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FERC approves four Texas LNG projects
TEXAS
THE US Federal Energy Regulatory Commis- sion (FERC) granted approvals on November 21 for the construction of four LNG projects in Texas – comprised of three greenfield ventures and one expansion of an existing facility.
The regulator said in a statement that it had approved three projects that would be located along the Brownsville Ship Channel in the Rio Grande Valley – Texas LNG, Annova LNG and Rio Grande LNG. The FERC also approved the Stage 3 expansion project at Cheniere Energy’s Corpus Christi LNG terminal, which entered service earlier this year.
Stage 3 of Corpus Christi LNG involves a dif- ferent design from the facility’s first three trains, each of which has a capacity of 4.5mn tonnes per year (tpy). Cheniere is proposing to build seven mid-scale trains at the terminal as part of Stage 3, with a combined capacity of 11.45mn tpy. The company updated its website in the wake of the FERC approval to say it planned to make a final investment decision (FID) on Stage 3 in 2020.
The largest of the three new projects approved by the FERC in the Rio Grande Valley is Next- Decade’s Rio Grande LNG, which would have a capacity of 27mn tpy. NextDecade said in a state- ment on its project approval that it anticipated finalising major commercial milestones during this quarter, as well as the first quarter of 2020. After that, the company expects to announce an FID also in the first quarter of 2020. Rio Grande LNG would then enter service in late 2023.
Both Annova LNG and Texas LNG are con- siderably smaller than the Rio Grande project, with proposed capacity of 6mn tpy and 4mn tpy respectively. Annova LNG did not issue an updated timeline in the wake of receiving FERC
approval, but its CEO, Omar Khayum, said in September that the company would not make an FID until it had contracted out two-thirds of its capacity. Annova LNG is not known to have signed any offtake contracts as yet, and there are concerns that securing buyers will become even harder given the growing glut of LNG supply on the global market, which would only be exacer- bated by new projects being built.
Texas LNG still needs several more approv- als, including a Texas air permit, before it can make an FID, which it anticipates doing in 2020 or 2021. Efforts to obtain the state air pollution permit are currently tied up in a legal process that could take at least another four months to complete. Judges that have been tasked with reviewing the air pollution permit will rule on it by February 24. After this, the Texas Commission on Environmental Quality (TCEQ) will be able to issue the permit, but its next meeting is unlikely to be held until March at the earliest.
All four FERC-approved projects also still require authorisation from the federal Depart- ment of Energy (DoE) to export LNG to coun- tries with which the US does not have a free-trade agreement (FTA). But even if all outstanding approvals are granted, there is no guarantee that all four projects will go ahead given the global oversupply of LNG and increasingly fewer buy- ers willing to be locked into long-term contracts. Cheniere’s expansion at Corpus Christi LNG is the most likely to go ahead, given how well-es- tablished the company is in US LNG trade. The Rio Grande Valley projects, meanwhile, still have some way to go in order to contract enough vol- umes to justify FIDs.™
The FERC approved an expansion of Cheniere’s Corpus Christi LNG,
as well as three other greenfield projects.
All four FERC- approved projects also still require authorisation from the federal Department of Energy.
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