On November 3, 2011, the Director of the Office of Energy Projects for FERC issued a delegated order dismissing the uncontested application of Pivotal LNG, Inc. (“Pivotal”) for a limited jurisdiction blanket transportation certificate, under section 7(c) of the Natural Gas Act (“NGA”), in order to own and operate a liquefied natural gas (“LNG”) facility in support of its non-jurisdictional LNG fuel business.  The delegated order stated that Pivotal would not be conducting activities that fall under the Commission’s jurisdiction, and thus, a section 7 certificate would not be necessary.

On August 8, 2011, Pivotal, a subsidiary of AGL Resources, Inc., submitted its application to the Commission.  As detailed in the application, Pivotal plans to purchase an LNG peaking facility from the City of Trussville, Alabama (“Trussville Facility”).  Trussville has previously used the Trussville Facility to meet the demands of its own retail customers.  However, Trussville has since arranged for alternative gas supplies that have eliminated its need for LNG peaking supplies.  Pivotal intends to buy the Trussville Facility to liquefy and store natural gas for future sales as a liquid fuel for vehicular and other end uses.  The LNG will be delivered from the facility in tanker trucks to destinations where it will be consumed in LNG vehicles and other stationary uses to displace liquid fuels such as diesel.  In asserting that its core business activity fell outside NGA jurisdiction, Pivotal analogized its activities to those reviewed by the Commission in a prior case, Air Products and Chemicals, Inc., where the Commission held that the activities of a company planning to operate “refrigerated liquid methane” facilities to supply locomotive fuel would fall outside NGA jurisdiction. 

In its application, Pivotal indicated that, although its core business activities were non-jurisdictional, the Trussville Facility would need to produce limited amounts of boil-off and tail gas, and that these vapor volumes would be sold and delivered directly to Trussville for consumption by that utility’s retail customers. While its application initially indicated that it might need to deliver some excess boil off and tail gas into Southern Natural’s interstate pipeline system, it confirmed in a data response that it has no present plan to do so, and would come back to the Commission if such were to be undertaken in the future.  Pivotal also confirmed that it had no plan to sell LNG for export to destinations outside the United States.

Since the boil-off and tail gas from the Trussville Facility would not be introduced back into an interstate pipeline, the November 3 Order determined that Pivotal would not be considered a natural gas company under section 2(6) of the NGA and that there is no need for a section 7 certificate from the Commission to deliver boil off and tail gas back into the Trussville utility system.

 A copy of the November 3 order is available here.