[Federal Register Volume 59, Number 236 (Friday, December 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30385]
[[Page Unknown]]
[Federal Register: December 9, 1994]
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DEPARTMENT OF ENERGY
[FE Docket No. 94-81-NG]
Phillips Alaska Natural Gas Corporation and Marathon Oil Company;
Application to Amend Authorization to Export Liquefied Natural Gas
AGENCY: Office of Fossil Energy, DOE.
ACTION: Notice of application.
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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice of receipt of an application filed on October 5,
1994, as supplemented October 11, 1994, by Phillips Alaska Natural Gas
Corporation (PANGC) and Marathon Oil Company (Marathon) requesting that
DOE amend a long-standing authorization to export Alaskan liquefied
natural gas (LNG). PANGC and Marathon seek permission to modify the
existing price formula used for exports to two Japanese customers. The
exports originate at their Kenai LNG plant in the Cook Inlet area of
Alaska and are delivered to Tokyo Electric Power Company, Inc. (Tokyo
Electric) and Tokyo Gas Company, Ltd. (Tokyo Gas).
The application is filed under section 3 of the Natural Gas Act and
DOE Delegation Order Nos. 0204-111 and 0204-127. Protests, motions to
intervene, notices of intervention, and written comments are invited.
DATES: Protests, Motions to intervene or notices of intervention, as
applicable, requests for additional procedures and written comments are
to be filed at the address listed below no later than 4:30 p.m.,
eastern time, January 9, 1995.
ADDRESSES: Office of Fuels Programs, Fossil Energy, U.S. Department of
Energy, Forrestal Building, Room 3F-056, FE-50, 1000 Independence
Avenue SW., Washington, D.C. 20585.
FOR FURTHER INFORMATION:
Susan K. Gregersen, Office of Fuels Programs, Fossil Energy, U.S.
Department of Energy, Forrestal Building, Room 3F-056, FE-53, 1000
Independence Avenue SW., Washington, D.C. 20585
Diane Stubbs, Office of Assistant General Counsel for Fossil Energy,
U.S. Department of Energy Forrestal Building, Room 6E-042, GC-41, 1000
Independence Avenue SW., Washington, D.C. 20585.
SUPPLEMENTARY INFORMATION:
Background
PANGC, a Delaware corporation with its principal place of business
in Bartlesville, Oklahoma, is a wholly owned subsidiary of Phillips
Petroleum Company, a Delaware corporation. Marathon, an Ohio
corporation with its principal place of business in Houston, Texas, is
a wholly owned subsidiary of USX Corporation, also a Delaware
corporation. PANGC and Marathon are not affiliated with each other.
The LNG export authorization held by PANGC (successor to Phillips
66 Natural Gas Company) and Marathon was granted originally by the
Federal Power Commission on April 19, 1967. It was subsequently amended
by DOE's Economic Regulatory Administration in 1982, 1986, 1987, and
1988, and by FE in 1991 and 1992. PANGC and Marathon are currently
authorized to export up to 64.4 trillion Btus of LNG through March 31,
2004. See DOE/ERA Opinion and Order No. 261 (1 ERA 70,130, July 28,
1988); DOE/FE Opinion and Order No. 261-A (1 FE 70,454, June 18,
1991); DOE/FE Opinion and Order No. 261-B (1 FE 70,506, December 19,
1991); and DOE/FE Opinion and Order No. 261-C (1 FE 70,607, June 15,
1992).
In DOE/FE Opinion and Order No. 261-A, DOE authorized a market-
sensitive pricing formula under which the monthly selling price per
MMBtu of LNG exported to Japan by PANGC and Marathon is calculated by
multiplying a predetermined base price by an adjustment factor composed
of the arithmetic average price paid in Japan for a barrel of imported
crude oil over three months. The arithmetic average price is based on
the weighted average price of all crude oils (including raw oils)
imported into Japan each month as reported in Japan Exports & Imports
Monthly which is edited by the Customs Bureau, Ministry of Finance, and
published by the Japan Tariff Association. In the application filed by
PANGC and Marathon, the proposed revision to their current price
formula is in accordance with an agreement (the ``Third Amendatory
Agreement'') entered into by PANGC, Marathon, Tokyo Electric, and Tokyo
Gas on April 19, 1994. The revised formula has fewer components and a
different base price. However, the selling price of the exported LNG
would continue to be adjusted each month according to changes over
three months in the published selling price of all crude oils imported
into Japan.
PANGC and Marathon assert that the new formula is similar to the
price formulas used by most other LNG projects which sell into the
Japanese market. Based on their current modification to the existing
price formula, if the arithmetic average price for crude oil imported
into Japan is $15.00 per barrel, the price of LNG sold by PANGC and
Marathon would be $2.93 per MMBtu. (The heat content of one barrel of
crude oil is approximately 5.8 MMBtu's.) Applying the formula, a $1.00
per barrel increase or decrease in the arithmetic average price of
crude oil would lead to a $0.15 per MMBtu increase or decrease in the
price of LNG.
This export application will be reviewed pursuant to section 3 of
the Natural Gas Act, as amended by section 201 of the Energy Policy Act
of 1992 (Pub. L. 102-486) and the authority contained in DOE Delegation
Order Nos. 0204-111 and 0204-127. In reviewing natural gas exports, DOE
considers domestic need for the gas and any other issue determined to
be appropriate, including whether the arrangement is consistent with
DOE's policy of promoting competition in the marketplace by allowing
commercial parties to freely negotiate their own trade arrangements.
Since DOE previously has determined in DOE/FE Opinion and Order No. 261
that there is no domestic need for the gas involved in this export over
the term of the LNG sales contract, the modification proposed by PANGC
and Marathon to their existing price formula shall be evaluated based
on whether the amendment is in accord with DOE's international gas
trade policy. Parties that may oppose this application should comment
in their responses on this issue.
NEPA Compliance. The National Environmental Policy Act (NEPA) (42
U.S.C. Sec. 4231 et seq.) requires DOE to give appropriate
consideration to the environmental effects of its proposed action. No
final decision will be issued in this proceeding until DOE has met its
NEPA responsibilities.
Public Comment Procedures. In response to this notice, any person
may file a protest, motion to intervene or notice of intervention, as
applicable, and written comments. Anyone who wants to become a party to
this proceeding and to have their written comments considered as the
basis for the decision on the application must, however, file a motion
to intervene or notice of intervention, as applicable. The filing of a
protest with respect to this application will not serve to make the
protestant a party to the proceeding, although protests and comments
received from persons who are not parties will be considered in
determining the appropriate action to be taken on the application. All
protests, motions to intervene, notices of intervention, and written
comments must meet the requirements specified by the regulations in 10
CFR Part 590. Protests, motions to intervene, notices of intervention,
requests for additional procedures, and written comments should be
filed with the Office of Fuels Programs at the address listed above.
It is intended that a decisional record on the application will be
developed through responses to this notice by parties, including the
parties' written comments and replies thereto. Additional procedures
will be used as necessary to achieve a complete understanding of the
facts and issues. A party seeking intervention may request that
additional procedures be provided, such as additional written comments,
an oral presentation, a conference, or trial-type hearing. Any request
to file additional written comments should explain why they are
necessary. Any request for an oral presentation should identify the
substantial question of fact, law, or policy at issue, show that it is
material and relevant to a decision in the proceeding, and demonstrate
why an oral presentation is needed. Any request for a conference should
demonstrate why the conference would materially advance the proceeding.
Any request for a trial-type hearing must show that there are factual
issues genuinely in dispute that are relevant and material to a
decision and that a trial-type hearing is necessary for a full and true
disclosure of the facts.
If an additional procedure is scheduled, notice will be provided to
all parties. If no party requests additional procedures, a final
opinion and order may be issued based on the official record, including
the application and responses filed by parties pursuant to this notice,
in accordance with 10 CFR Sec. 590.316.
A copy of PANGC's and Marathon's application is available for
inspection and copying in the Office of Fuels Programs docket room, 3F-
056, at the above address. The docket room is open between the hours of
8:00 a.m. and 4:30 p.m., Monday through Friday, except Federal
holidays.
Issued in Washington, D.C., on November 30, 1994.
Clifford P. Tomaszewski,
Director, Office of Natural Gas, Office of Fuels Programs, Office of
Fossil Energy.
[FR Doc. 94-30385 Filed 12-8-94; 8:45 am]
BILLING CODE 6450-01-P
