US DOE says no Commonwealth, CP2 LNG export decisions before new FERC approvals

The US Department of Energy will not issue key LNG export permits for the proposed CP2 and Commonwealth LNG export projects in Louisiana before the US Federal Energy Regulatory Commission completes added environmental reviews following decisions by a federal appeals court, according to the outgoing Biden administration.

That position, laid out in a Dec. 10 statement by the DOE, amounted to an affirmation of the agency's existing approach that began under the Obama administration instead of an announcement of new policy.

"Relying on DOE policy and consistent with precedent during the Obama, Trump, and Biden Administrations for the program that governs export of domestically-sourced natural gas as LNG to non-FTA countries, DOE cannot complete its review of these two applications—CP2 and Commonwealth – until after FERC's completion of the environmental reviews and issuance of final merits orders," the agency said.

The DOE said it issued the statement to provide "clarity" in response to questions "over the past several months" about the status of applications pending at the agency, particularly CP2 and Commonwealth. The statement named five additional projects that are awaiting approvals from other federal agencies that the DOE said need to be completed before it issues a non-FTA permit, including US LNG exporter Cheniere's proposed expansions of its terminals in Louisiana and Texas.

The transition team for the Trump administration, which could seek to change the process, did not specify in response to questions whether it planned to change the process for issuing the LNG export approvals. The permits at issue authorize LNG exports to countries that lack free trade agreements with the US, which represents most of the global LNG import market.

The Washington-based trade group the Center for Liquefied Natural Gas is not seeking changes to the DOE's practice of issuing non-FTA permits after a project has been approved for construction by the relevant federal agency, which is FERC for onshore US projects, the center's Executive Director Charlie Riedl said.

CP2 developer Venture Global criticized the DOE statement as one "crafted to give the illusion of an eleventh-hour win to well-funded NGOs and does not reflect DOE's obligations under the Natural Gas Act"

"We look forward to President Trump and Secretary Wright returning DOE to regular order," Venture Global said. "This will allow the American energy industry to continue building, creating jobs, and unleashing much needed US LNG supply to our allies."

The CP2 and Commonwealth LNG projects were among the hardest hit by the Biden administration's decision in early January to hit "pause" on issuing the non-FTA permits until the DOE can update the economic and environmental analyses it uses for determining whether exports are in the public interest. DOE officials have said the agency expects to release the updated study by "mid-December."

The incoming Trump administration has pledged to resume issuing the approvals after taking office, although how it does so and how quickly remain uncertain. The DOE statement about the statuses of pending projects did not address the permitting moratorium.

Analysts at ClearView Energy Partners said in a note to clients the DOE's statement "does not change fundamentals; projects must still receive environmental approval before finalization," the analysts said.

But they questioned whether the statement "could inspire the incoming administration to revisit DOE processes." One possibility could be returning to a practice, changed a decade ago under the Obama administration, of issuing conditional non-FTA permits to projects contingent on them receiving the necessary approvals to build and operate the facilities after an environmental, typically from FERC.

"It is unclear how much a return to conditional non-FTAs might benefit project sponsors, but it could offer the Trump administration a path to day-one deliverables," ClearView said.

The Trump-Vance transition team referred to a previous statement from spokesperson Karoline Leavitt, saying that the incoming administration would end a "war on American energy" during Biden's term.

"When he takes office, President Trump will make America energy dominant again, protect our energy jobs, and bring down the cost of living for working families," Leavitt said.

FERC said it was performing the added environmental reviews for the CP2 and Commonwealth projects to look at air quality issues after two rulings by the US Court of Appeals for the District of Columbia Circuit that found fault with LNG project authorizations. Both projects have FERC permits.

But the DC Circuit in July remanded the Commonwealth approval back to FERC to correct what it said were flaws in the commission's reasoning about the cumulative impacts of NO2 emissions.

After FERC faced arguments that it repeated the error in the CP2 approval, the commission said in late November it would "set aside" part of the authorization for CP2 and will not grant authorization to proceed with construction until the commission issues a new order on the merits of the project.

FERC released separate notices of schedule for the added environmental reviews that anticipated completing the supplemental reviews in May before issuing final orders in July.