The U.S. Department of Energy’s revised policy on granting export permit extensions for liquefied natural gas (LNG) developers who fail to meet construction deadlines is causing a fresh challenge for greenfield plants, according to analysts.
The DOE stated it would grant future extensions only on “extenuating circumstances” and rejected Energy Transfer’s proposed Lake Charles LNG project. Analysts predict that the change will impact firms without a successful track record and sufficient financing.
About a dozen LNG projects in the U.S. and Mexico that would process more than 20 billion cubic feet per day (bcfd) of exports are at risk of halting due to the policy shift.
Without extensions to acquire non-Free Trade Agreement permits, funding for new entrants may dry up, leading to potential abandonment of the projects.
Alex Munton, Rapidan’s Global Gas Service director, stated, “For many of these projects, it looks like ‘game over.'” Glenfarne Group, which has two projects – Texas LNG and Magnolia LNG – on Rapidan’s list of at-risk projects, remains optimistic that the DOE will provide extensions.
The company spokesperson said that both projects align with the DOE’s preferred forward-thinking, environmentally sensitive model for U.S. gas exports.
Energy Transfer has appealed the rejection of its permit extension, but co-CEO Marshall McCrea revealed that one customer is considering going elsewhere. On the other hand, established firms with regular customers and operations welcomed the decision.
Cheniere Energy and Venture Global LNG, which have successfully constructed new plants, commended the policy change. “Fully commercialized LNG projects, including Cheniere’s, have been constructed and have commenced exports within the seven-year deadline,” said a Cheniere spokesperson.
Venture Global LNG, which has consistently beaten the seven-year window, believes the policy change is advantageous to its construction schedule, said spokeswoman Shaylyn Hynes.
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