UNITED STATES OF AMERICA DEPARTMENT OF ENERGY OFFICE OF FOSSIL ENERGY __________________________________________ ) RIO GRANDE LNG, LLC ) FE DOCKET NO. 15-190-LNG __________________________________________) OPINION AND ORDER GRANTING LONG-TERM AUTHORIZATION TO EXPORT LIQUEFIED NATURAL GAS TO NON-FREE TRADE AGREEMENT NATIONS DOE/FE ORDER NO. 4492 FEBRUARY 10, 2020 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................. 1 II. BACKGROUND ................................................................................................................... 5 A. DOE’s LNG Export Studies ............................................................................................ 5 2012 EIA and NERA Studies ...................................................................................... 5 2014 and 2015 LNG Export Studies ............................................................................ 6 2018 LNG Export Study .............................................................................................. 8 B. DOE’s Environmental Studies ....................................................................................... 14 C. Judicial Decisions Upholding DOE’s Non-FTA Authorizations .................................. 17 III. PUBLIC INTEREST STANDARD ..................................................................................... 20 IV. DESCRIPTION OF REQUEST .......................................................................................... 23 A. Description of Applicant and Changes in Control ......................................................... 23 B. The Rio Grande LNG Project ........................................................................................ 24 C. Project Pipeline .............................................................................................................. 25 D. Source of Natural Gas .................................................................................................... 25 E. Business Model .............................................................................................................. 25 V. APPLICANT’S PUBLIC INTEREST ANALYSIS ............................................................ 26 A. Overview ........................................................................................................................ 26 B. Domestic Need for the Natural Gas to Be Exported ...................................................... 26 C. Impacts on Natural Gas Markets ................................................................................... 28 D. Economic Benefits ......................................................................................................... 29 F. International Considerations ......................................................................................... 30 VI. FERC PROCEEDING ......................................................................................................... 31 A. FERC’s Pre-Filing Procedures ...................................................................................... 31 B. FERC’s Environmental Review..................................................................................... 32 C. FERC’s Order Granting Authorization .......................................................................... 33 VII. CURRENT PROCEEDING BEFORE DOE/FE ................................................................. 36 A. Comment of John Young ............................................................................................... 36 B. Comment of Mark Magee .............................................................................................. 37 VIII. DISCUSSION AND CONCLUSIONS ............................................................................... 37 A. Non-Environmental Issues ............................................................................................. 38 Significance of the 2018 LNG Export Study ............................................................. 38 Rio Grande LNG’s Application ................................................................................. 39 Price Impacts ............................................................................................................. 40 Benefits of International Trade .................................................................................. 42 B. Environmental Issues ..................................................................................................... 43 i Adoption of FERC’s Final EIS .................................................................................. 43 Environmental Impacts Associated with Induced Production of Natural Gas .......... 43 Greenhouse Gas Impacts Associated with U.S. LNG Exports .................................. 45 C. Other Considerations ..................................................................................................... 47 D. Conclusion ..................................................................................................................... 48 IX. FINDINGS ........................................................................................................................... 54 X. TERMS AND CONDITIONS ............................................................................................. 54 A. Term of the Authorization ............................................................................................. 54 B. Commencement of Operations ...................................................................................... 55 C. Commissioning Volumes ............................................................................................... 55 D. Make-Up Period ............................................................................................................. 55 E. Transfer, Assignment, or Change in Control ................................................................. 56 F. Agency Rights................................................................................................................ 57 G. Contract Provisions for the Sale or Transfer of LNG to be Exported ........................... 58 H. Export Quantity.............................................................................................................. 59 I. Combined FTA and Non-FTA Export Authorization Volumes .................................... 59 XI. ORDER ................................................................................................................................ 59 APPENDIX: RECORD OF DECISION ...................................................................................... 65 A. Alternatives .................................................................................................................... 65 B. Environmentally Preferred Alternative .......................................................................... 68 C. Decision ......................................................................................................................... 68 D. Mitigation....................................................................................................................... 69 E. Floodplain Statement of Findings .................................................................................. 70 ii FREQUENTLY USED ACRONYMS AEO Annual Energy Outlook Bcf/d Billion Cubic Feet per Day Bcf/yr Billion Cubic Feet per Year CPP Clean Power Plan DOE U.S. Department of Energy EIA U.S. Energy Information Administration EIS Environmental Impact Statement EPA U.S. Environmental Protection Agency FE Office of Fossil Energy, U.S. Department of Energy FERC Federal Energy Regulatory Commission FTA Free Trade Agreement GDP Gross Domestic Product GHG Greenhouse Gas IECA Industrial Energy Consumers of America LCA Life Cycle Analysis LNG Liquefied Natural Gas Mcf Thousand Cubic Feet MMBtu Million British Thermal Units mtpa Million Metric Tons per Annum NEPA National Environmental Policy Act NERA NERA Economic Consulting NETL National Energy Technology Laboratory NGA Natural Gas Act iii I. INTRODUCTION On December 23, 2015, Rio Grande LNG, LLC (Rio Grande LNG) filed an Application1 with the Office of Fossil Energy (FE) of the Department of Energy (DOE) under section 3 of the Natural Gas Act (NGA).2 Rio Grande LNG filed an Amendment to the Application on June 7, 2016.3 Rio Grande LNG requests long-term, multi-contract authorization to export domestically produced liquefied natural gas (LNG) by vessel from a natural gas liquefaction terminal that it proposes to site, construct, and operate along the north embankment of the Brownsville Ship Channel, in Cameron County, Texas (the Rio Grande LNG Project or the Project).4 Rio Grande LNG seeks to export the LNG to: (i) any country with which the United States currently has, or in the future enters into, a free trade agreement (FTA) requiring national treatment for trade in natural gas (FTA countries);5 and (ii) any other country with which trade is not prohibited by U.S. law or policy (non-FTA countries).6 Rio Grande LNG requests authority to export LNG to both FTA and non-FTA countries in a total volume equivalent to 1,318 billion cubic feet (Bcf) per year (Bcf/yr) of natural gas, which it states is equivalent to 27 million metric tons per annum (mtpa) of LNG.7 On August 17, 1 Rio Grande LNG, LLC, Application for Long-Term, Multi-Contract Authorization to Export Liquefied Natural Gas, FE Docket No. 15-190-LNG (Dec.