A final investment decision (FID) for Commonwealth LNG will have to wait until next year, or even later, as Gulf Coast export project developers continue to adapt to the fallout of the Department of Energy’s (DOE) indefinite authorization pause.
Commonwealth LNG LLC, currently developing a self-named export facility near Cameron, LA, was previously expected to reach an FID on the 9 million metric ton/year (mmty) project by the end of March. However, after the Biden administration ordered a pause for non-free trade agreement (FTA) export permits in January, Commonwealth is now expecting an FID could be delayed until at least July 2025.
Commonwealth Spokesman Lyle Hanna told NGI the open-ended nature of the pause also has the potential to impact the timing of Commonwealth’s tentative and binding supply agreements if it drags on.
“As of now, the pause has been in effect for a short period,” Hanna said. “The duration of the pause and the corresponding impact on our estimated FID date remain uncertain.”
So far, Commonwealth has placed more than 6 mmty under tentative and binding supply agreements. The company had been guiding that more agreements could be on the way shortly before FID when the project received non-FTA authorization.
Hanna said Commonwealth still has the potential to continue signing agreements, but U.S. liquefied natural gas project developers would face “additional challenges and complexity due to the DOE-imposed uncertainty.”
At least seven projects in the United States and Mexico under DOE jurisdiction – and considered commercially advanced – could be impacted in the near-term, according to an NGI review of pending projects. That amounts to a combined 9.3 Bcf/d in export capacity under increased risk. These are projects that currently have offtake agreements or, in one case, have already been constructed.
Non-FTA permits are considered essential for large-scale export projects because of the flexibility in customer base they can provide. While an FTA permit gives an exporter access to customers in 20 countries, non-FTA approval makes far more demand centers available and a project more attractive to financial backers and large portfolio players.
Future volumes from Commonwealth LNG are a part of Woodside Energy Group Ltd.’s plans to increase its international portfolio and diversify outside of the Asian market. Switzerland-based energy firm Met Group also signed a tentative agreement to bring 1 mmty to European gas buyers starting in 2027.
Hanna said negotiations with foreign investors and offtakers continue, but the latest regulatory upset has been “unhelpful” at best.
“Broadly speaking, DOE’s decision undermines foreign confidence in U.S. LNG to meet their needs,” Hanna said.
