Catch A Wave, Part 3 - More U.S. LNG Export Projects Moving Toward FID

The cascade of LNG export project news continues. In the past week, yet another “second-wave” U.S. LNG export project — NextDecade’s Rio Grande LNG — cleared FERC’s environmental review process. That follows news of three other projects that received their environmental approvals this month; plus two other projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — got final FERC authorization to construct their facilities, should they make the financial commitment to proceed; and, finally, plans for a brand new export terminal, Venture Global’s Delta LNG, were unveiled. All in all, there are more than 20 announced projects totaling 235 MMtpa (~35 Bcf/d) that are looking to catch the second wave of U.S. LNG exports in the next decade. The timing of their regulatory approvals and final investment decisions will determine, in part, when this next wave — or shall we say tsunami — of export demand will materialize. Today, we wrap up our second-wave LNG project update series with a look at the progress made by some of the remaining projects that we’re tracking.

In Part 1, we looked at the regulatory, financial and contracting milestones that make up the years-long, capital-intensive process for bringing liquefaction and export facilities across the finish line. On the regulatory front, there are export licenses, and environmental and project approvals — from the Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE) for U.S. onshore projects, and the U.S. Maritime Administration (MARAD) for offshore U.S. projects, or from the National Energy Board (NEB) in the case of Canadian projects. Developers typically also must lock in financing for a good portion of the project through equity partnerships, offtaker sales and purchase agreements (SPAs) for the liquefaction capacity, and/or project financing. And, finally, the projects (or their offtakers) must be able to secure the feedgas and the firm pipeline capacity to physically supply the terminal, which may involve simply signing up for firm transport on existing pipeline routes — but more often than not in the case of U.S. projects, it has involved modifying or building pipelines to move gas to the terminals. There are numerous factors — from location and timing to supply access and pipeline connectivity — that could determine whether a project finds the support it needs to move forward, and not all announced projects will ride the wave all the way to the proverbial shore. But many will, and the ones that do will dramatically reshape the domestic and global natural gas market balance in the 2020s and beyond.

In Part 2, we began our project-by-project update with a look at the first of the stateside second-wave projects to be greenlighted — ExxonMobil and Qatar Petroleum’s (QP) three-train, 15.6-MMtpa (~2-Bcf/d) Golden Pass Products (GPP), proposed to be built at the site of what is a legacy import terminal located in Jefferson County, TX. GPP took FID in early February (2019) and has since also received approval to proceed with initial site preparation, with the first of the three trains due for completion in early 2024. Then there’s Venture Global LNG’s Calcasieu Pass, an 11-MMtpa (~1.4-Bcf/d) project sited in Cameron Parish, LA, that has all but reached FID; the project, whose capacity is just about fully contracted, received its FERC authorization on February 21, its DOE non-FTA authorization two weeks later and already has begun initial construction activity. (As we noted in the previous episode, Venture Global also is developing the 20-MMtpa Plaquemines LNG project in Plaquemines Parish, LA, and a couple weeks ago, the company also initiated FERC’s pre-filing process for a third project — the 20-MMtpa Delta LNG terminal, also in Plaquemines Parish.)