LNG in World Markets Featured Article

The US Department of Energy (DOE) and Federal Energy Regulatory Commission (FERC) have placed four LNG export projects with a combined 60.5 MMt/y of liquefaction capacity into a holding pattern that will extend until 3Q 2025 amid ongoing work to re-evaluate environmental reviews and pending export permit decisions.

FERC officials are preparing supplemental environmental impact statements (SEIS) for 27-MMt/y Rio Grande LNG, 4-MMt/y Texas LNG, 9.5-MMt/y Commonwealth LNG and 20-MMt/y CP2 LNG. The reviews were individually ordered by the US Court of Appeals for the District of Columbia Circuit (DCCA) due to separate legal challenges filed against all four projects by environmentalists and other opponents. Final drafts of the SEIS reports for the projects will be ready between May 9 and July 31, 2025. FERC will use those reports to draft final orders that are expected to be released between July 24 and Nov. 20, 2025.

FERC Supplemental Environmental Impact Statement (SEIS) Schedule

In a Dec. 9 statement, DOE officials said they are waiting for the conclusion of the FERC process to make decisions on non-free trade agreement (non-FTA) export permits for Commonwealth LNG and CP2 LNG. With the final FERC orders due on July 24, 2025, it is unlikely that the DOE will make its export permit decisions until August or September 2025 at the earliest.

Rio Grande LNG and Texas LNG already have non-FTA export permits that require them to send their first cargo in February 2027. The two projects will likely need extensions but are not expected to request them until well after the Trump administration has settled in and newly-appointed staff are installed in the DOE.

Although the incoming Trump administration has pledged to lift Biden’s non-FTA export permit pause and ease the regulatory burden for the oil and natural gas industry, the bureaucratic process will most likely have to play out with all four projects adhering to the timelines set by the FERC and the DOE. Any changes to the process by the Trump administration could invite additional legal challenges by opponents that could result in even further delays or resulting in the courts vacating project permits altogether. However, with a global LNG supply glut expected between 2027 and 2029, the delays may not completely be a negative. The proposed export projects could come into service in a stronger market for sellers forecast at the end of the decade when inventories will be tighter and demand will be higher.

FERC preparing four SEIS reports

The SEIS reports for the four projects are not expected to be complete until varying dates in 3Q 2025, meaning that permit decisions will not be made by the FERC until at least 90 days after their release date. Because the FERC is an independent agency, there will be little or nothing the Trump administration can do to alter the process. And if they were able to do so, any changes to the process would invite further legal challenges and delays.

In a Nov. 27 decision, FERC officials announced the agency would prepare SEIS reports for Commonwealth LNG, CP2 LNG and its related 4.4-Bcf/d CP Express pipeline. The reports are not expected to be completed until May 2025 with a final order expected to be issued in July 2025.

The agency issued a permit to Commonwealth in November 2022 but a legal challenge by environmentalists and other opponents over the proposed plant’s nitrogen dioxide emissions resulted in the DCCA sending the project back to the FERC to prepare a more thorough environmental review.

FERC officials issued a permit to CP2 LNG and CP Express pipeline in June 2024, but environmentalists immediately asked for a rehearing, citing concerns over the proposed export project’s nitrogen dioxide and particulate matter emissions. Instead of denying the rehearing request and having a lawsuit filed in court, the FERC opted to prepare a SEIS report before being ordered by a court to do so. FERC commissioners went one step further by issuing an order setting aside parts of the previously issued permit, adding that the agency would not authorize any construction until it issues a further merits order.

FERC Supplemental Environmental Impact Statement (SEIS) Schedule

Beyond CP2 and Commonwealth, DOE officials said they cannot make non-FTA permit decisions on five other projects with a combined 33 MMt/yof liquefaction capacity until the department receives information from other federal agencies.

US LNG developer Next Decade had already reached a final investment decision (FID) and started construction on the 17.6-MMt/y Phase 1 of Rio Grande LNG when the DCC Avacated the project’s permit and sent it back to the FERC in August 2024. The court ordered the FERC to prepare a SEIS report to address concerns over emissions, environmental justice and a proposal, which has since been withdrawn, to add carbon capture and storage to the plant. EPC contractor Bechtel has been allowed to continue construction while Next Decade seeks a rehearing before the court’s entire bench (see LNGWM, Sep ’24). Next Decade is not expected to reach FID on its Train 4 or Train 5 expansion at Rio Grande LNG until after the legal issue has been resolved.

Texas LNG is sold out and has selected Kiewit as its engineering, procurement and construction (EPC) contractor but developer Glenfarne is not expected to reach FID until the legal issue with the SEIS has been settled and the project has a line of sight on an extension for its non-FTA export permit. The DCCA ordered the FERC to prepare a SEIS for the project that addresses environmental justice and emissions concerns.

DOE path set beyond Trump inauguration

Since being issued in late January 2024, the Biden administration’s non-FTA export permit pause has been subject to the ire of Republican lawmakers through numerous bills and in committee hearings. Donald Trump’s election night victory came with a Republican majority in the US House and Senate. The President-elect has been highly vocal on the campaign trail that he intends to remove the LNG pause “on day one” of his presidency, and a republican majority would help lend congressional support to many of his energy initiatives. Although that makes permitting reform feasible, it could take months to enact laws and supporting regulations.

In the meantime, the Biden administration, in conjunction with a few landmark Supreme Court rulings, has a set a path that will be very difficult for the Trump administration to deviate from without receiving legal challenges by environmentalists and other LNG industry opponents.

DOE officials enacted an April 2023 policy that makes it much more difficult for US LNG export projects to seek extensions on their non-FTA export permits (see LNGWM, Apr’23). Citing concerns over environmental justice and the impact of LNG exports on the domestic natural gas market, the DOE went one step further in January 2024 by putting a pause on issuing new non-FTA export permits. A federal judge struck down the policy months later, but the Biden administration is seeking an appeal. The Trump administration will need to overturn both policies and withdraw the appeal, in a process that could take months.

The Biden administration could add one last obstacle when it releases a months-anticipated study that supposedly supports the permit pause. The DOE is expected to release the final study, with a report focused on environmental justice issues and a regional analysis of the impact that natural gas prices have on families, during the week of Dec. 16. The study’s release would be followed by a 60-day comment period that would extend beyond Trump’s expected Jan. 20, 2025, inauguration. While the future Trump administration’s newly installed DOE staff would likely update the study, the process could take up to six months.

US Energy Secretary Jennifer Granholm said on the sidelines of the COP29 conference in Azerbaijan that the study would be released by the end of this year and that it would “speak for itself”. The outgoing energy secretary said the Trump administration would have to decide what to do with the information.

Non-FTA Permit Waiting List

The following seven LNG export projects are waiting on non-free trade agreement (non-FTA) export permit decisions by the DOE. In a Dec. 9 statement, the agency said it cannot complete the reviews until it receives information from the other federal agencies.