The Department of Energy (DOE) could be delaying authorization for Venture Global LNG Inc.’s CP2 project after a directive from the Biden administration to study its climate impacts, according to the New York Times.
Citing three unnamed sources, the newspaper first reported Wednesday that DOE’s additional analysis could stall an authorization decision for the 24 million metric ton/year (mmty) liquefied natural gas project until after November.
The report comes after months of speculation over whether the administration would answer the mounting call from environmental groups and Democratic representatives to throttle new export projects ahead of the election.
Chilling Effect
Rapidan Energy Group’s Alex Munton, director of global gas service, told NGI a pause of LNG project authorizations would create a chilling effect for additional supply contracts for U.S. terminals and potentially delay projects that were previously expected to reach a final investment decision (FID) this year. Along with CP2, it also could mean headwinds for the next expansion at Cheniere Energy Inc.’s Corpus Christi LNG and other projects under development.
Since last November, more than 200 environmental groups have written to DOE Secretary Jennifer Granholm asking the agency to deny CP2 authorization. More than 160 scientists also signed a letter to Biden urging the administration to find the project is not in the public interest.
Venture Global confirmed the company hadn’t been informed of an official policy change by DOE, but accused the administration of trying to influence policy through the news.
“If this leaked report from anonymous White House sources is true, it appears the administration may be putting a moratorium on the entire U.S. LNG industry,” spokesperson Shaylyn Hynes said in a statement. “Such an action would shock the global energy market, having the impact of an economic sanction and send a devastating signal to our allies that they can no longer rely on the United States.”
While the White House or DOE officials hadn’t confirmed the directive by Wednesday afternoon, the news garnered pushback from Republicans.
Rep. Clay Higgins (R-Louisiana), who represents the district where CP2 would be sited, called the potential pause a blow for the U.S. energy industry that undermines relations with international allies.
Climate Fight
Over the past several months, international energy firms with tentative offtake contracts from CP2 and some governments have publicly supported the project in requests to FERC for prompt authorization. That support has placed CP2 in the middle of climate debates in Europe as it stands poised to deliver more U.S. volumes to displace Russian pipeline supplies.
Venture Global hosted a German delegation earlier in the week to tour its Calcasieu Pass facility near the proposed site of CP2 LNG.The company became Germany’s largest potential long-term supplier after EnBW AG and Securing Energy for Europe GmbH (SEFE) each inked 20-year contracts last year.
Combined with an additional supply agreement for Plaquemines LNG, Venture Global could supply 4.25 mmty to Germany by 2026.
Executives from SEFE, currently managed by Germany’s energy regulator, said in their letter to the Federal Energy Regulatory Commission that the country “is now urgently relying on the United States of America to provide much-needed LNG supplies for our people…”
German environmental groups have honed in on the project as a key part of a potential expansion in natural gas consumption that could extend the country’s fossil fuel imports for decades. Earlier in the month, conservation groups and lawmakers penned letters to FERC requesting the Commission deny CP2.
More than 20 other projects have been proposed that would need federal approvals to move ahead. There already is a backlog of projects waiting for key non-free trade agreement (FTA) export licenses at the DOE. The Biden administration has never issued one of those licenses.
