US LNG export projects on hold until environmental reviews are out of the way

The U.S. Department of Energy (DOE) has confirmed the need for environmental reviews to be completed with all agencies before pending liquefied natural gas (LNG) export projects can get back on track and secure authorization to move forward. Hence, this is seen as a sign that the pause remains in effect, even though a preliminary injunction from a court in Louisiana seemingly ended a temporary lull in approvals of U.S. LNG export projects to non-free trade agreement (FTA) countries.

After U.S. President Joe Biden’s administration hit the pause button on pending approvals of LNG exports to non-free trade agreement countries for a review of the environmental and economic impacts to be undertaken, the move, dubbed the ‘LNG export ban’ by its opponents, was interpreted to signify a reversal of the stance the U.S. Department of Energy adopted last year when it reaffirmed the continuation of LNG export approvals.

Those determined to thwart Biden’s LNG freeze, such as Pelican Institute and Liberty Justice Center, filed a lawsuit to oppose the LNG permitting pause after sixteen states jointly sued through their attorneys general.

While this battle ended in a favorable outcome for the 16 states that sued the Biden administration, the timing of the Department of Energy’s resumption of reviews and issuance of pending permits was never clarified. The ball was perceived to be in the DOE’s court, giving it the option to determine when to start approving/rejecting pending permit requests.

The preliminary injunction restored the status quo, requiring the resumption of pending LNG applications evaluation on a case-by-case basis, but it did not order DOE to issue any specific decisions or require the authorization of any new LNG export facilities, nor did it stop DOE from being able to update studies that evaluate the economic and environmental impacts of LNG exports.

Those opposed to the LNG freeze see it as having far-reaching consequences that stretch beyond simple regulatory compliance; in their view, it directly undermines the economic livelihood of thousands of Americans and the operational stability of a whole industry.

“Now is the time to bolster U.S. production of oil and natural gas, both helping to grow our nation’s economy and making us less reliant on our adversaries to meet our energy needs,” highlighted the American Petroleum Institute (API).

According to the Department of Energy, multiple questions were received regarding the status of various applications to export liquefied natural gas to non-FTA countries and recently, in particular, about the status of the Venture Global CP2 LNG (CP2) and Commonwealth LNG applications.

To address these questions, the DOE reminded that the Federal Energy Regulatory Commission (FERC) issued notices with the schedule for supplemental environmental impact statements (EIS) for the CP2 project and its associated pipeline (Venture Global CP Express), and the Commonwealth project.

As a result, each EIS is required to address issues related to FERC’s analysis of the cumulative air quality impacts specific to the CP2 project’s NO2 and PM2.5 emissions and the Commonwealth project’s NO2 emissions, which could affect local communities. 

In addition, FERC issued an order setting aside, in part, its earlier authorization order for the CP2 project, explaining that “no authorization to proceed with construction of the CP2 LNG Project or CP Express Pipeline Project will be issued [… ] until the Commission issues a further merits order.”

With this at the forefront, the Department of Energy has now underlined that it cannot complete its review of these two applications, CP2 and Commonwealth LNG, until after FERC completes the environmental reviews and issuance of final merits orders.

DOE justifies its decision by saying it is relying on its policy consistent with precedent during the Obama, Trump, and Biden administrations for the program that governs the export of domestically sourced natural gas as LNG to non-FTA countries. 

Several applications to export domestically sourced natural gas as LNG to non-FTA countries are still undergoing environmental review before other federal agencies in which DOE is a cooperating agency. Therefore, it claims to be unable to complete its review until those other agency processes are done. 

This affects many projects, including Venture Global Plaquemines LNG with 0.45 billion cubic feet per day (Bcf/d); Commonwealth LNG, with 1.21 Bcf/d; Venture Global CP2 LNG with 3.96 Bcf/d; New Fortress Energy Louisiana FLNG with 0.4 Bcf/d; Gulfstream LNG Development with 0.46 Bcf/d; Corpus Christi Liquefaction, CCL Midscale 8-9, and Cheniere Marketing with 0.47 Bcf/d; Sabine Pass Liquefaction, and Sabine Pass Liquefaction Stage V with2.46 Bcf/d.

As climate change digs its claws deeper, the opponents of fossil fuels keep pushing harder to put Big Oil out of business. Legal challenges are becoming a common tool in attempts to take coal, oil, gas, and liquefied natural gas out of the energy equation.

However, analysts and energy experts claim the world will continue to be powered by fossil fuels in the decades to come, advising all industry players to collaborate to curtail greenhouse gas (GHG) emissions to reach low-carbon production.