Sadvocate article: Is Louisiana’s LNG boom slowing down?

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Delfin LNG just wants a little more time. Again.

The floating liquefied natural gas terminal, planned for a site roughly 40 miles from the Cameron Parish coast, is asking the Federal Energy Regulatory Commission for a fifth extension of its development timeline. When authorizing LNG projects, FERC grants developers a limited window for construction.

All four previous extensions were no more than one year, though Delfin LNG unsuccessfully sought a 3½-year extension in 2019. Its latest request is for another four years, until 2027, to finish building.

Delfin LNG’s latest ask, filed with FERC in July, once again cited COVID-19 disruptions and “complications” related to U.S. trade with China as causes for its delays. It also cited “the continuing evolution” of floating LNG terminal technology.

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However, Delfin LNG isn’t the only Louisiana LNG project facing setbacks. Four of the 14 LNG export terminals either built in or planned for Louisiana are grappling with extended timelines because of regulatory delays or financing struggles, according to The Advocate’s record of the state’s LNG facilities.

Lake Charles LNG failed to convince the Department of Energy to give it more time to begin exporting LNG. Driftwood LNG has yet to announce a final investment decision, or FID, even though its construction began in April 2022. West Delta LNG’s bid for a deepwater port license has been delayed after environmental groups raised questions about the firm’s failure to adhere to application deadlines.

That list doesn’t even include G2 Net-Zero, which recently pulled the plug on its planned LNG plant in Cameron Parish, or Venture Global LNG’s Calcasieu Pass terminal, which has shipped LNG since early 2022 without reaching full commercial operations.

Though bigger LNG players here are firmly established, the delays facing newer projects have raised questions about how much the state’s LNG industry will continue to boom.

Analysts said delays are all too common for industrial projects that require lengthy regulatory reviews and boundless resources, particularly capital. However, fundamental capitalism could also be at play: too many players rushed into a roaring market, and some of them are getting weeded out.

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Of the five delayed or canceled Louisiana projects, three of them have at least one long-term contract in place, according to Department of Energy filings. Delfin LNG has signed three with another one pending, and Lake Charles LNG has six.

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In addition to financing difficulties, the regulatory process might be too much for some projects, Slocum said. The average FERC review for an LNG project is three years, and not everyone has the resources to wait that long.

Though the Biden administration has been supportive of the LNG industry, the Department of Energy issued a new policy statement in April saying it wouldn’t grant extension requests for export authorizations unless a project had begun construction. That policy statement arose after some industry leaders complained about a glut of LNG applicants, Slocum said.

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Sabine Pass and Cameron LNG, two of the nation’s top three export terminals, have expansions in the works. Even with the issues at Calcasieu Pass, Venture Global LNG has locked up two massive financing packages for its impending Plaquemines LNG terminal in Plaquemines Parish.

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Loosening the regulatory burden would help the smaller projects that can’t handle lengthy reviews, though it would further exacerbate environmental risks for Louisiana’s Gulf Coast, Slocum said.

“If you remove that FERC regulatory process, and you allow some of these smaller scale facilities to basically just take your local zoning board out for a steak dinner and you got yourself your building permit and you can start construction the next day and you can finish it in 12 months, obviously that’s a big advantage,” Slocum said.

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