Energy Transfer to appeal DOE decision on Lake Charles LNG

Energy Transfer is planning to appeal a recent decision by the US DOE to deny Lake Charles LNG’s request to extend the deadline to start exports from its proposed LNG export facility in Louisiana.

Last year, Lake Charles LNG, a unit of Energy Transfer, sought and won a three-year extension from FERC to construct the export plant by December 2028.

However, the US DOE recently declined the request to extend the deadline to start exports by December 2028, saying that Lake Charles LNG has not shown “good cause” for an “unprecedented” second extension.

“We strongly disagree with this decision and we plan to file an appeal with the DOE within 30 days of the DOE decision,” Energy Transfer’s co-CEO, Tom Long, told analaysts during the company’s first-quarter earnings call on Tuesday.

Energy Transfer announced six SPAs during last year, bringing the total amount of LNG contracted from its Lake Charles LNG export facility to nearly 8 mtpa.

The customers include China GasGunvorENNSK Gas, and Shell.

Energy Transfer’s Lake Charles LNG project seeks to convert the company’s existing regasification terminal to an LNG export facility.

It has a proposed liquefaction capacity of 16.45 mtpa and includes three trains and also modifications to the Trunkline Gas pipeline.

In talks for over 20 million tonnes of LNG

Energy Transfer’s co-CEO Mackie McCrea said during the call that the decision by the DOE was “wrong and it was political.”

The company has been working on the Lake Charles LNG project for a number of years and it has spent over $200 million on the development, he said.

“We have worked our tails off to try to get this project online. Then the pandemic hit, that slowed us down significantly. And then, of course, as I just mentioned Russia attacked Ukraine. It flipped to 180 degrees and all of a sudden everybody woke up and the demand has increased astronomically,” McCrea said.

He said that the company beefed up its team and began traveling throughout the world throughout Asia and Europe.

“We’ve done that consistently over the last year,” he said.

According to Long, the company is in talks with customers for over 20 million tonnes of additional LNG supplies on top of what the company had already signed up.

“We have significant equity players that we’re in negotiations with. And for months, we’ve been given every indication that the DOE would approve our extension,” he said.

“And then low and behold, here recently, they’ve come out and said that because of a new policy, they are not going to extend our request. And they’ve cited the lack of progress. So here’s the DOE citing the lack of progress. They have not asked us onetime over the last year how we progressed it,” he said.

“They don’t know if we’re out there right now building facilities. We already have four tanks built. We already have a dock built. It’s a brownfield unlike some of our competitors,” McCrea said.

One customer will “go another direction”

The decision by DOE has already prompted one LNG buyer to approach Energy Transfer.

“We’ve had one customer come to us after we heard that 10 days ago and said they’ll go another direction at least for now,” McCrea said.

“And we think it’s extremely important to reverse this decision as quickly as possible so it doesn’t harm us more than it already has,” he said.

“We will be asking for rehearing and we’re hoping that reasonable and rational minds at the DOE will prevail and they’ll reverse what was an arbitrary and capricious political decision,” McCrea said.

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