Venture Global LNG Inc. said it will start construction immediately on its $5 billion Calcasieu Pass liquefied natural gas export terminal in Louisiana after receiving approval from the top U.S. energy regulator.
The Federal Energy Regulatory Commission cleared Venture Global’s proposal in an order late Thursday, according to a statement from the agency, marking the first authorization in two years for a new LNG export facility. The project is one of several competing to be part of a second wave of terminals sending U.S. shale gas overseas.
With the FERC order and 20-year sales and purchase agreements in hand, “we plan to immediately commence construction activities in Louisiana in close coordination with FERC and other agencies,” Venture Global co-chief executive officers Bob Pender and Mike Sabel said in a statement Friday.
Speculation of partisan divisions at FERC had been fueled when Venture Global’s project was struck from the agenda of the agency’s December meeting. The commission has been split, 2-2, between Democrats and Republicans since Kevin McIntyre, a commissioner and former chairman, died in January. Democratic Commissioner Cheryl LaFleur voted to approve the project, while her colleague, Rich Glick, dissented from Thursday’s order.
“The agreement that we struck today to break the dam open on this tricky issue gives me reason for optimism that we’ll be able to move expeditiously on these other applications,” FERC Chairman Neil Chatterjee said in an interview Thursday.
Read about Venture Global’s plan to put U.S. gas on the water.
The compromise put forward to break the deadlock was to calculate the direct annual greenhouse gas emissions that the Venture Global project would emit as a percentage of total U.S. emissions.
LaFleur, who has repeatedly called for more analysis of greenhouse gas emissions in the agency’s environmental reviews, said in a Twitter post that the approval showed that the agency can take action when it’s willing to compromise.
“The commission now has a path forward and a precedent on other, larger LNG certificates,” said Mike McKenna, a Republican energy strategist. “That is really important.”
Venture Global has 20-year contracts with companies including Royal Dutch Shell Plc and BP Plc for 80 percent of Calcasieu Pass’s export capacity. The facility is designed to produce about 10 million tons a year, although it could boost output to 12 million tons a year at optimal operating conditions, according to FERC. The terminal will include about nine smaller-sized production plants, or trains — a contrast to the massive trains that usually characterize such projects.
About 27 major LNG export projects worldwide, with a combined price tag of $336 billion, are vying to be built after companies pulled back investments following the 2014 energy price crash, according to BloombergNEF. About 15 of those are in North America., seeking to capitalize on the surge of output from shale.
Since 2015 just two major projects previously had been sanctioned for construction – Shell’s LNG Canada in October 2018 and Exxon Mobil Corp.’s Golden Pass earlier this month.
Deputy Secretary of Energy Dan Brouillette heralded the FERC decision as an important breakthrough, not just for Venture Global’s project but other proposed infrastructure necessary to deliver U.S. natural gas to countries eager to wean themselves off Russian supplies.
“The impact of tonight’s decision is obviously much larger’’ than just this one approval, Brouillette said in a phone interview Thursday. “We feel somewhat strongly that energy security equates to national security,’’ particularly for European countries now reliant on Russia.
“Tonight’s decision by the FERC allows us to develop the infrastructure’’ that is necessary “to improve their energy diversity,’’ he said.