Chairman Chatterjee Keeps LNG Projects Moving, But Will It Continue

At FERC’s open meeting in April, despite conflicting signals the past several months from Commissioner LaFleur, FERC issued certificates for two LNG projects and three related pipelines. These decisions are clearly a triumph for these developers as well as Chairman Chatterjee as he continues to work with Commissioner LaFleur to gather the three votes needed to get these projects approved, while also sticking to the position that FERC need not treat greenhouse gas (ghg) impacts like other environmental impacts from these projects.

Because LNG facilities are of a much longer term than the traditional pipeline projects, it is harder to track where each project is in the review process from pre-filing through in-service. Today’s Insights groups these projects by their place in the FERC review process, starting with the projects that are already under construction and moving down to those which have only begun the mandatory pre-filing process.

As we discuss below in more detail, while Chairman Chatterjee may have received Commissioner LaFleur’s vote in April, he may not be able to count on Commissioner LaFleur’s vote for three projects due for approval later this year: Annova LNG, Rio Grande LNG and Texas LNG.

Projects Under Construction

The following projects have been approved by FERC and are nearing the in-service date for at least one of the trains approved by FERC.

Project	Status
Freeport LNG Liquefaction Project	The anticipated in-service timing for Train 1 is the fall of 2019, followed by Train 2 in spring of 2020, and Train 3 in late fall of 2020.
Cameron Liquefaction Project	On April 5, 2019 FERC granted authorization for the introduction of feed gas as the final commissioning step for Train 1, and on April 15, Sempra announced that feed gas was flowing to Train 1. Train 2 construction continues toward mechanical and electrical installation with two Substantial Mechanical Completion Certificates completed. Train 3 construction continues with the installation of underground and above ground piping, structural steel, duct banks, and equipment.
Corpus Christi LNG Project	On February 28, 2019, the contractor for Train 1 completed commissioning and turned over care, custody, and control of Train 1 to Cheniere. All major equipment in Train 2 is installed, and piping installation and a majority of pressure testing have been completed. The concrete foundation and tabletop for the Train 3 refrigerant compressor deck is complete and structural steel is being installed.
Sabine Liquefaction Expansion Project	On March 12, 2019, Sabine Pass placed the Train 5 and the Stage 3 OSBL facilities in service. A schedule for Train 6 is under development.
Elba Liquefaction Project	The Project includes installation of 10 Moveable Modular Liquefaction System (MMLS) units. Final commissioning and start-up activities are ongoing in the utility areas which includes nitrogen, instrument air, and power distribution. The Project is preparing to circulate hot oil from the heating medium system to MMLS unit #1 and feed gas has been introduced to the main blowout preventer piperack with isolation to all 10 MMLS units.

FERC-approved Projects

The following projects have all been approved by FERC and are in the process of finalizing the commercial terms that will allow the project sponsors to make their final investment decisions and commence construction.

Some of these projects were approved over three years ago and therefore may no longer be viable, but a number of them were in the wave of approvals that Chairman Chatterjee has been promoting. In particular, the last five projects listed were all approved at the April FERC meeting. However, those approvals came over a dissent by Commissioner Glick and with a lengthy concurrence by Commissioner LaFleur, which could impact the projects still awaiting approval, as discussed below.

Projects Awaiting FERC Approval

The following projects are awaiting FERC approval; our median dates for when they should be approved by FERC are as follows:

As long as FERC continues to have the current four members, the vote of Commissioner LaFleur remains critical for the approval of these projects. Commissioner LaFleur has been giving conflicting signals regarding her stance on the process FERC is using to approve these projects. First, she voted for the two projects that were approved in February, which led Chairman Chatterjee to announce a breakthrough that would allow all of the pending projects to move forward. At the March open meeting, however, Commissioner LaFleur spent a considerable portion of her opening remarks explaining that her vote in February should not be predictive of a vote in favor of the remaining projects. But then at the April meeting, she again provided the critical third vote to allow those projects to move forward.

Based on her concurrences in the cases decided in April, it would seem that she will find a way to vote to approve the remaining cases as well. However, the three projects that may be at the greatest risk are Annova LNG, Texas LNG and Rio Grande LNG. The image below from the Rio Grande Final Environmental Impact Statement, with the Rio Grande site outlined in red, shows just how close in physical proximity these three projects are.

It is possible to read Commissioner LaFleur’s concurrences in April, along with her dissent in the Atlantic Coast Pipeline and Mountain Valley Pipeline projects, as a warning sign for these three projects for the following three reasons.

First, in Commissioner LaFleur’s concurrence for the Driftwood project, she could not understand why the majority refused to consider the cumulative impacts of ghg emissions from that project when combined with other projects within a 50 km radius. So she performed her own calculation of that impact. The projects she considered, in that case, were far more geographically dispersed than these three projects are. For these three projects, the Final Environmental Impact Statements consider the cumulative impact of the projects on other environmental aspects of the projects, but not ghg emissions. Whether Commissioner LaFleur will continue to do her own calculation -- or insist that the majority do so -- when all three are being considered simultaneously, may be critical.

Second, in her concurrences for both projects in April, she seemed to be particularly concerned that the majority’s refusal to treat ghg impacts like other environmental impacts was creating a litigation risk for the Commission’s approval of the projects. The projects that were approved in April were not the focus of any major environmental groups that were likely to appeal those decisions. That is not the case for these three projects. All have been highly contested by a group of environmental opponents led by the Sierra Club, which has filed substantial comments about the inadequacy of the environmental review for each of the projects. If Commissioner LaFleur is concerned about the Commission’s decisions being overturned, she may well take a stronger stance with respect to ghg emissions in a case that is more likely to be appealed.

Third, while Commissioner LaFleur has disagreed with the majority’s reasoning in recent cases, she has found a way to concur with the ultimate decision to approve the projects. A key exception to this rule was her dissent from the approval of the Mountain Valley Pipeline and Atlantic Coast Pipeline projects. In those dissents, she noted that the two projects would be “located in the same Appalachian region, with similarities in route and timing.” She also noted that the projects, when “considered collectively, pose significant environmental impacts.” As a result, she believed FERC should have “given more consideration to a merged system/one-pipe alternative option that could result in less environmental disturbance and fewer landowner impacts.”

The same could basically be said for these three projects. In fact, as shown in the map above, they are in very close proximity to each other, are proceeding on very similar timelines and, as stated in the Rio Grande Final EIS, the three projects “would contribute to potential significant cumulative impacts” in a litany of environmental areas.

The key determinant for these three projects will be whether Commissioner LaFleur can look past the combination of these issues which have given her pause in the past to still side with the majority to find the projects in the public interest. Otherwise, the projects may need to wait until the Commission is restored to a full complement of commissioners or, perhaps, until Commissioner LaFluer steps aside without a replacement, which would allow the projects to be approved with a 2-1 vote.

Projects Undergoing Environmental Review

These projects are still undergoing the environmental review process at FERC, although Plaquemines’ environmental review is scheduled to be issued today, and the other environmental reviews will likely be issued by early next year.

Projects That Are Still in Pre-filing

Finally, there is a final wave of projects that are still in the pre-filing process and the viability of these projects will likely depend on how many of the projects ahead of them in the queue go forward.

Project	Purpose	Location
Commonwealth LNG Project	Export 9 MPTA of LNG	Cameron Parish, LA
Energy World’s Fourchon LNG Project	Export 5 MPTA of LNG	Lafourche Parish, Louisiana
NextDecade’s Galveston Bay LNG Project	Export 16.5 MPTA of LNG	Texas City, Texas
Pointe LNG Project	Export of 6 MPTA of LNG	Plaquemines Parish, Louisiana
Venture Global’s Delta LNG/Delta Pipeline	Export of 24 MPTA of LNG	Plaquemines Parish, Louisiana

Insights Coming Soon

Operating costs by company
Update on oil and gas policy matters in Colorado and Texas