Annova LNG pressed federal regulators to act on its application to build a natural gas export project on the Brownsville Ship Channel in Cameron County, Texas, noting that potential customers and investors have pointed to delays at the Federal Energy Regulatory Commission as bearing on their commercial decisions.
The nudge for action came after FERC authorized six LNG projects so far in 2019. Five other projects are awaiting decisions after receiving their final environmental reports this year.
In a Sept. 20 letter to FERC, Exelon Generation Co. LLC affiliate Annova LNG reminded FERC that in 2018 the commission had assured the industry that its staff was "very cognizant" of the financial market impacts of its LNG project schedules.
"As the commission recognizes, delay in action on pending permit applications can have significant and irreversible commercial implications" for LNG projects, Annova wrote. "Indeed, our potential customers and investors routinely cite delay in commission action on the pending permit as a critical issue in their decision-making process on key commercial activity."
Annova decision in June 2020
In a Sept. 23 email, Annova said its original final investment decision, or FID, was scheduled for 2018, "but delays in FERC's review of Annova's LNG application over the past few years have pushed FID back to June 2020." The FID will occur on 4 million tonnes per annum of investment-grade long-term contracts, the company said.
The midscale LNG facility, developed by Annova LNG Common Infrastructure LLC, Annova LNG Brownsville A LLC, Annova LNG Brownsville B LLC and Annova LNG Brownsville C LLC, would include six LNG trains, each with a nameplate capacity of 1 mtpa. Annova has been seeking to expand its equity ownership to include power and gas utilities. In addition to Exelon Corp., current equity owners include Black & Veatch Corp. and Kiewit Corp., and an unnamed oil and gas company.
In its Sept. 20 letter to FERC commissioners, Annova touted the economic benefits of the project, suggesting it would support $1.1 billion in labor income during construction when direct and indirect jobs are counted.
Annova also sought to distinguish its project from neighboring projects in terms of environmental impacts. Overall, FERC staff found the impacts of the Annova project could be reduced to less-than-significant levels. But the staff concluded in a final environmental impact statement that, combined with other nearby projects on the Brownsville Ship Channel area being developed by Texas LNG LLC and NextDecade Corp.'s Rio Grande LNG, the project would result in "significant cumulative impacts." These include harm to two protected wildcat species and impacts to visual resources.
Those findings complicated the path to FERC approval for the three projects, particularly with FERC's recent configuration of two Republicans and two Democrats. With a 2-1 Republican majority now in place with the exit of Commissioner Cheryl LaFleur in late August, it is possible that the majority could begin moving the projects.
Conservation corridor
Annova, in its letter to FERC, pointed to environmental and sustainability efforts. It highlighted a plan, backed by the U.S. Fish and Wildlife Service, to establish a 185-acre conservation corridor, contribute to a conservation fund, and make other key investments to help protect the ocelot, an endangered wildcat species.
Annova has previously argued that FERC should consider quantitative comparisons of the three projects, suggesting that some impacts are proportional to project size.
A coalition of environmental groups, fishermen and a community organization has objected to the Annova project and has been active in the FERC docket, raising the potential for litigation after the commission's review.
Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.
