Washington (Platts)--16Oct2012/153 pm EDT/1753 GMT

The US Department of Energy is putting off its decision on whether to block a key permit for Cheniere Energy's Sabine Pass liquefied natural gas export project in Louisiana.

The new order comes in a response to a September 6 request from Sierra Club, which asked DOE to reconsider and stay Sabine Pass' permit to export LNG to countries without US free trade agreements. Sierra Club argued the permit was based on an inadequate environmental review.

DOE's October 5 order, which was released recently, gives the department more time to consider the group's request. Without the order, Sierra Club's motion would have been automatically denied after 30 days.

The order is the latest in a long regulatory saga related the Sabine Pass project, the only facility so far to win permits to export LNG to both FTA and non-FTA countries.

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While a number of other facilities have been authorized to export to FTA nations, the department plans to wait to approve additional non-FTA permits until it has completed research on the domestic impact of exports. The final study is due at the end of the year.

In May 2011, DOE authorized Sabine Pass to export LNG to non-FTA countries. However, DOE's decision could not be finalized until the Federal Energy Regulatory Commission issued its environmental review of the project.

FERC staff later issued its environmental assessment and, in April, the commission approved construction and operation of the Sabine Pass facility.

Days after FERC's decision, Sierra Club filed a late motion to intervene in the DOE docket, arguing that FERC failed to consider the environmental impacts of new gas production that would be spurred by exports.

In August, DOE issued a finding of no significant impact for the project, based on FERC's environmental assessment. At the same time, it finalized Sabine Pass' non-FTA export permit and denied Sierra Club's motion to intervene. DOE argued that Sierra Club had plenty of warning and should have complied with the filing deadlines.

In September, Sierra Club filed its request for DOE to reconsider and stay the final Sabine Pass decision. The group reasserted its claims that it should have been allowed to intervene. And it again raised concerns about the impact of gas production on air emissions, water quality and landscapes.

"[DOE's] finding that the project is consistent with the public interest is arbitrary and capricious," the group said. "Consideration of the public interest includes environmental factors, including effects attributable to induced drilling."

Sierra Club and Cheniere did not immediately respond to requests to comment.

--Kate Winston, catherine_winston@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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