U.S. review of LNG export plant should weigh shale gas impact -EPA

WASHINGTON, March 31 Mon Mar 31, 2014 6:00pm EDT

WASHINGTON, March 31 (Reuters) - The U.S. environmental regulator has raised concerns that a federal review of Sempra Energy's proposed liquefied natural gas export project did not include an assessment of the potential effects of more natural gas drilling.

The Environmental Protection Agency issued its finding earlier this month. It urged the Federal Energy Regulatory Commission to weigh indirect greenhouse gas emissions and other environmental effects that would flow from the increase in gas drilling needed to support exports from the Cameron plant in Louisiana.

The Department of Energy approved exports from the project in February, but the plant must still get clearances from FERC.

The EPA's assessment is a fresh angle in the long running debate of how much LNG the U.S. should export.

FERC should "consider the extent to which implementation of the proposed project could increase the demand for domestic natural gas extraction, as well as potential environmental impacts associated with the potential increased production of natural gas," the EPA said in response to the commission's draft review of the project.

The finding, dated March 3, was released by FERC late on Friday.

FERC has long resisted calls from environmental groups such as the Sierra Club to consider the effects of shale gas production in its review of the safety and environmental impacts of LNG export facilities.

A spokeswoman said FERC would take the EPA's comments and other public input into consideration as it crafts its final environmental review, currently set for release by April 30.

Energy analysts said FERC will probably decide there is no need for an extensive analysis of the indirect greenhouse gas emissions that would be caused by one LNG export project.

A federal appeals court ruled in FERC's favor in 2012 in a similar case regarding Crestwood Midstream Partner's Marc 1 natural gas pipeline. In that case, environmental groups argued that the commission should have done a more expansive review of the impact of natural gas production.

"I don't think FERC will defer to Sierra Club's or EPA's issues on the upstream unless or until regulations change," said Christi Tezak, energy analyst for ClearView Energy Partners.

The shale gas boom, spurred by advances in drilling techniques such as hydraulic fracturing, or fracking, has led to record U.S. natural gas production and paved the way for the United States to become a major gas exporter.

Fracking involves injecting water, sand and chemicals underground at high pressure to extract fuel. Critics have blamed the practice for water contamination and say that increased drilling is polluting the air. (Reporting by Ayesha Rascoe, editing by Ros Krasny and David Gregorio)