Loading of the first commissioning cargo at the Sabine Pass LNG Terminal in February 2016. File photo: Cheniere Energy
By Jennifer A. Dlouhy, Rachel Adams-Heard and Ryan Collins (Bloomberg) — Government approval of projects intended to export rising supplies of shale gas could be delayed by 18 months as the top energy regulator struggles with a backlog of permit requests, according to people familiar with the matter.
The Federal Energy Regulatory Commission is notifying some developers of multi-billion-dollar liquefied natural gas plants of 12- to 18-month delays, the people said, asking not to be named because the information isn’t public. That could affect the commercial viability of several ventures vying for a spot in the rapidly expanding global gas market.
The delays may undermine President Donald Trump’s pledges to streamline regulatory oversight, promote American energy might and nurture LNG exports. At the FERC, Chairman Kevin McIntyre is keen to hire private contractors for the first time to help work through LNG reviews.
Two weeks ago, the agency sent letters to nine LNG developers requesting they “consider providing a third-party contractor to assist” FERC staff in their reviews — specifically for evaluating fire-safety protections.
Representatives of the FERC had no immediate comment.
The surge in applications for new export projects is testament to the American shale-gas boom that turned old plans to import the fuel on their head. The U.S. has two major LNG export facilities in operation today, with four more set to enter service by the end of 2019. Another four have received all major regulatory permits and are awaiting the final go-ahead from their developers. Meanwhile, more than a dozen are still seeking FERC approval.
‘Center of the World’
Paul Varello, president and CEO of Commonwealth LNG, which is developing an LNG terminal near Cameron, Louisiana, has pressed the FERC to broaden the contractor plan and seek ways to streamline reviews.
“FERC has been very open and very constructive,” Varello said in an interview. “They know they have an issue and need to find a way to fix it.”
On Wednesday, Commissioner Neil Chatterjee took to Twitter to offer possible solutions to the problem, including increasing pay for agency staffers in a bid to retain them or opening a regional office in Houston, which he called “the center of the world” for natural gas legal and technical expertise.
At least three projects — Tellurian Inc.’s Driftwood, Venture Global’s Calcasieu Pass and NextDecade Corp.’s Rio Grande — didn’t receive the letter. NextDecade confirmed it didn’t receive a letter and declined to comment further. Tellurian said Driftwood is still on schedule. Venture Global didn’t immediately respond to telephone and emailed messages.
Varello said he’s heard that it will take 18 months to two years to prepare an environmental review for proposed projects — compared to the six to eight months traditionally spent on those assessments.
“It is a startling revelation to me that it will take me twice as long to permit the plant as to build it,” he said. “Five years to permit it, and two and a half years to build it.”
© 2018 Bloomberg L.P
Sign up for our newsletter