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FERC unveils federal agreement, new processes to speed up LNG project reviews

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FERC unveils federal agreement, new processes to speed up LNG project reviews

The Federal Energy Regulatory Commission took steps to speed up its reviews of natural gas liquefaction and export projects with an agreement to collaborate with a federal safety agency and the release of environmental review schedules for a dozen proposed export terminals.

FERC announced the developments at a time when it has faced pressure to address a backlog of pending applications for LNG export projects from lawmakers and industry groups.

"Our recent streamlining efforts will provide all LNG stakeholders additional regulatory certainty and help minimize undue administrative burdens," FERC Chairman Kevin McIntyre said in an Aug. 31 statement.

McIntyre said "process improvements have shortened projected environmental schedules in some cases by 9 to 12 months."

With the notices of 12 new and updated schedules, FERC established self-imposed deadlines for completing environmental impact statements, which are a major step toward the commission's final decision on a Natural Gas Act certificate for such projects. FERC authorization is a critical step for LNG developers, both as the most important federal permit for the construction of such facilities and as evidence of progress that developers can use to win financing for their projects.

The notices came with the FERC announcement of an agreement with the Pipeline and Hazardous Materials Safety Administration, part of the U.S. Department of Transportation, to improve coordination between the two agencies on siting and safety reviews of LNG projects. FERC is the lead federal agency in preparing environmental assessments and impact statements under the National Environmental Policy Act for LNG and natural gas infrastructure projects. The commission is responsible for determining whether LNG facilities in its jurisdiction are in the public interest. PHMSA, which focuses on the safe operation of transportation infrastructure, oversees standards governing the location and design of LNG facilities.

The agreement, hinted at by the two agencies earlier in the summer, calls for making better use of PHMSA's safety expertise, which FERC will then consider in assessing whether a project is in the public interest.

FERC took other steps to help speed up reviews, including hiring new staff focused on LNG, using an outside contractor to help with construction inspections, and working with project developers to hire third-party contractors to conduct analyses that involve nonproprietary information.

"The news is overwhelmingly good for LNG exporters — certainty around FERC's process has been in short supply — and demonstrates the commission's commitment to delivering on some of President Trump's campaign promises," Height Capital Markets analysts Katie Bays and Josh Price wrote in a Sept. 4 note to clients.

LNG projects covered by the FERC notices include Freeport LNG Investments LP's train 4, NextDecade Corp's Rio Grande LNG facility, Tellurian Inc.'s Driftwood LNG facility, Sempra Energy Port Arthur LNG facility, Cheniere Energy Inc. Corpus Christi LNG expansion, Texas LNG LLC's Brownsville terminal, Eagle LNG Partners's Jacksonville facility, Exelon Corp.'s Annova LNG facility, Venture Global LNG's Plaquemines LNG facility, Pembina Pipeline Corp.'s Jordan Cove LNG facility, Kinder Morgan Inc.'s Gulf LNG facility and Alaska Gasline Development Corporation's Alaska LNG project.

"If FERC can keep its promises, it will approve over 165 million [tonnes] of new export capacity by the end of Trump's first term," the Height analysts wrote. "Most of these decisions will come throughout 2019 as the agency will spend the rest of 2018 attempting to crank out draft environmental studies at an unprecedented pace. Hopefully (for FERC), the partnership with PHMSA ... will streamline the process somewhat. We are optimistic that well-positioned and well-funded projects can keep the agency on track, and greater certainty should help both investors and buyers assess winning projects."

LNG developers released statements touting the notices of schedule. "FERC's schedule provides clarity to Texas LNG stakeholders including LNG buyers and investors that Texas LNG will receive its final FERC approval and is on track to achieving final investment decision in 2019," said Langtry Meyer, founder and COO of Texas LNG, in a Sept. 2 statement.

The U.S. LNG industry association Center for Liquefied Natural Gas praised the release of the schedules and said it would like to see the agreement between the commission and PHMSA "provide greater certainty for the market."

"We hope that the focus by FERC and [PHMSA] will help to alleviate the delays in the LNG review process, enable projects to reach completion and provide natural gas to market to feed the growing global demand for U.S. LNG," the center's Executive Director Charlie Riedl said in a Sept. 4 statement.