34
the effective probability of its occurrence to zero.
125
Sierra Club further states that it would be a
mistake to rely on the 2012 NERA Study’s prediction of export volumes.
The NERA Study,
according to Sierra Club, understated the market for likely exports by concluding that exports
would only occur when the spread between U.S. gas prices and prices in potential foreign
markets exceeded the cost of liquefying, transporting, and re-gasifying domestic production.
Sierra Club contends that NERA overstated these transaction costs,
particularly the costs of
exporting from proposed West Coast terminals, and ignored the ways in which “take-or-pay”
contracts are likely to distort the market.
126
Sierra Club disputes the argument that all proposed projects may not be approved or that
not all approved projects will actually be built, stating that these uncertainties do not justify
excluding pending proposals from cumulative impacts review. Sierra Club claims that analyzing
cumulative impact does not require DOE/FE to assume all proposed projects will be approved;
rather, Sierra Club contends, such analysis informs DOE/FE of potential consequences so that
DOE/FE can decide whether to approve all projects or only a subset.
127
Next, Sierra Club argues that NEPA and the NGA require DOE/FE to
consider a broad
range of alternatives to Delfin’s proposed Facility, including but not limited to: whether
DOE/FE should allow LNG exports but on a smaller-scale and a slower time-table; whether the
source of exported natural gas should be restricted to certain plays, formations,
or regions;
whether to delay, deny, or condition exports based upon their effect on the U.S. utility market;
and whether to deny export proposals altogether as contrary to the public interest.
128
125
Sierra Club Mot. at 13 (citations omitted).
126
See id. at 14-15.
127
See id. at 14.
128
See id. at 17-18.
35
2.
Alleged Environmental Impacts from the Requested Authorization
Sierra Club maintains that the construction and operation of Delfin’s proposed
Liquefaction Facility will have a range of adverse local environmental effects. Sierra Club states
that it cannot thoroughly discuss these impacts because their precise nature and extent will
depend on the final site design and plan of the Liquefaction Facility (which, at
that time, Delfin
had not yet provided).
129
Nevertheless, Sierra Club charges that both construction and operation of the planned
Facility will emit harmful quantities of carbon monoxide, nitrogen oxides, volatile organic
chemicals, and GHGs, and also will likely emit harmful sulfur dioxides and particulate matter.
Sierra Club asserts that each of these types of emissions will have injurious environmental and
health impacts. Sierra Club further argues that the proposed Facility’s offshore location does not
eliminate these local impacts because “air emissions from the offshore are likely to affect
onshore air quality.”
130
Addressing local air emissions, Sierra Club charges that both
construction and operation
of the proposed Terminal will emit harmful quantities of carbon monoxide, nitrogen oxides,
volatile organic chemicals, and GHGs, and also will likely emit harmful sulfur dioxides and
particulate matter. Sierra Club asserts that each of these types of emissions will have injurious
environmental and health impacts.
131
In addition to air emissions, Sierra Club maintains that the proposed project will likely
have deleterious environmental impacts on
local water quality, fish and wildlife, and other
129
See id. at 21.
130
Id.
131
See Sierra Club Mot. at 21-25.
36
environmental resources. Sierra Club states that it intends to submit comments during the NEPA
process that will explore these impacts.
132
Next, Sierra Club argues that the export of additional volumes of LNG from the proposed
Liquefaction Facility likely will have environmental impacts greater than the local impacts
because the planned exports will induce additional natural gas production in the United States.
133
Sierra Club asserts that these impacts are reasonably foreseeable, and that NEPA and the NGA
require DOE/FE to consider the effects of this additional production.
Sierra Club points out that
the EIA Study concluded that roughly 63 percent of natural gas demand created by exports will
be met with new production. In the context of this proceeding, Sierra Club states that this data
equates to an additional 1.25 Bcf/d of natural gas production.
134
Sierra Club further argues that
Delfin relies upon a report by ICF International concluding that up to 88 percent of LNG export
volumes will be offset by increasing natural gas production.
135
Sierra Club observes that Delfin does not dispute that additional natural gas production
will result from the proposed exports. Sierra Club maintains that available tools enable DOE/FE
to predict where this increased production will occur, specifically citing the NEMS model
employed by EIA in the EIA Study. Sierra Club states that a model employed by Deloitte
Marketpoint is also capable of identifying the geographic region in
which additional production
will occur.
136
Sierra Club asserts that much of the induced production will come from shale gas and
other unconventional sources, citing the EIA Study for EIA’s projection that 72 percent of the
132
See id. at 25.
133
See id.
134
See id. at 26.
135
See id. at 25.
136
See id. at 28-29.