An LNG tanker moored to a jetty. Source: Felix Cesare/Getty Creative via Getty Images

A year that began with expectations of ample investment in LNG export infrastructure may end with no new U.S. projects getting commercially sanctioned.

Worldwide, there could be just one LNG export project that advances to that stage in 2020, with Sempra Energy's recent decision to greenlight its Energía Costa Azul terminal in Baja California.

The market upheaval caused by the coronavirus pandemic and muted investor appetite for new multibillion-dollar LNG infrastructure forced many developers to push back their targets for making final investment decisions, or FIDs, until 2021 or later. Now, 2021 is poised to be a pivotal year in which new capacity may be sanctioned or fall off the board altogether.

"As far as a lot of the big projects that require third-party capital, I just don't see that being available in the foreseeable future," Katie Bays, managing director at FiscalNote Markets, said in an interview. "I think that's out of step with what some companies are saying publicly. But ... if you were to step back and look at the state of the industry and ask, 'Are these companies in a better position than they were two years ago?' — the answer has got to be 'No.'"

There were a couple sources of optimism for the U.S. LNG industry. The potential for lowered trade tensions between Washington and Beijing with the departure of U.S. President Donald Trump could foster supply negotiations with LNG buyers in China. China is expected to become the world's biggest importer of the fuel by the end of the decade, making it a critical market for liquefaction terminals in the U.S.

Global LNG demand has also rebounded significantly from the summer doldrums, when cancellations of U.S. LNG cargoes were widespread. Feedgas deliveries to the six U.S. LNG export terminals in operation have surged past 10 Bcf/d since then, exceeding the levels before the pandemic took hold.

But significant uncertainty remains over what the export dynamics will look like after the peak winter heating season. Rising coronavirus infection rates threaten to hamper commercial and industrial gas demand. Even with the announced project delays, questions linger about how long the global gas market will take to rebalance after the economic and health crisis. Developers continue to struggle to sign sufficient long-term supply deals with LNG buyers to secure project financing.

"Weak global demand and market conditions have stalled the second wave of LNG projects, and very few projects will take FID without a sustained price recovery," David Braziel, president of research and analysis firm RBN Energy, said during a Nov. 9 LDC Gas Forums event in San Antonio.

The following is a compilation of updates to major U.S. LNG export projects in recent months.

Cheniere revises outlook for new projects

Cheniere Energy Inc. reported some commercial progress in its earnings call Nov. 6. The country's top LNG exporter confirmed that its marketing arm signed a heads of agreement with a second-tier gas buyer in China, Foran Energy Group Co. Ltd., which called for negotiating a five-year supply deal that would likely include 26 shipments of LNG starting in 2021.

Still, despite Cheniere's optimism about an improved market, executives did not offer a new timeline for a proposed midscale expansion of its Corpus Christi LNG terminal in Texas. Cheniere indicated in the spring that it might push a decision on the project until 2021.

On Nov. 6, Cheniere suggested that commercially sanctioning this Stage 3 expansion project has become a lesser priority in the near term. Executives said the company would first focus on securing contracts for additional LNG that it can produce from existing liquefaction gas trains.

Sempra's Mexico LNG project advances

Many market observers had seen Energía Costa Azul as having the best chance to move forward in 2020, but delays in getting a key export permit from the Mexican government had repeatedly forced Sempra to push back its target for an FID. With the export permit finally in hand, Sempra said it planned to build the estimated $2 billion facility in time to start producing LNG in late 2024.

The project is relatively small, with a single liquefaction train with an off-take capacity of about 2.5 million tonnes of LNG per year in the first phase, with the potential for an expansion. The project, which would ship U.S. gas, would allow for a shorter shipping route to major Asian demand centers than from the U.S. Gulf of Mexico.

Beyond Energía Costa Azul, Sempra is the main owner of the Cameron LNG terminal in Louisiana. It is also the developer of the proposed Port Arthur LNG export terminal in Texas, which has an FID target in 2021.

2 US LNG terminals move through construction

The developers of the two U.S. LNG terminals under construction — Venture Global LNG's 10-Mt/y Calcasieu Pass terminal in Louisiana and the up to 18-Mt/y Golden Pass LNG Terminal backed by Qatar Petroleum and Exxon Mobil Corp. — said Nov. 10 that they remain on track to start up on time, even with the global market volatility and an unusually active hurricane season.

Golden Pass plans to have the first of three trains operational in 2024. Calcasieu Pass is scheduled to begin service in 2022.

Besides Calcasieu Pass, Venture Global is developing the proposed Plaquemines LNG export facility in Louisiana, which would have a production capacity of up to 20 Mt/y. Venture Global has delayed its target for closing financing until mid-2021, after previously planning to make an FID in late 2020.

French utility halts talks on deal with NextDecade

France's Engie SA pulled out of talks over a potential long-term contract for LNG from NextDecade Corp.'s proposed Rio Grande LNG export terminal in Brownsville, Texas. The collapse of the negotiations came amid public pressure on the French utility not to import U.S. LNG over concerns about methane emissions. NextDecade has touted steps to lower the environmental impacts of its project.

Market observers were watching for signs of whether the canceled deal was a one-off, or a sign that U.S. supplies could suffer additional setbacks over such concerns.

In August, the Federal Energy Regulatory Commission approved NextDecade's plans to abandon a sixth train at Rio Grande LNG. The developer said it could achieve the same total production capacity of 27 Mt/y with five trains. NextDecade is among the U.S. LNG developers to delay an FID until 2021.

Two other LNG export projects proposed for the Brownsville area have also struggled to build commercial support.

Magnolia LNG gets extension

FERC in October granted the developer of the proposed Magnolia LNG LLC export terminal in Louisiana an extra five years to build the project, acknowledging tough conditions for commercial efforts. The private U.S. investment firm Glenfarne Group LLC now has until April 2026 to complete the project.

The proposed export terminal has had all the necessary federal permits to advance to construction since 2016, but the previous developer LNG Ltd. struggled to reach any firm deals with buyers for the up to 8.8 Mt/y of LNG production. Glenfarne Group acquired Magnolia LNG in late May and estimated it could reach a final investment decision in the second half of 2021.

Tellurian pares down midstream plans

Tellurian Inc. in 2020 has weathered severe financial pressure by cutting staff, extending the due date of a term loan, and raising additional working capital. It hopes to start construction on its proposed Driftwood LNG terminal in Louisiana in 2021.

Tellurian sharply scaled back its midstream plans, saying in August it planned to build just one of four proposed pipelines during the first phase of Driftwood.

At full development, about half of the liquefaction terminal's 27.6 Mt/y of approved capacity is expected to be used by the equity investment partners that Tellurian has been seeking. The remaining capacity would be held by Tellurian to market on its own. Tellurian has reportedly continued talks with India's Petronet LNG Ltd. about a potential equity deal.

Freeport LNG holds off on expansion

Freeport LNG Development LP had hoped to commercially sanction a fourth train this year at its export terminal south of Houston. The developer said the project could still reach an FID in 2021, depending on market conditions. FERC in September granted Freeport a three-year extension to May 2026 to complete it.

Lake Charles LNG moves on without Shell

Energy Transfer LP decided to move forward as the sole developer of the proposed Lake Charles LNG export project after partner Royal Dutch Shell PLC pulled out. But the developer said it would not target an FID until 2021, and it might reduce the size to two trains with a total capacity of 11 Mt/y.

US West Coast projects remain in limbo

The proposed 20-Mt/y Alaska LNG export terminal and Pembina Pipeline Corp.'s proposed 7.5-Mt/y Jordan Cove LNG export project in Oregon continue to face major headwinds, including a lack of commercial support.

The state-run Alaska Gasline Development Corp. is looking to turn the Alaskan export facility over to private interests.

Commonwealth LNG still in federal review process

Commonwealth LNG LLC's proposed 8.4-Mt/y export project in Louisiana, which has yet to announce any firm off-take deals, has been targeting an FID in 2021. A federal environmental review is pending.

Delfin delays decision

The Delfin LNG project off the coast of Louisiana has all major permits but has not received an FID. FERC in July granted Delfin a one-year extension to construct connected onshore facilities, after the developer told the regulator it needs more time given the "extraordinary circumstances the world economy faces."