity and create thousands of jobs in Louisiana,” Sempra Chairman and CEO Debra Reed said in a statement. “Today’s approval is another important step in delivering natural gas to America’s trading partners abroad.”
Democrats and Republicans in Congress have pushed to expedite approval of the export terminals to send the fuel to Europe and reduce Russia’s energy dominance after it annexed Ukraine’s Crimea region.
The Republican-led House Energy and Commerce Committee in April approved and sent the full House a bill that would speed Energy Department approval of LNG export applications.
Cameron “will position America as an energy superpower,” Senate Energy and Natural Resources Committee Chairwoman Mary Landrieu, a Louisiana Democrat, said Thursday in a statement.
The Federal Energy Regulatory Commission’s environmental staff concluded in April that Cameron won’t cause major environmental damage, and recommended steps to minimize “some adverse environmental impact” in western Louisiana.
The commission on Thursday approved more than 75 conditions on the project to reduce potential environmental harm, according to a statement.
Landrieu and Sen. Mark Udall, a Colorado Democrat, on Wednesday introduced legislation that would require the Energy Department to issue a final decision on an export license within 45 days after the U.S. environmental review of the facility is complete.
“I’m confident that whatever the law requires, the department will be able to accomplish,” Christopher Smith, the Energy Department’s principal deputy assistant secretary for fossil energy, said Thursday at a Senate Energy and Natural Resources hearing.
Cheniere Energy Inc.’s Sabine Pass export plant, now under construction in Louisiana, is the only other facility so far to win the support of both the FERC and the Energy Department. The project, also in Louisiana, is scheduled to begin exporting fuel in late 2015, according to the company.
The Energy Department determines whether it is in the public interest for a plant to ship natural gas to countries that don’t have a free-trade agreement with the U.S., such as Japan or the 28 nations of the European Union.
No prior approval is needed for countries that have free-trade agreements, such as Canada and Mexico.
The department is reviewing 24 applications for such projects.
The FERC leads U.S. environmental reviews of gas export projects. It is weighing 14 applications for proposed facilities in the United States.
“I think it is a positive data point for others awaiting FERC approval,” Paul Patterson, Glenrock Associates LLC, said of the Sempra decision in a telephone interview.
Sempra increased to a 52-week high $105.25 after the FERC decision, then surrendered some of the gains as U.S. markets fluctuated after the Federal Reserve promised to keep interest rates low. It closed at $104.65, up 0.5 percent.
The Cameron project won Energy Department backing in February, conditioned upon approval by the FERC. It’s scheduled to begin liquefying gas in late 2017 and be fully operational by 2018, according to San Diego-based Sempra.
“We are pleased to have reached this important milestone successfully and to be one step closer to starting construction later this year,” Sempra LNG President Octavio Simoes said in a statement.
A final Energy Department permit to replace the conditional one it now has must be issued before the company can begin shipping to overseas customers, according to the company.
Sempra owns 50.2 percent of the facility, which will be able to export 1.7 billion cubic feet of the fuel per day.
France’s GDF Suez and Japan’s Sumitomo Mitsui Financial Group Inc. each own a 16.6 percent stake. A joint venture of Tokyo- based Mitsubishi Corp. and Nippon Yusen K.K. owns the remaining 16.6 percent.
The EU gets about a third of its natural gas from Russia through a web of pipelines that cross nations including Ukraine, according to the Congressional Research Service.
Shipments from most terminals probably won’t begin until “pretty late in the decade,” Energy Secretary Ernest Moniz said at an April 23 conference in Washington.