Offshore LNG developer Delfin seeks 4th permit extension for US export project

Developer Delfin LNG asked federal regulators for a one-year extension to build onshore facilities that would connect to a proposed floating LNG export terminal, citing a recent long-term supply deal as evidence of the project's viability after a long struggle to secure sufficient commercial support.

Delfin's July 15 filing to the Federal Energy Regulatory Commission marked the fourth time the developer has asked the commission for more time to build the onshore facilities in Cameron Parish, Louisiana, Delfin has attributed the project delays to a variety of factors, including difficult market conditions in recent years, US-China trade tensions, and the pandemic.

"Currently, however, the need around the world for additional export of the abundant, low-cost, and clean-burning US natural gas supplies has never been stronger," Delfin said in the filing.

If FERC grants the Delfin request, the developer would have until Sept. 28, 2023, to place the onshore component into service. Delfin asked FERC to approve the extension before its existing Sept. 28 deadline for completing the facilities.

The developer pointed to increased demand for US LNG as European buyers attempt to turn away from Russian gas following Russia's invasion of Ukraine in late February. High prices and supply security concerns have also prompted other buyers to commit to new long-term supplies, resulting in a surge of contract announcements tied to US LNG projects.

Delfin, a subsidiary of Fairwood Peninsula Energy, is one beneficiary of the contracting wave. The developer on July 13 announced a 15-year deal with Vitol Group that called for the global commodities trader to off-take 500,000 mt of LNG per year from the Delfin deepwater port. The supply agreement is indexed to the Henry Hub, with total proceeds for Delfin estimated at about $3 billion over the deal's 15-year term.

Delfin told FERC it is also finalizing term agreements with other customers in pursuit of the 2 million mt/year to 2.5 million mt/y in long-term supply deals that the company needs to reach a final investment decision on the project, which the company plans to do by the end of 2022. The developer did not name the counterparties in the talks.

But the Vitol deal marked significant commercial progress for the developer, which has all major federal permits but has had difficulty securing the long-term supply deals needed to finance construction. Potential partner Golar LNG dropped out in August 2019 over doubts about the project reaching a final investment decision.

The deepwater port could ultimately support four floating LNG vessels producing up to about 13 million mt/y of LNG. The onshore component would include metering, compression and piping infrastructure.

FERC has recently granted permit extensions to other natural gas infrastructure projects over the objections of project opponents. In public filings, the regulator has referred to the commission's practice of considering construction timing and whether there is "good cause" to grant an extension while avoiding arguments that relitigate the original permitting decision.

"Delfin LNG continues to propose to change only the timing, not the nature, of its project, and the unforeseen events that have delayed the project have previously been recognized by the commission," Delfin said.