A proposed Natural Gas Industry Bill in the Senate is eyeing to enforce two-tiered permitting for liquefied natural gas (LNG) import terminals to clearly demarcate if the facility is for the own-use of the owner and operator; and a separate permit is required if it targets to market the gas commodity to other end-users. Photo credit: from DOE Senate Bill 1819 authored by Senator Sherwin T. Gatchalian, chairman of the Energy Committee, propounded that the Department of Energy (DOE) shall be the agency in-charge of issuing permits for LNG import facilities. “The DoE shall issue own use and rTPA (regulated third party access) permits to owners and operators of LNG terminals. The owner and operator of an LNG terminal shall have the option to apply for both permits and simultaneously perform the functions of an own use LNG terminal permit holder; and an rTPA LNG terminal permit holder,” the bill stipulated. There are currently four LNG import terminal projects that the DOE had granted with permits – but there are no specific delineations yet if these are for own-use of the facility owners; or if their capacities will be sold to other end-users. As an own-use LNG terminal, it was specified that the capacity of the asset shall be exclusively utilized for the requirements of the facility owner/operator or permit holder. And if the permit secured is solely for that purpose, the proposed law prescribes that the facility owner or operator must “not enter into an nTPA (negotiated third party access) or any similar arrangement to the extent of the capacity allowed and during the length of time specified in the permit.” At the same time, the entity holding an own-use permit is directed “not to grant use or access of its facilities to third parties through an nTPA or any similar arrangement.” An nTPA would refer to a contractual arrangement between an own-use LNG terminal permit holder or an own-use natural gas transmission system permit holder, and a third party to allow the latter use and access of a specific capacity covered by the own use permit for a fee negotiated between the relevant parties. The other permit, which is for rTPA, is granted to an owner and operator of LNG terminal intending to market the gas fuel to other end-users with corresponding fees. The rTPA permit holder, as emphasized, shall “publicly disclose the capacity available to third parties.” Such permit holder is likewise enjoined to “determine the mode of selection of third parties who shall utilize the capacity available which may include negotiated contracts;” and it must provide “non-discriminatory use and access, to the extent of the capacity allowed by and during the length of time specified in its permit.” The LNG facility with rTPA permit shall not also give “any undue preference or advantage to any third party, whether in rates, terms, conditions or special privileges.” For the transmission of natural gas, this shall be subject to the regulation of the Energy Regulatory Commission (ERC), including the proposed establishment of Natural Gas Transmission System Operator (NGTSO); as well as the rate setting that shall prevail in this segment of the industry.