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FERC terminates permitting review for La. LNG project, citing inaction

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FERC terminates permitting review for La. LNG project, citing inaction

  • Author Corey Paul
  • Theme Energy

The Federal Energy Regulatory Commission told natural gas export developer Pointe LNG LLC that the agency would terminate a pre-filing review for a proposed export terminal in Louisiana after years of inaction.

FERC's Oct. 28 letter to Pointe LNG co-founder Thomas Burgess cited a "lack of progress in the pre-filing review process" that began in September 2018 as the reason for terminating the review. (PF18-8) The developer indicated to FERC that it planned to file a project application no later than November 2019, a targeted deadline that came and went.

"The pre-filing record indicates that Pointe LNG has not engaged any regulatory authorities or potentially affected stakeholders over the past 2 years, which is one of the main intended purposes of the pre-filing process," FERC said in the letter, which said Pointe LNG could submit a new pre-filing request in the future.

Burgess said in an Oct. 29 email that Pointe LNG is working to raise funds to complete the FERC permitting process and believes that the project could reach a final investment decision within 24 months of securing a development investor.

"We firmly believe that this project will be the low-cost export liquefaction project in North America and look forward to continuing permitting with our stakeholders and FERC," Burgess said.

Favorable market dynamics have kept the six major U.S. LNG export terminals running at close to full capacity for months. And a large spread between U.S. Henry Hub gas prices and prices in end-user markets in Asia and Europe has fueled anticipation among project sponsors about increased buyer interest in supply deals that could be used to support building new facilities. A recent blitz of contract activity that has seen companies such as Cheniere Energy Inc. and Venture Global LNG sign supply deals with coveted buyers in China has supported the idea of more U.S. export projects getting commercially sanctioned in the near term.

But more than a dozen North American LNG developers are competing to advance their projects, and only a small group have managed to sign new off-take deals in recent months. Not all proposed projects will advance to construction.

Pointe LNG would build its project on a site covering about 600 acres of leased property with more than 6,500 feet of river frontage on the eastern banks of the Mississippi River in southern Louisiana. The project, with a planned in-service date in the second quarter of 2025 when proposed in 2018, would consist of three liquefaction trains, each with a nominal capacity of 2 million tonnes of LNG per year, and a marine loading berth with three loading arms and one vapor arm for loading LNG tankers.

The project also calls for building two 36-inch-diameter gas supply laterals to interconnect with nearby existing pipeline infrastructure. One 3.2-mile pipeline would enter the facility from the north, connecting with High Point Gas Transmission LLC's system. Another 3.4-mile pipeline would enter the facility from the south and connect with Tennessee Gas Pipeline Co.'s system.

In 2018, the developers said it was in talks with private investors and potential LNG customers to secure financing to build the project, which was estimated to cost about $3.2 billion.

"The development capital that would fund the permitting and engineering for the project has been difficult to secure," Burgess said Oct. 29. "Pointe LNG has engaged three investment banking firms, but those efforts were not successful."

But Burgess said that Pointe LNG has since found a "potential investor for the $65 million development capital that is needed to complete the engineering and FERC permitting process." The company is looking to pair that investor with another financier who would relieve the development capital investor once the project reaches a final investment decision and take on an equity position "after permitting risk is addressed while having access to low-cost LNG cargoes."

"We believe this to be an attractive, low-risk approach to take a significant stake in Pointe LNG," Burgess said.