Delfin seeks new DOE extension, eyes FID on first FLNG in August

In March this year, Delfin LNG, a unit of Delfin Midstream, secured a five-year permit extension from DOE.

This extended the start date for Delfin’s export authorization for exports of up to 1.8 billion cubic feet per day (Bcf/d) of natural gas as LNG to non-free trade agreement countries to June 1, 2029.

Additionally, Delfin received a license from the US Maritime Administration (MARAD).

Last month, Delfin submitted a request to DOE to amend its existing long-term, multi-contract authority to export LNG to FTA and non-FTA nations.

Specifically, Delfin requests that DOE amend its non-FTA export authorization to allow it to start commercial non-FTA exports of LNG by June 1, 2031, providing an additional two-year extension of time beyond that recently granted by DOE.

Delfin said this is based on updated facts about the project and consistent with DOE’s newly adopted approach to term extensions providing for “the removal of additional regulatory barriers standing in the way of unleashing US liquefied natural gas (LNG) exports.”

In addition, Delfin requests that DOE amends both its non-FTA and FTA authorizations as necessary to reflect the current design of its project in accordance with the license recently granted to Delfin by MARAD.

The facility redesign now includes three FLNG vessels instead of the original four.

Each of the three units would produce 4.4 mtpa of LNG for export, for a total project output for the three FLNG vessels of 13.2 mtpa.

“Although Delfin’s current commencement deadline is just over four years away, it respectfully requests that DOE act on this request within that same 90-day time period, i.e., by the end of July 2025,” the company said.

“This timing is necessary to remove potential regulatory uncertainty as Delfin progresses toward a positive final investment decision (FID) on its first FLNG vessel in the third quarter of this year and hopefully as soon as August,” the company said.

Samsung Heavy slot

Delfin also discussed securing a shipbuilding slot with South Korea’s Samsung Heavy Industries.

The company noted that it has previously “negotiated and agreed upon major terms of a near-ready-for execution engineering, procurement, construction, and integration (EPCI) agreement” with Samsung Heavy, supported by Black & Veatch of Kansas for the topside liquefaction technology, for a newbuild FLNGV.

However, the finalization and execution of the EPCI had been held up by regulatory uncertainty about the timing of Delfin’s FID.

DOE recognized that the extension of time it granted until June 1, 2029 was less than the five years requested by Delfin given the passage of time between the request and its action, but found it to be “a necessary and reasonable period of time based on the evidence presented.”

In that regard, DOE observed that Delfin had stated that it “can arrange for completion of its first FLNGV in just under five years.”

Regulatory hurdles eliminated

“That timing, however, was premised on the expectation that Delfin would receive the necessary regulatory authorizations and accordingly contractually commit with SHI to the necessary timing for FLNGV construction essentially in the middle of last year,” Delfin said.

“Of course, that did not happen given the continuing regulatory uncertainty resulting from both MARAD delay and DOE’s deferral of a decision on the term extension,” Delfin said.

“Furthermore, the length of the extension requested in the March 2024 request was limited to the absolute minimum necessary in light of the emphasis in the 2023 extension policy on the need for authorization holders to develop their projects as quickly as possible, its limitation on extensions to the delay caused by extenuating circumstances, and its apparent general predisposition not to grant extensions of time,” it said.

Delfin noted that DOE has now rescinded the 2023 extension policy, concluding that it “does
not align with the Unleashing America Energy Executive Order and posed an undue burden on natural gas project development and LNG export authorization holders.”

“Both the change in DOE policy and updated facts regarding the current status of Delfin’s project as it continues to do all it can to complete the project following the very recent elimination of the previous regulatory hurdles support the additional extension of time,” the firm said.

Deals

In March, Delfin signed a heads of agreement with German gas importer SEFE to supply the latter with LNG.

The HoA is for the long-term supply of 1.5 million tonnes of LNG per year for at least 15 years.

Besides this deal with SEFE, Delfin signed an agreement last year with US shale gas producer Chesapeake Energy to supply LNG to Geneva-based trader Gunvor.

Under the SPA, Chesapeake will buy about 0.5 million tonnes per annum (mtpa) of LNG from Delfin at a Henry Hub price with a targeted start date in 2028.

These volumes will represent 0.5 mtpa of the previously announced up to 2 mtpa heads of agreement with Gunvor, Delfin said.

Also, these volumes will add to the SPA Gunvor signed with Delfin in November 2023.