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FERC signs off on four proposed US LNG export projects

Highlights

20.2 Bcf/d, 11 LNG projects approved this year

Three projects in Brownsville, Texas

Washington — Four proposed US LNG export projects, including three that would be built near the underutilized Brownsville, Texas, port, gained certificate approval Thursday from the Federal Energy Regulatory Commission.

The approvals bolster the likelihood that the biggest obstacle for additional liquefaction capacity in the US may be developers' ability to secure sufficient commercial agreements to get financing for construction.

The three Brownsville projects include NextDecade's Rio Grande LNG, which entails a terminal with up to six liquefaction trains, with a total design capacity of 27 million mt/year; Exelon-backed Annova LNG's 6 million mt/year project; and Texas LNG Brownsville, approved for 4 million mt/year and expected to include 2 million mt/year in the first phase.

Also gaining approval was Cheniere Energy's Corpus Christi Stage III expansion, comprising up to seven midscale liquefaction trains capable of producing up to 9.5 million mt/year of LNG, one LNG storage tank, compression, and 21 miles of pipeline in San Patricio County, Texas.

The vote on all the four projects was 2-1, with Commissioner Richard Glick dissenting. Glick had concerns about FERC's refusal to consider the significance of greenhouse gas emissions impacts, as well as on FERC's response to species impacts associated with the three closely related Brownsville projects.

MARKET TIMING

The action continues FERC Chairman Neil Chatterjee's focus on moving through FERC's large queue of proposed LNG projects, mostly proposed along the Gulf Coast.

He commended staff for a "monumental achievement" of certifying 20.2 Bcf/d of liquefaction capacity over the last year, helping to ensure that "we don't miss this crucial period for developing an export market for US gas." In addition to that 20.2 Bcf/d, this year 2.8 Bcf/d of liquefaction capacity has entered service, bringing the total to 32 Bcf/d authorized, with 13 Bcf/d under construction, commissioning or preparing for development, Chatterjee said.

After the three Brownsville LNG projects received their final environmental reports in the spring, they had been waiting for a final decision for months, raising some questions about whether cumulative impacts flagged -- for instance on federally listed wildcat and falcon species -- could have complicated FERC's decision-making.

At the open meeting, Glick suggested FERC fell short in its order of considering the significant impacts identified against the benefits. "We just say there are significant impacts and we don't do anything," he said.

The approvals also covered the 137-mile Rio Bravo pipeline from Agua Dulce to the Rio Grande terminal.

PROMISE OF OPPOSITION

Environmental groups said the Brownsville projects face strong opposition and still have regulatory hurdles to clear. The three projects need signoff from the US Army Corps of Engineers; Texas LNG awaits a biological opinion from the Fish and Wildlife Service, and state air permits are needed for Texas LNG and Annova LNG.

"Our communities are united in opposition to these dirty, dangerous projects, and we will continue to pursue all avenues -- from the courts to pressuring financial institutions -- to ensure they are never built," said Sierra Club Brownsville Organizer Rebekah Hinojosa in a statement.

But the commercial hurdles may loom larger, as none of the four LNG projects approved Thursday for certificates has reached a final investment decision to build, and only two of the four have announced any firm long-term offtake contracts tied to their proposed facilities.

Langtry Meyer, Texas LNG chief operating officer, welcomed the FERC approval, which he called a culmination of over four years of intensive environmental, engineering, regulatory, and legal efforts. "We are one step closer to delivering clean, safe, low-cost Texas natural gas energy to the world and generating jobs and economic benefits in Cameron County, Texas," he said.

There are currently six major LNG export terminals operating along the Gulf and Atlantic coasts. Five of them are actively shipping cargoes. Two more export projects are under construction. In addition, there are more than a dozen proposed projects being developed for startup in the early- to mid-2020s.

One of the projects currently operating, Freeport LNG, received FERC approval Thursday to place its first train into commercial service. Also Thursday, one of the projects under construction -- Venture Global LNG's Calcasieu Pass -- got the green light for its affiliated TransCameron feedgas pipeline to begin full construction activities.

-- Harry Weber, Harry.Weber@spglobal.com

-- Maya Weber, maya.weber@spglobal.com

-- Edited by Kshitiz Goliya, newsdesk@spglobal.com