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Cheniere Energy

Louisiana's swift permitting process allows Cheniere Energy to create first domestic terminal to export liquefied natural gas

Cheniere Energy

Increasing LNG market provides expansion opportunity to Cheniere Energy

Liquefied natural gas, or LNG, has created tremendous new opportunities for companies in the chemical industry. Cheniere Energy has operated an LNG import terminal in Cameron since 2008, and this location offered a promising site for a potential new investment in exporting. With the advancements in natural gas extraction and the development of the nearby Haynesville Shale, Cheniere saw the opportunity to expand and convert the terminal into a bidirectional facility capable of both exporting LNG and receiving LNG for regasification.

If it could successfully proceed with these plans, Cheniere would be one of the first facilities in the country to have both importing and exporting capabilities. In order to advance, however, an extensive permitting process lay ahead of them. Additionally, if they were able to complete the permitting process quickly, Cheniere executives required support for their investment. The added export capabilities would create new jobs, and Cheniere wanted to attract the best applicants possible to staff them.

LED goes to Washington to pave way for Cheniere expansion

This new capacity for exporting LNG would provide added value to a terminal that supported 77 jobs. LED and Cameron Parish embraced the opportunity to support this local company and facilitate a new and innovative capacity for the site. LED officials were as energized about this innovative new capability as the Cheniere executives. To support the Cheniere expansion, LED officials were eager to expedite and secure their permits quickly.

The permitting process created a unique challenge for Cheniere and the LED team. The increasing market for LNG provided the company with an opportunity to not only expand, but to have a competitive edge in the LNG industry. The company would likely lose this competitive advantage if they could not expedite the permitting process.

LED's Business Expansion and Retention group (BERG) and LED's Federal Programs group agreed that Cheniere could not miss this opportunity. Cheniere officials worked closely with these groups and the Louisiana congressional delegation to urge swift action in the permitting process.

LED offered a competitive incentive package to the company, which included the state's Industrial Tax Exemption Program. This program abates local property taxes on manufacturers' new investments for up to 10 years. The incentive package also included the Quality Jobs program, which provides a cash rebate to companies that create well-paid jobs.

Finally, with the potential for Cheniere's exporting capabilities to create new jobs, the company needed assistance in recruiting and training the best available talent. As part of the incentive package, LED FastStart® — rated the No. 1 workforce recruitment and training program in the nation — agreed to help by providing assistance to Bechtel, a Cheniere contractor for recruiting construction workers.

Expedited permitting moves terminal plans forward

With the support of LED and the congressional delegation in place, Cheniere was ready to embark on this new venture and capitalize on the new opportunity in the market.

The efforts to expedite the permitting process were successful, and Cheniere received authorization from the U.S. Department of Energy in May 2011 to become the first domestic terminal to export LNG. With the help of state developers and leaders, Cheniere became the only company to receive both Department of Energy and Federal Energy Regulatory Commission permits. Sabine Pass Liquefaction LLC, a subsidiary of Cheniere, would liquefy and export the gas from the company's Sabine Pass Terminal.

With the permitting process complete and the investment funds in place, Cheniere announced their plans for the export terminal at their existing LNG import facility in July 2011. The company's $6.5 billion investment to expand the Sabine Pass facilities and incorporate exporting capacities to their services ranks as one of the largest capital investments in Louisiana history.

Contracts for LNG purchase and use signed, construction under way

Construction on the Cheniere facility began in 2012, with operations expected to begin in 2015. The expansion will result in an anticipated 148 new jobs, in addition to the 77 retained at the facility. Hiring for these positions is expected to begin in 2014.

FastStart will assist with training for recruiting operations of the facility once it's operational, to ensure a qualified staff is supporting Cheniere's new investment.

FastStart has also offered the services of a technical writer who will be remotely assigned to work with Cheniere and their contractor Bechtel in compiling training plans and documents for their project managers.

The collaboration of LED and state officials allowed for a swift permitting process, buying time for Cheniere to gain a competitive advantage in the growing natural gas export market. Under the Department of Energy permit, Sabine Liquefaction is allowed to export up to 803 billion cubic feet per year of domestically produced natural gas (or 16 million metric tons of LNG). The company has secured non-binding deals for 9.8 million metric tons of processing capacity annually and is converting those deals into definitive agreements.

As the first domestic export LNG terminal to export natural gas, Cheniere has already signed multiple 20-year contracts for the purchase and use of exported LNG from major foreign utility companies around the world.

Key Industry

Energy

Strong infrastructure, workforce, logistics and regulations present an ideal situation for energy companies.

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