September 10, 2010 / 3:28 PM / 9 years ago

UPDATE 2-Cheniere gets DOE approval to export LNG from Sabine

* Cheniere will be able to export 16 mtpa for 30 years

* Sign of ample US natural gas supply

(Adds detail throughout, background)

NEW YORK, Sept 10 (Reuters) - The U.S. Department of Energy on Sept. 7 approved Cheniere Energy’s (LNG.A) plan to export domestically produced liquefied natural gas from the Sabine Pass terminal in Louisiana, the department said on its website.

The approval brings Cheniere one step closer to building the first LNG export plant in the United States for 40 years, and is another sign of the market revolution caused by the boom in unconventional gas development in the United States.

The proposed LNG plant, which is currently under review by the Federal Energy Regulatory Commission, would export gas produced from shale rock in Texas and further afield, found in abundance in the United States and now relatively easy and viable to produce thanks to new technologies such as horizontal drilling.

U.S. gas producer Chesapeake Energy (CHK.N) has agreed to supply 0.5 billion cubic feet per day to Cheniere for export.

The export plant would be built on the site where Cheniere currently operates the Sabine Pass LNG import facility.

The U.S. has received only light volumes of LNG this year, as ample gas supply, thanks to an increase in shale production, and weak demand have pressured gas prices and deterred shippers from sending much LNG there.

Plans for new U.S. import terminals have been scrapped and existing terminals are shifting strategies. Some, including Sabine Pass, now have the ability — and approval — to re-export previously imported LNG to higher-paying markets elsewhere.

Under this week’s DoE approval, Cheniere will be able to export up to 16 million tonnes of LNG per year for 30 years from Sabine Pass. Cheniere’s initial plan is to build two 3.5 million tonne per year trains by 2015, with the potential to expand to four trains later.

Approval is pursuant to Cheniere signing one or more long term export contracts — greater than two years — with LNG buyers.

Under the current filing, Cheniere can only export to countries which have a free trade agreement with the United States. Of these countries, only Chile, Canada, Mexico and Singapore have import terminals. The company has filed a second application to authorize export to all countries that it can legally export LNG to under U.S. law.

Cheniere has asked for authorization to export to countries that are members of the World Trade Organization by Sept. 22 and non-WTO countries by the end of the year. (Reporting by Edward McAllister; Editing by Marguerita Choy and Sofina Mirza-Reid)

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