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Venture Global makes 'urgent request' to FERC to approve LNG project

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Venture Global makes 'urgent request' to FERC to approve LNG project

Venture Global LNG pressed the Federal Energy Regulatory Commission to approve its proposed Calcasieu Pass liquefied natural gas export terminal in Louisiana, saying it is "critically important" after a previous delay in commission action and after a signal that commissioners will not take up the matter when they meet Jan. 17.

In an "urgent request for commission action," Venture Global asked FERC to approve the project by Jan. 22. "Any further delay could undermine the market's confidence in the commission process," the developer wrote in the Jan. 15 letter signed by co-CEOs Bob Pender and Mike Sabel.

Ahead of a Dec. 20, 2018, FERC meeting, Republican Chairman Neil Chatterjee had pulled a scheduled vote on Calcasieu Pass as well as a small pipeline project. With only Chatterjee and two Democrats on the commission set to cast votes, Chatterjee might have lacked the votes to advance the projects, and it was not clear whether future votes on LNG projects could also stall. A rift has grown between Republicans and Democrats on some issues in its reviews of natural gas infrastructure projects, which has led the Democrats to dissent from several commission authorization orders. The main points of conflict are the commission's approach to determining public need and the climate impacts of individual gas projects. The Jan. 2 death of Republican Commissioner and former Chairman Kevin McIntyre returned the commission to a 2-2 split between political parties, deepening the uncertainty.

But even before the Trump administration names McIntyre's successor to restore the full commission, the FERC commissioners could still reach compromise and allow LNG projects to advance. Rob Rains, an energy industry specialist at the research firm Washington Analysis LLC, and other observers pointed to Commissioner Cheryl LaFleur, a Democrat, as the likely swing vote.

"There's been a rush to judge this FERC as divided and incapable of furthering some of these actions," Rains said in an interview. "I don't think that's really the case. I think we can reasonably foresee a compromise outcome here related to [greenhouse gases] analysis that would comfortably secure the support of a third commissioner: Cheryl LaFleur."

LaFleur and her fellow Democrat, Commissioner Richard Glick, have repeatedly called for expanding consideration of the potential impacts of greenhouse gas emissions as part of the agency's review of gas projects. Among other reasons, they have argued that this would fix a narrower analysis that allowed a federal appeals court to overturn FERC authorizations in a landmark pipeline case. But LaFleur, who supported many FERC approvals of LNG export and pipeline projects in the years before that court decision and before the arrival of Glick at the commission, has not always joined her fellow Democrat in dissents on gas project votes. In some cases, LaFleur signed off on projects after considering greenhouse gas emissions on her own.

If the commission had signed off on the Calcasieu Pass project in December 2018, it would have been the first authorization of a new LNG export facility by FERC in two years. At that meeting, the newest Republican commissioner Bernard McNamee declined to vote for or against any items after he had just joined earlier that month. McIntyre, who was ill, was absent and did not vote.

FERC staff cleared Calcasieu Pass in a final environmental impact statement in October 2018. (FERC dockets CP15-550, CP15-551)

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Venture Global has lined up a heavy industrial construction firm to build the project, which is considered one of the front runners among second-generation U.S. LNG export projects seeking final investment decisions in 2019. The company has secured a series of long-term LNG supply deals with offtakers that support the project and its production capacity of up to 10 million tonnes per annum of LNG.

"We have made very significant financial commitments to our vendors and suppliers, acting in reliance on the expectation that the commission will act on a timely basis in accordance with its public pronouncements and the established schedule," Venture Global wrote. "It is imperative that the commission do so."

FERC can approve projects outside of the monthly public meetings, and it can vote on items added to a public meeting agenda just before the meeting starts. FERC usually tries to accommodate the time frames requested by companies, but the commission is not obligated to.

Venture Global took the Jan. 22 date in its request from a schedule published in August 2018 by FERC, which said it expected to issue a final order for Calcasieu Pass by that time. The commission rarely ties itself to a date for a final decision. The U.S. gas industry is watching.

"While that date has not yet passed, we expect that the absence of the project on the open meeting agenda will be read by the natural gas community as an indication that the commission is presently unable to move forward on natural gas infrastructure dockets while it lacks a fifth commissioner," the research firm ClearView Energy Partners said in a Jan. 10 note to clients.

A FERC spokesperson declined to comment on Venture Global's plea, citing FERC policy not to comment on matters pending before the commission. A Venture Global spokesperson did not respond to a request for comment.

"If it gets into months, I mean these projects won't be canceled or anything like that," Rains said. "But obviously they are nervous. They've got a lot on the line. They are getting ready to make a major investment. And timing is important for these LNG projects, as we learned the last go-around when oil fell off a cliff. And competition is picking up too. This is a global market."