02-16608. Hackberry LNG Terminal, L.L.C.; Notice of Application

June 26, 2002.

Take notice that on May 30, 2002; [as revised on June 24, 2002], Hackberry LNG Terminal, L.L.C. (Hackberry LNG), 1000 Louisiana, Suite 5800, Houston, Texas 77002, filed an application seeking authorization to site, construct and operate a liquefied natural gas (LNG) terminal located at Hackberry, Louisiana, and a new 35 mile natural gas pipeline in Cameron, Calcasieu, and Beauregard Parishes, Louisiana. The purpose of the LNG terminal is to provide open access LNG tanker services to shippers importing LNG. Hackberry LNG is requesting authorization to offer open access terminalling services at market-based rates; open access transportation service on the proposed pipeline will be separately charged, and calculated on a cost-of-service basis.

The application is on file with the Commission and open to public inspection. This filing may be viewed on the web at http://www.ferc.gov using the “RIMS” link, select “Docket # “ and follow the instructions (please call [phone] for assistance). Any initial questions regarding the application should be directed to Sarah Tomalty, Dynegy Inc., 1500 K Street, NW., Suite 400, Washington DC 20005, Phone: [phone].

Hackberry LNG made the request to site, construct and operate the LNG terminal pursuant to section 3(a) of the Natural Gas Act and part 153 of the Commission's regulations (Docket No. CP02-378-000); and section 7(c) of the NGA and part 157, subpart A of the Commission's Regulations (Docket No.CP02-374-000). Hackberry LNG also requests approval of the Hackberry LNG terminal as the place of entry for the imported LNG supplies under section 3(a) of the Natural Gas Act and part 153 of the Commission's regulations (Docket No.CP02-378-000). Hackberry LNG also requested authorization in Docket No.CP02-376-000 to provide the LNG terminalling services on a firm and interruptible basis pursuant to Section 7(c) of the NGA and Part 284 of the Commission's Regulations. In addition, Hackberry LNG seeks authorization, pursuant to section 7(c) of the NGA and part 157, subpart A of the Commission's Regulations, to construct and operate a 35 mile pipeline and related facilities to transport natural gas on an open access basis under Part 284. Finally, in Docket No. CP02-377-000, Hackberry LNG requests a blanket certificate under section 7(c) of the NGA and part 157, subpart F of the Commission's regulations to perform routine activities in connection with the future construction, operation and maintenance of the proposed 35 mile pipeline.

Hackberry LNG says that following the conclusion of an 85-day open season, it executed a binding precedent agreement with Dynegy Marketing and Trade (Dynegy Marketing) for all of the available firm LNG terminalling capacity. The total available delivery capacity offered by Hackberry LNG in its open season was 1,500,000 Dth per day, and Dynegy Marketing was awarded the entire available delivery quantity because Dynegy Marketing submitted the highest net present value bid. Hackberry LNG says that Dynegy Marketing will contract for and pay a monthly reservation fee based upon its Maximum Daily Delivery Quantity (MDDQ) of 1,500,000 Dth per day. Hackberry LNG says that shippers are allocated LNG storage capacity based on fixed ratio of storage capacity to contracted MDDQ. The LNG storage capacity is proposed to be 1,006,000 barrels or 10.4 Bcf.

Hackberry LNG proposes to offer open-access, non-discriminatory LNG terminalling services, which would include the receipt of imported LNG from ocean-going tankers, and the storage and vaporization of the LNG. Hackberry LNG will also provide pipeline transportation of vaporized LNG from the tailgate of the LNG terminal to the pipeline grid through a proposed pipeline. Dynegy Marketing will be allocated 1,500,000 Dth per day of transportation capacity in the new pipeline. The new 35 mile pipeline is proposed to be interconnected with the facilities of Transcontinental Gas Pipe Line and will cross several other pipelines which could become interconnected.

In order to provide the LNG terminalling and pipeline transportation services, Hackberry LNG requests Commission authorization to construct, install, and operate the following facilities :

—An LNG unloading slip with two berths, each equipped with three liquid unloading arms and one vapor return/delivery arm;

—Three LNG storage tanks each with a usable volume of 160,000 cubic meters (1,006,000 barrels);

—Nine in-tank pumps, each sized for 250,000 Mcf/d;

—Ten second stage pumps, each sized for 188,000 Mcf/d;

—Twelve submerged combustion vaporizers, each sized at 150,000 Mcf/d;

—A boil-off gas compressor and condensing system;

—An LNG circulation system to maintain the facilities at the appropriate temperature when LNG tankers are not being unloaded;

—An natural gas liquids recovery unit;

—Utilities, buildings and service facilities; and

—A 35.4-mile, 36-inch-diameter natural gas send out pipeline.

Hackberry LNG's filing includes a pro forma copy of the FERC Gas Tariff under which Hackberry LNG proposes to provide firm and interruptible LNG terminalling services on an open access basis under Rate Schedules LNG-1 and LNG-2, and firm and interruptible transportation services under Rate Schedules FTS and ITS. Hackberry LNG has requested waiver of certain nomination/confirmation/scheduling provisions contained in the GISB/NAESB standards due to the unique nature of scheduling receipt if ocean-going LNG tankers.

Hackberry LNG has requested approval of market based rates for its LNG terminalling services and has requested waiver of the requirements to disclose the capital and operating costs of the LNG terminal. To support its request for market based rates, Hackberry LNG has proved a study in Exhibit Z of its application which concludes that Hackberry LNG meets the criteria for market based rates set forth in Commission's 1996 Policy Statement on this topic. However, Hackberry LNG has estimated the capital cost of the new 35 mile pipeline to be about $ 74.5 million and an annual cost-of-service for the new pipeline to be $ 12.7 million. The proposed firm transportation reservation rate for the new pipeline is $ 0.7087.

Hackberry LNG requests that the Commission issue a preliminary determination on all non-environmental matters, including Hackberry LNG's request for market-based rate authority for the pricing of terminalling services and the proposed tariff, by October, 2002, and a final order granting the requested authorizations by August 15, 2003. Hackberry LNG says that this proposed schedule will enable it to commence LNG import terminalling services by November, 2006.

There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before July 19, 2002, file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.

However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.

Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.

The Commission may issue a preliminary determination on non-environmental issues prior to the completion of its review of the environmental aspects of the project. This preliminary determination typically considers such issues as the need for the project and its economic effect on existing customers of the applicant, on other pipelines in the area, and on landowners and communities. For example, the Commission considers the extent to which the applicant may need to exercise eminent domain to obtain rights-of-way for the proposed project and balances that against the non-environmental benefits to be provided by the project. Therefore, if a person has comments on community and landowner impacts from this proposal, it is important either to file comments or to intervene as early in the process as possible.

Comments, protests, and interventions may be filed electronically via the internet in lieu of paper. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site under the “e-Filing” link.

If the Commission decides to set the application for a formal hearing before an Administrative Law Judge, the Commission will issue another notice describing that process. At the end of the Commission's review process, a final Commission order approving or denying a certificate will be issued.

Linwood A. Watson, Jr.,

Deputy Secretary.