Commonwealth LNG files FERC permit application for Louisiana export facility

Houston — Privately held Commonwealth LNG filed with US regulators on Tuesday its formal application for a permit to build an 8.4 million mt/year export terminal and affiliated feedgas pipeline interconnect in Cameron Parish, Louisiana.

The project is among a dozen or so liquefaction terminals that are actively being pursued in the US with the expectation they will come online during the early to middle part of the next decade, a time when global supply could face a shortage based on forecast demand.

There is uncertainty in the market about the number and ultimate size of projects that will make it to the finish line, given the cost to build, the competition for buyers and, more recently, the impact from the ongoing trade war between the US -- the biggest supplier of new capacity -- and China, which is expected to be the world's biggest importer of LNG within a decade.

Commonwealth LNG had been in the pre-filing process with the Federal Energy Regulatory Commission since 2017. Its formal application with FERC asks for permit certificate approval by January 2021, so it can begin commercial exports by the first quarter of 2024.

Houston-based Commonwealth, a subsidiary of an investment vehicle owned by businessman Paul Varello, is proposing a six-train facility, with each unit capable of producing 1.4 million mt/year of LNG. Total capacity could be increased to 9.5 million mt/year under optimal conditions, the permit application said.

The project will also include six LNG storage tanks and a 3-mile-long, 30-inch diameter natural gas pipeline that will connect the facility with existing pipeline systems operated by Kinetica Partners and EnLink Bridgeline Holdings.

Commonwealth expects to build significant portions of the trains and storage tanks offsite in modular fashion. This approach is becoming more common among second wave US developers to shorten construction time, cut costs and find suitable offtakers.

In June, Commonwealth said it had signed a heads of agreement with global commodity trader Gunvor that anticipated the negotiation and finalization of a definitive 15-year sale-and-purchase agreement for 1.5 million mt/year of LNG offtake from the proposed terminal. The developer said at the time that it expected to take a final investment decision on the project next year.

Several existing and proposed LNG export terminals have been sited in Cameron Parish and nearby parishes in southwestern Louisiana.

Among them is Venture Global LNG's Calcasieu Pass, which has its FERC permit and began site construction in February.

The developer's co-CEO, Robert Pender, told S&P Global Platts in March that Venture Global had already made a final investment decision on the project. The company wrapped up financing arrangements Monday that are expected to allow it to cover the full cost of construction. On Tuesday, it issued a statement saying it had made FID, reiterating what it told Platts five months earlier. A spokesperson did not respond to a request for comment.

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

-- Edited by Zac Aiuppa, newsdesk@spglobal.com