US LNG developers react to White House pause on issuing new LNG permits

The Biden administration's election-year halt on the US issuing critical LNG export licenses for new projects put a slew of proposed US LNG projects in permitting limbo, threatening to delay projects and to prevent some from advancing at all.

The moratorium, expected to last at least through November, centers on the analyses that the DOE uses to decide whether to approve LNG exports from US projects to countries that lack free trade agreements from the US. Such non-FTA countries represent most of the global LNG import market.

As a consequence, the "pause" announced by the White House Jan. 26 created a dynamic where some pre-final investment decision projects are stuck waiting while rivals have the approvals in hand. But even among the latter group, several projects with licenses face permitting deadlines in the coming years that could require developers to seek extensions, a category of approvals that is also affected by the policy shakeup.

According to the White House announcement the policy update would take a "hard look" at impacts of LNG exports on US energy costs, energy security and the environment, with an emphasis on climate change.

"The LNG industry --not only in the United States but globally-- must consider the consequences of the policy change that lies ahead, and the potential impact of US regulatory risk on the global LNG future beyond 2024," S&P Global Commodity Insights analysts said.

Permit holders

Following the announcement, several US LNG developers with non-FTA approvals in hand touted their permitting status.

NextDecade, one of three US LNG developers to reach FID in 2023, said the moratorium would have "no impact" on its Rio Grande LNG project in Texas. The developer is working to build sufficient commercial support for two-train expansion of Rio Grande and faces a February 2027 DOE deadline.

Tellurian, which has struggled to advance its proposed Driftwood LNG terminal to construction and recently confirmed hiring the financial advisor Lazard to explore "commercial opportunities," pointed to its non-FTA permit in a Jan. 29 letter to shareholders. The permit is set to expire in May 2026.

"As we get closer to completing construction, we plan to adjust the in-service date condition under that license to accommodate our construction timeline," Tellurian Chairman Martin Houston said in the letter, adding that it would monitor the DOE process for any impacts to its permit. "In the meantime, the global demand outlook for LNG has not changed, so any scarcity will drive opportunity for Tellurian."

One project facing the need for a permitting extension is the proposed Delfin LNG export project offshore Louisiana, which has been targeting an FID on the first of four floating LNG vessels with a nearly 3.3 million mt/year nameplate capacity. Delfin, which did not reply to requests for comment, has a permit set to expire in June.

Then there are projects without licenses, and within this group there are different camps.

Awaiting approvals

FIDs on US and Mexico projects that were forecast to total some 23.7 million mt/year of new capacity in 2024 will all likely slip to at least 2025, according to S&P Global Commodity Insights analysts.

Sempra, the operator of the Cameron LNG terminal in Louisiana and the developer behind the Port Arthur LNG terminal that advanced to construction in Texas in 2023, has been targeting expansions on both projects in 2024. Sempra did not respond to questions about project-level impacts.

"Sempra Infrastructure remains confident in the merits of its proposed projects, which include helping to displace more carbon intense fossil fuels such as coal and fuel oils and supporting national security goals through providing access to U.S. natural gas to our allies in Europe and Asia," Sempra spokesperson Kym Butler said, adding the company looks forward "to the opportunity to review and comment on any proposed policy change as it relates to non-FTA permits."

Venture Global, another developer targeting an FID project in 2024 on its nameplate 20 million mt/year CP2 LNG project in Louisiana, declined to comment. CP2, specifically targeted by climate activists, has yet to receive an approval from the US Federal Energy Regulatory Commission, which it would need for a DOE decision.

Projects targeting a near-term FID also include the 8.4 million mt/year Commonwealth LNG terminal in Louisiana, which said it considered the pause "especially punitive" to its project, given its more than 430-day wait since getting a FERC approval. Commonwealth's Founder and Executive Chairman Paul Varello discussed the potential consequences of an extended permitting wait in a recent interview ahead of the permitting freeze.

"My momentum is there and if I slow it down, bad things happen," Varello said. "My customers walk away from me. My price goes up because inflation hits my capex."

A new entry into the field of US developers, Gulfstream LNG in Louisiana, said it was "very disappointed by the announcement" from the White House as it prepares to begin the FERC process.

Meanwhile, officials at the biggest US LNG exporter, Cheniere, said they "expect this pause to have no impact on the overall timelines for our expansion projects" at its Sabine Pass LNG terminal in Louisiana and its Corpus Christi terminal in Texas, which will need the non-FTA approvals.

The Sabine Pass expansion, which Cheniere revised in late-2023 to two 7 million mt/year trains, and the smaller Corpus Christi project are both in the early stage of the permitting process at FERC, meaning it could be at least a year before the projects are ripe for DOE decisions on non-FTA exports.

"Cheniere supports a clear, fair and robust permitting framework and believes any delay or disruption to it risks injecting uncertainty into the U.S. regulatory environment," the company said. "Nonetheless, we are confident we will continue to secure all regulatory approvals for our expansion projects within our expected timelines, as we have for more than a decade under multiple administrations."