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LNG Project Tracker: Signs of US LNG renaissance could kick-start construction

  • Author Corey Paul
  • Theme Energy

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An LNG tanker sails in the Mediterranean Sea off the coast of Gibraltar.
Source: onfilm/iStock/Getty Images Plus via Getty Images

U.S. LNG developers see the potential for a new wave of export projects with global natural gas prices at record levels, a high demand for American gas supplies and Russia's war in Ukraine raising fears of supply disruptions.

Industry executives in recent weeks described a shift in tone from policymakers as the White House scrambles to boost LNG shipments to European allies. Several U.S. LNG developers also pointed to an uptick in commercial talks over long-term contracts traditionally used to secure financing. The counterparties included European buyers that had shied away from deals for U.S. shale gas over climate concerns in recent years and buyers in Asia that face increased competition for supplies.

"They are going to be buying more gas, not less," said Dan Brouillette, president of LNG exporter Sempra's infrastructure unit and a former U.S. energy secretary, in a recent interview.

The possibility of a U.S. LNG renaissance has fueled optimism among the backers of a dozen proposed export projects after a dearth of final investment decisions, or FIDs, since 2019. Six major natural gas liquefaction facilities in operation in the U.S. have been running at or near full utilization for months, with most cargoes flowing to Europe. A seventh export terminal — Venture Global LNG's Calcasieu Pass facility in Louisiana — shipped its first cargo March 1 and has continued to ramp up production as additional trains come online.

At the same time, the U.S. LNG sector and broader gas industry also see the potential for increased challenges on the domestic regulatory front, including from the Federal Energy Regulatory Commission's recent overhaul of its permitting policy for natural gas infrastructure. Critics of that policy, which FERC on March 24 decided to suspend and revisit after seeking more public input, argued it will hinder the development of needed infrastructure. A slew of projects already have the necessary federal permits to advance to construction, but some have been forced to return to FERC for approvals of changes to their projects.

Being fully permitted suddenly provides more of a competitive advantage than it used to, according to Jason Feer, head of business intelligence at Poten & Partners. Developers positioned to quickly execute their proposed LNG export projects should also have a leg up in capitalizing on the increased buyer interest, Feer said in an interview.

"People are looking to diversify their energy supplies and diversify who they do business with, and that obviously helps LNG projects that are not Russian," Feer said. "You might see some surprises."

High global gas prices will likely persist through 2024 with no major LNG export capacity projects expected to come online, Sanford C. Bernstein & Co. gas analyst Jean Ann Salisbury said in a March 21 note to clients. Europe's efforts to reduce its dependence on Russian gas could double the U.S. LNG export capacity that gets commercially sanctioned in the next year or two to between 40 million tonnes and 80 Mt per year as a result of the war in Ukraine, according to Bernstein's outlook. But the analysts cautioned this export capacity might not come online until 2027 or 2028.

The following is a compilation of updates to major U.S. LNG export projects in recent months.

Cheniere nears decision on Texas expansion

Cheniere Energy Inc. expects to commercially sanction a 10-Mt/y midscale expansion of its Corpus Christi, Texas, LNG terminal by June, after announcing it has already secured sufficient contracts tied to the project to underpin financing. The company, the biggest U.S. LNG exporter, also operates the Sabine Pass LNG terminal in Louisiana.

Executives said March 9 the company has about 5 Mt of LNG available beyond its normal marketing supply to offer for prompt delivery to Europe because of the early startup of liquefaction train 6 at Sabine Pass and train 3 at Corpus Christi.

Venture Global starts building 2nd export terminal

Venture Global started construction on its Plaquemines LNG terminal in Louisiana and recently approved Baker Hughes Co. to begin assembling the first trains. Venture Global CEO Michael Sabel said March 9 the company still needs to obtain financing for the project before declaring a formal FID. The company reported selling a total 14 Mt/y of the 20 Mt/y nameplate LNG production capacity.

Besides Calcasieu Pass and Plaquemines, Venture Global has applications pending at FERC for two additional Louisiana export terminals.

Tellurian in financing talks

The developer of the Driftwood LNG terminal in Louisiana is on the verge of proving a new approach for developing a U.S. LNG project by using 10-year contracts to support financing for the first phase of the export facility, according to Tellurian Inc.'s executive chairman and co-founder, Charif Souki. U.S. LNG terminals have traditionally been backed by 20-year contracts, and the repayment period has typically exceeded 10 years.

Souki said in a recent interview Tellurian is in financing talks and expects to reach an FID on Driftwood by the end of April. The first phase of the project could produce about 11 Mt/y before expanding to 27.6 Mt/y.

Mexico Pacific Ltd. lines up contracts

Mexico Pacific Ltd. LLC executives said March 8 the company secured binding offtake agreements for about a third of the volumes it needs to cover the two-train, 9.4-Mt/y first phase of its export project on the Sea of Cortez in Mexico. President and CEO Douglas Shanda said the company expects to announce an FID in September on the project, which would use U.S. feedgas.

The project still needs an export permit from the Mexican government, which the developer said it expects to receive in the coming weeks.

Freeport anticipates 2023 FID

Freeport LNG Development LP expects to build enough commercial support to greenlight a 5 Mt/y expansion at its Texas natural gas export facility by early 2023, Chairman and CEO Michael Smith said March 9.

"We are in very, very active discussions on train 4 with a large number of potential buyers," Smith said.

Golden Pass tries to ramp up construction

The developer of the 18.1-Mt/y Golden Pass LNG Terminal wants to bring in more workers to build the Texas natural gas export facility. FERC staff in an environmental review issued March 22 found that Golden Pass' request to boost the peak workforce from 2,900 to 7,700 people per day would not cause significant harm to the environment, but the request still requires approval from the commission amid concerns of delay.

Golden Pass also complained about permitting delays for an associated pipeline. As it stands, the export project remains on track to start operations in 2024, Golden Pass spokesperson Renwick DeVille said March 22.

Sempra shifts focus

Sempra is working to commercialize plans for a fourth liquefaction train at Cameron LNG. The train would be designed with a capacity of 6.75 Mt/y.

The developer asked FERC in a Jan. 18 filing to approve an amended plan to let the company pursue a single gas liquefaction train expansion at the three-train, 12-Mt/year capacity LNG export facility. The amendment would change an existing authorization for a two-train expansion that would have added a total 9.97 Mt/y of production capacity.

Sempra's top priority among LNG projects is building its $2 billion Energía Costa Azul terminal on the west coast of Mexico on time and on budget. The company planned for this 2.5-Mt/y facility to start producing LNG in 2024.

Brownsville LNG projects still face review

NextDecade Corp.'s Rio Grande LNG export project and the Texas LNG LLC export projects remain in the FERC permitting process after a federal appeals court in August 2021 found fault with the commission's climate and environmental justice reviews for the facilities.

NextDecade is the only Brownsville developer that has announced any firm long-term contracts. The developer said in a February investor presentation it is targeting an FID by the end of 2022 on the first phase, which would include two trains capable of producing 11 Mt/y.

NextDecade also pursued ways to reduce the emissions profile of the Rio Grande facility, which has a capacity of up to 27 Mt/y, including a carbon capture and storage project.

Commonwealth LNG awaits permit

Commonwealth LNG LLC would like to commercially sanction its 8.4-Mt/y project in Louisiana in 2023. The developer applied for a federal Natural Gas Act permit in August 2019, and the project remained in the FERC approval process.

US West Coast projects in limbo

The proposed 20-Mt/y Alaska LNG export terminal has faced persistent difficulties that include trouble securing customers and a high price tag of about $38.7 billion, even after cost-cutting efforts.

The state-run Alaska Gasline Development Corp. worked to shore up the credentials of the project, which the state would turn over to private interests after getting a federal loan guarantee that could lower the cost of debt.

Lake Charles LNG continues without Shell

Energy Transfer LP decided to move forward as the sole developer of the proposed Lake Charles LNG export project after Shell PLC pulled out in March 2020, but the developer has yet to announce any firm offtake deals tied to the facility.

Delfin seeks extension

FERC in January 2022 granted the developer of the Delfin LNG LLC terminal a one-year extension to construct connected onshore facilities after it struggled to secure sufficient commercial support. The request marked the third extension FERC has granted to Delfin.

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