Venture Global seeks to enter early FERC review for another US LNG terminal

spglobal.com/platts 25 Jan 2021

Highlights: Pitches up to 24 million mt/year facility, 87.5-mile pipeline

• Author  Maya Weber    Harry Weber

Washington — Venture Global is seeking to enter the pre-filing process at the US Federal Energy Regulatory Commission for yet another major liquefied natural gas project —an export terminal capable of producing up to 24 million mt/year in Cameron Parish, Louisiana, and an 87.5-mile pipeline project running from Jasper County, Texas, to the facility.

The proposal for the CP2 LNG project and CP Express pipeline marks another bullish bet Venture Global has made on US LNG export prospects. The company already is building the Calcasieu Pass Project in Cameron and has received authorization to build the Plaquemines LNG project as well.

Last spring, Venture Global also began the early FERC review stage for the Delta LNG project, an up to 24 million mt/year facility in Plaquemines south of New Orleans, although the company did not mention that facility in its latest filing.

The CP2 LNG project pitch, disclosed in a pre-filing application on FERC's website Jan. 22, would include 18 liquefaction blocks, each with a nameplate capacity of about 1.1 million mt/year, four LNG full containment storage tanks, two marine loading berths, and an onsite, 1,400 MW combined cycle gas-turbine power generation station. The LNG terminal would be adjacent to the Calcasieu Pass terminal.

It would be built in two phases of 10 million mt/year nameplate capacity each, as would the 48-inch-diameter pipeline, with 84,000 hp of compression allowing for up to 2 Bcf/d in the first phase and another 84,000 hp, bringing the total up to 4 Bcf/d, in the second.

The first phase would start construction with receipt of regulatory approvals, while the second would depend upon market conditions, according to the FERC filing (PL21-1).

"Following the receipt of commission authorization and other necessary approvals, CP2 LNG plans to begin construction of the project in the second quarter of 2023, to commission and initiate operation of its LNG blocks sequentially, to make its first deliveries of LNG in Q2 2025, and to achieve full commercial operations for the first phase by mid-2026," the filing said.

Market challenges

In the highly competitive field of developers of new liquefaction projects in the US that have struggled to secure long-term contracts to finance the construction of their terminals, Venture Global differentiated itself with Calcasieu Pass by offering supplies to customers for ultra-low fees.

About 90% of Calcasieu Pass' offtake was sold under long-term agreements — Venture Global was said to have offered some of the LNG for less than $2/MMBtu.

To date, however, only 17.5% of the capacity from the proposed Plaquemines LNG has been sold so far, based on public disclosures. No offtake agreements have been announced to date for Delta LNG in Louisiana. Venture Global's ability to sell sufficient offtake to support a fourth project is unclear.

Robust Asian spot prices in recent months have raised the hopes of US developers that commercial activity will pick up.

As recently as mid-September, Venture Global was expecting more than half of the supplies produced at its second project, Plaquemines LNG, to go to Europe, based on discussions with existing and potential buyers. Less than two months later, France's Engie halted talks over a potential long-term supply agreement with NextDecade tied to the developer's proposed Rio Grande LNG export facility in Texas, amid pressure from environmental groups not to import LNG produced from shale gas.

On Dec. 30, Tellurian co-founder and Executive Chairman Charif Souki said the Driftwood LNG export terminal developer did not expect European utilities to be among the customers it relies on to sanction the Louisiana project.

Buyers in Asia and the Middle East would be even more critical to US LNG export terminal developers for long-term contracts if European utilities can't be counted on to help anchor the second wave of American supplies the way they did for the first wave.

Application timing

In its FERC filing, Venture Global said it expects to start early site-preparation work for Plaquemines LNG in early 2021, and that it is targeting a formal application for the CP2 project at FERC in September 2021.

According to the pre-filing, land for the CP2 terminal is under an exclusive lease option for the project, subject only to added documentation and administrative approvals.

The CP Express project also would include a 5.5 mile, 24-inch-diameter lateral connecting the terminal to the existing pipeline grid in East Texas and Southwest Louisiana.

Venture Global did not immediately respond to an inquiry as to whether it views the newest project as an alternative to Delta LNG, which would have the same capacity. That pre-filing docket is still live at FERC, although without much activity (PL19-4). The December update said, "Delta LNG continues to prepare its federal and state environmental permit applications."