Pipeline Operator Energy Transfer Slams US Denial of LNG Extension, Seeks Rehearing
(Reuters) — Pipeline operator Energy Transfer slammed the U.S. Department of Energy's denial of an export-permit extension to its Louisiana LNG export project in a DOE filing, seeking a rehearing.
The DOE had denied Energy Transfer's request for a three-year extension of its multi-billion-dollar Lake Charles LNG project, saying the request did not meet its criteria for granting second extensions. The decision caused one potential customer to suspend contract talks, it said.
The denial violates U.S. law governing such regulations, "raising serious constitutional concerns of lack of due process and impermissible takings," it wrote in a filing on Monday.
The rejection wrongly relied on an interpretation that "will likely result in a project's demise," the company said in its request for reconsideration.
"Lake Charles LNG is the most advanced LNG project in the United States that has not taken FID and we believe it satisfies the criteria for an extension," said Energy Transfer's spokesperson Vicki Granado.
A person familiar with the DOE's thinking said, "All currently operating U.S. liquefied natural gas export facilities secured a financial investment decision, were constructed, and commenced exports within the original seven-year authorization window provided by DOE."
Energy Transfer said the three-year extension was needed to accommodate the unplanned delays and "severe shortages" of equipment needed to build the Lake Charles project. If the extension is granted, the company could make a formal investment decision on the project by the end of this year,
The LNG developer has spent $350 million in development costs and struck deals for 7.9 million tons of LNG offtake, or almost 50% of the proposed plant's output, it said.
Energy Transfer is ready to enter into an engineering procurement and construction (EPC) contract by mid-July, it wrote. The project was delayed by the COVID-19 pandemic which significantly reduced demand for LNG and caused supply chain challenges with its suppliers.
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