* Cheniere can now build Sabine Pass export plant
* First U.S. plant of its kind in 50 years
* Political opposition could delay others
By Edward McAllister and Ayesha Rascoe
April 16 U.S. regulators on Monday approved the
country's first liquefied natural gas export plant in nearly 50
years, which will open up cheap and abundant American supplies
to importers across the globe.
The Federal Energy Regulatory Commission (FERC) approval
paves the way for construction to begin at Cheniere Energy's
LNG plant at Sabine Pass, Louisiana, which will chill
natural gas to a liquid for shipping overseas by as early as
It marks a huge turnaround for the U.S. energy market that
five years ago was scrambling to build gas import terminals
before shale gas drilling provided decades of domestic reserves.
Analysts say the project alone will do little to alleviate the
glut in supplies that have sent domestic prices to 10-year lows,
The FERC ruling comes as U.S. natural gas inventories are
set to spill over due to record high production from newly
developed gas deposits.
A string of export projects have been proposed in the United
States to supply thirsty markets in Europe and Asia where gas
prices are up to seven or eight times higher.
For now, Cheniere looks likely to be the only project to get
the go ahead. The U.S. government has suspended decisions on
expanding U.S. gas exports until a study on the price impact of
such exports on domestic consumers is completed late summer.
U.S. natural gas prices dropped below $2 per million British
thermal unit this month for the first time since 2002, easing
"Politically, it might look bad, but this amount of gas is a
drop in the ocean," said Nikos Tsafos, analyst at PFC Energy in
Washington, DC. "I don't think this will move natural gas
Houston-based Cheniere will build a plant to export up to
2.2 billion cubic feet of natural gas per day, the equivalent of
16 million tonnes per year (mtpa) of LNG or about 3 percent of
U.S. daily supply.
The plant will be built in two stages, the first consisting
of two production units, or trains, of 4 mtpa each, FERC said.
"Today's order finds that the project can be constructed and
operated safely and with minimal environmental impacts," FERC
said in a statement.
Customers from Europe, India and South Korea have already
signed long-term supply deals with Cheniere.
Cheniere said it has engaged eight financial institutions to
raise up to $4 billion in debt to help finance construction at
In February, private equity firm Blackstone Group LP
said it would invest $2 billion in Cheniere Energy Partners to
help fund the plant's construction.