US DOE rejects Lake Charles LNG request to extend start of exports

The US Department of Energy has denied a request by Lake Charles LNG, a unit of Energy Transfer, for a second extension of its deadline to start exports from its proposed LNG export facility in Louisiana.

In 2019, the US FERC gave five more years to Lake Charles LNG’s affiliates to complete construction of project and make it available for service by December 16, 2025, while DOE approved the company’s application to amend its non-FTA orders to extend its export deadlines in 2020.

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

After that, Lake Charles LNG filed an application with the DOE on June 21, 2022, to amend the export commencement deadline in its non-FTA orders for a second time, from December 16, 2025, to December 16, 2028.

DOE said in a filling dated April 21, 2023 that it invited the public to submit protests and motions to intervene and received two fillings related to the application.

One was from Industrial Energy Consumers of America (IECA), and the other was from Sierra Club, Louisiana Bucket Brigade, and Healthy Gulf.

Subsequently, Lake Charles LNG submitted a response to both filings.

DOE said it has reviewed the application by Lake Charles LNG, the protests, and the FERC 2022 extension order.

Commercial deals

Lake Charles LNG stated in the request that global events over the past few years, including the Covid-19 pandemic, have made it “extremely challenging” for authorization holders to construct their LNG export facilities and to execute international commercial agreements.

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.

“Unprecedented” second extension

“Although Lake Charles LNG Export has executed some long-term offtake contracts since 2020, it has not achieved the level of commercial progress that other authorization holders have reached in a similar time period, which is all the more important when requesting an unprecedented second extension,” DOE said in the filling.

Also, DOE said that all authorization holders currently exporting from the seven largest export facilities in the US commenced exports within their original seven-year commencement period—some while weathering the challenging delays and uncertainties associated with the Covid-19 pandemic and related market repercussions.

Most recently, Venture Global’s Calcasieu Pass began operating its LNG export facility in Cameron Parish, Louisiana, within three years from the date it received its non-FTA authorization in 2019, “demonstrating that it is possible for major LNG projects to be placed in-service well within the seven-year commencement period, even during the COVID-19 pandemic,” it said.

DOE also said that, since 2022, Venture Global Plaquemines LNG, Corpus Christi Liquefaction Stage 3, and Port Arthur LNG have each announced that they have reached a final investment decision and commenced construction of their respective export facility, all within three or four years of receiving their long-term non-FTA authorization.

“Lake Charles LNG has not shown good cause”

“For these reasons, we do not believe that the “difficult circumstances” cited by Lake Charles LNG Export warrant a second extension,” it said.

“DOE has determined that Lake Charles LNG Export has not shown good cause under NGA section 3(a) for an unprecedented second extension of the export commencement deadline,” DOE said.

Therefore, DOE denies the application, it said.

Lake Charles LNG’s existing authorizations, including its extended deadline to start non-FTA exports under both orders by December 16, 2025, remain in effect, DOE said.

New policy

DOE also said in a separate statement it issued a new policy, reaffirming the seven-year deadline for authorization holders to start exports of domestically produced natural gas, including LNG, to non-FTA countries.

For existing and future non-FTA authorizations for the export of LNG, DOE will allow authorizations to expire on the export commencement deadline originally set forth in the order-

DOE said it will not consider an application for an extension, unless the authorization holder demonstrates both that it has physically commenced construction on the associated export facility its inability to comply with the existing export commencement deadline is the result of extenuating circumstances outside of its control.

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