United States of America Department of Energy Office of Fossil Energy ) Magnolia Lng, Ll
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UNITED STATES OF AMERICA DEPARTMENT OF ENERGY OFFICE OF FOSSIL ENERGY _______________________________________ ) MAGNOLIA LNG, LLC ) FE DOCKET NO. 13-132-LNG _______________________________________ ) OPINION AND ORDER GRANTING LONG-TERM, MULTI-CONTRACT AUTHORIZATION TO EXPORT LIQUEFIED NATURAL GAS BY VESSEL FROM THE PROPOSED MAGNOLIA LNG TERMINAL TO BE CONSTRUCTED IN LAKE CHARLES, LOUISIANA, TO NON-FREE TRADE AGREEMENT NATIONS DOE/FE ORDER NO. 3909 NOVEMBER 30, 2016 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................. 1 II. SUMMARY OF FINDINGS AND CONCLUSIONS .......................................................... 9 III. PUBLIC INTEREST STANDARD .................................................................................... 10 IV. DESCRIPTION OF REQUEST .......................................................................................... 12 A. Description of Applicant ............................................................................................... 12 B. Description of Facility................................................................................................... 13 C. Procedural History ........................................................................................................ 15 D. Business Model ............................................................................................................. 16 E. Source of Natural Gas ................................................................................................... 16 V. APPLICANT’S PUBLIC INTEREST ANALYSIS ........................................................... 17 A. Domestic Need for the Proposed Exports ..................................................................... 18 B. Impact on Domestic Natural Gas Prices ....................................................................... 20 C. Domestic Energy Security and International Impacts ................................................... 20 D. Economic Benefits ........................................................................................................ 21 VI. CURRENT PROCEEDING BEFORE DOE/FE ................................................................ 22 A. Overview ....................................................................................................................... 22 B. Non-Intervenor Comments in Support of the Application ............................................ 23 C. API’s Motion to Intervene and Comments in Support ................................................. 24 D. Sierra Club’s Motion to Intervene, Protest, and Comments ......................................... 26 1. Alleged Environmental Impacts from the Requested Authorization ..................... 26 2. Alleged Economic Impacts from the Requested Authorization ............................ 35 E. APGA’s Motion to Intervene and Protest ..................................................................... 38 F. Magnolia LNG’s Answer to APGA’s and Sierra Club’s Motions to Intervene, Protest, and Comments ............................................................................................................... 41 1. Magnolia LNG’s Answer to Sierra Club’s Protest ................................................ 42 2. Magnolia LNG’s Answer to APGA’s Protest ....................................................... 44 VII. DOE/FE’S LNG EXPORT STUDIES ................................................................................ 45 A. 2012 LNG Export Study ............................................................................................... 45 B. 2014 EIA LNG Export Study, Effect of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy Markets ................................................................................... 47 1. Methodology .......................................................................................................... 47 2. Scope of EIA Study ............................................................................................... 50 3. Results of the 2014 EIA LNG Export Study ......................................................... 50 4. Increased Natural Gas Prices ................................................................................. 51 5. Increased Natural Gas Production and Supply ...................................................... 52 6. Decreased Domestic Natural Gas Consumption.................................................... 52 7. Energy-Related Carbon Dioxide Emissions .......................................................... 52 8. Increased End-User Natural Gas and Electricity Delivered Prices ....................... 53 i 9. Increased Gross Domestic Product ........................................................................ 53 C. 2015 LNG Export Study, The Macroeconomic Impact of Increasing U.S. LNG Exports .......................................................................................................... 54 1. Overview of Rice-Oxford’s Findings in the 2015 Study ....................................... 54 2. Methodology .......................................................................................................... 55 3. Natural Gas Market Assumptions across International Demand Scenarios .......... 57 4. The Rice World Gas Trade Model......................................................................... 59 5. The Oxford Global Economic Model and Global Industry Model........................ 60 6. Results of the 2015 LNG Export Study ................................................................. 61 VIII. COMMENTS ON THE 2014 AND 2015 LNG EXPORT STUDIES AND DOE/FE ANALYSIS ................................................................................................ 64 A. Data Inputs and Estimates of Natural Gas Demand ...................................................... 65 1. Comments .............................................................................................................. 65 2. DOE/FE Analysis .................................................................................................. 66 B. Distributional Impacts ................................................................................................... 68 1. Gross Domestic Product (GDP) ............................................................................ 68 2. Sectoral Impacts..................................................................................................... 70 3. Household and Distributional Impacts .................................................................. 73 4. Regional Impacts ................................................................................................... 74 C. Estimates of Domestic Natural Gas Supplies ............................................................... 75 1. Comments .............................................................................................................. 75 2. DOE/FE Analysis .................................................................................................. 76 D. Modeling the LNG Export Business ............................................................................. 80 1. Comments .............................................................................................................. 80 2. DOE/FE Analysis .................................................................................................. 80 E. Cost of Environmental Externalities ............................................................................. 81 1. Comments .............................................................................................................. 81 2. DOE/FE Analysis .................................................................................................. 82 F. Prices and Volatility ...................................................................................................... 82 1. Natural Gas Price Volatility .................................................................................. 82 2. Linking the Domestic Price of Natural Gas to World Prices................................. 84 IX. DOE/FE ADDENDUM TO ENVIRONMENTAL REVIEW DOCUMENTS CONCERNING EXPORTS OF NATURAL GAS FROM THE UNITED STATES ........ 85 A. Water Resources............................................................................................................ 87 1. Water Quantity....................................................................................................... 87 2. Water Quality......................................................................................................... 89 B. Air Quality .................................................................................................................... 91 C. GHG Emissions ............................................................................................................. 92 D. Induced Seismicity ........................................................................................................ 93 E. Land Use ....................................................................................................................... 94 X. DOE/FE LIFE CYCLE GREENHOUSE GAS PERSPECTIVE ON EXPORTING LIQUEFIED NATURAL GAS FROM THE UNITED STATES ...................................... 95 A. Description of LCA GHG Report ................................................................................. 95 ii 1. Purpose of the LCA GHG Report .........................................................................