Jack Fusco, CEO of the US LNG exporting giant Cheniere is going “full steam ahead” with the company’s Corpus Christi and Sabine Pass expansion projects, vowing President Joe Biden’s move to pause non-FTA permits will “not materially impact timelines.” Sempra Infrastructure, similarly, remains confident on the merits of its proposed LNG ventures as they will be linked to carbon sequestration.
In a controversial move, President Biden had halted pending decisions on LNG exports to countries that the US does not have a Free Trade Agreement with (non-FTA), giving the Department of Energy (DOE) “time to take a hard look at the impacts of LNG exports on energy costs for American consumers and our environment.” Industry lambasted the decision taken in an election year, though Energy Secretary Jennifer Granholm was quick to point out “it’s only a month-long pause. It’s not a ban.”
Ramifications of the regulatory review are deemed far-reaching: Though the US government claims only four projects with pending export approvals are directly affected by the pause, analysts warned it also affects many projects which under their current DOE approval aim for first LNG exports before 2027. Currently, almost 90 mtpa of planned liquefaction and export capacity would need non-FTA approval – and without such permit, projects struggle to sign on sufficient firm offtake to secure debt financing and reach financial close.
Determined to press ahead, Cheniere plans to file an application with the Federal Energy Regulatory Commission (FERC) before the end of March for a 20 mtpa expansion of its Sabine Pass terminal in Louisiana, CEO Fusco said in the company’s quarterly earnings call. Cheniere is already in an early filing stage with FERC for its Sabine Pass Midscale 8 and 9 project – but once the expansion gets approved by the energy regulator, it would also be subject to the moratorium on export permits and the more stringent DOE review.
The Corpus Christi mid-scale Trains 8 and 9 expansion in Texas, meanwhile, should commence preliminary shipments before the end of this year, Fusco vowed, before “meaningful LNG production” of the new Trains with 15 mpta capacity combined will be reached in 2025. The Cheniere CEO disclosed he just received a letter of determination from the Pipeline and Hazardous Materials Safety Administration (PHMSA) which keeps him confident that “previous timelines won’t be materially impacted and we will maximize the efficiency [during construction] with having Bechtel on site already through Stage 3.”
Four projects directly affected
Sempra’s Port Arthur expansion in Texas, in contrast, is directly hit by the suspension on non-FTA permits. The proposed Trains 3 and 4 would be capable of producing up to 13.5 mtpa and applied for DOE approval already in September last year. Once in place, the Phase 2 expansion would take Port Arthur’s total liquefaction capacity to approximately 26 mtpa. Staying optimistic, Sempra singled out the merits of LNG exports in displacing more carbon-intense fossil fuels abroad and underlined it will mitigate emissions from the liquefaction process via the Titan Carbon Sequestration project at Port Arthur as well as via the Hackberry Carbon Sequestration project near its Cameron LNG terminal in Louisiana. The captured CO2 would be compressed and permanently stored in a saline aquifer.
Commonwealth LNG had been waiting for over 14 months for a non-free trade permit for its 9.3 mtpa LNG export facility in Cameron, Louisiana. The developer had written to President Biden in January to help expedite the approval process as the project secured firm offtake for about half of its capacity and was aiming for financial close this year. Now, with the permitting pause in place, FID and start of construction has been pushed back to the first half of 2025.
The Lake Charles LNG venture is also directly impacted by Biden’s permitting pause. Energy Transfer re-applied for new and expedited export license in mid-August last year after its original permit expired and DOE refused a three-year extension of the license. The Dallas-based developer has been going after the multi-billion-dollar project since 2012 and had to admit in its latest filing it was unable to meet the construction deadline before the existing LNG export license expires in 2025. The company blamed “unplanned delays,” especially due to a decision to add a carbon capture and sequestration unit to the plant. In terms of offtake, Energy Transfer’s CEO Tom Long pointed out Lake Charles LNG made “substantial progress” as evidenced by six SPAs for some 7.9 mtpa – about half of the terminal’s FERC-approved 16.45 mpta liquefaction capacity. Now, Energy Transfer is hoping to get a new export license that would give it seven more years to get the project in Louisiana over the finishing line.
Rival Magnolia LNG, an 8.8 mtpa project developed by Glenfarne Group, also refiled for an export permit in March last year but the company did not disclose details on dates and progress of the venture. Magnolia had already sought and received an extension of time until April 2026 and noted the new application will be evaluated under DOE’s new carbon management policies. In its application, Glenfarne pointed out Magnolia LNG’s access to consistently low-priced feed gas from the significant resources along the Gulf Coast, specifically the Haynesville basin, as well as the utilized low-emission OSMR-liquefaction technology.
US permitting pause feared to squeeze supply
JERA, Japan’s largest LNG importer and power generator, as well as the German utilities Uniper, EnBW and state-owned SEFE warn President Biden’s temporary pause on permits for American LNG exports could undermine the world’s energy security. Chinese buyers fear the suspension of US LNG permits could force them to return to the spot market as nearly 10 million tons per annum (mtpa) of contracted volumes are at risk of arriving late.
Seven Chinese companies – ENN, PetroChina, Foran, China Gas, Guangzhou Development Group, Zheijang Energy and Hong Kong & China Gas – in 2022 and 2023 signed ten sales and purchase agreement with a combined 9.6 mtpa with American LNG suppliers. The buyers now fear to lose parts of these contracted volumes as some of the shelved US LNG export might be abandoned further out.
Similarly, SEFE and JERA are concerned about the timeline of their first LNG purchases from Venture Global’s Calcasieu Pass 2 plant, one of many stalled projects. The regional power producer EnBW signed a contract to import 0.75 mtpa while SEFE agreed to offtake 2.25 mtpa from Calcasieu Pass 2. Over in Japan, both Inpex and JERA signed 20-year contracts for around 1 mtpa from Venture Global’s contested LNG project. In the UK, Grain LNG recently signed a binding long-term terminal use agreement giving Venture Global access to 3 mtpa of LNG storage and regas capacity at the Isle of Grain terminal for sixteen years starting from 2029.
While Asian and European gas importers worry how to replace contracted US LNG and fear rising prices due to volume shortages, analysts are less concerned: "The EU will become a declining gas consuming region, the signals are downward," said Anne-Sophie Corbeau, a researcher at Columbia University's Center on Global Energy Policy (CGEP). "Between growing biomethane, Norwegian gas, some African gas, Azeri gas and declining production, we might just see eventually a progressive decline of our LNG demand, especially post 2030 – and this is precisely for that period that the Biden decision would matter,” she explained.
