U.S. LNG Export Projects Face Delays

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U.S. LNG Export Projects Face Delays

At first glance, the LNG export boom in the United States seems to be well under way. After all, the Department of Energy has accelerated the pace of approvals for such projects, signing off on six new LNG export permits in the past year alone.

Eventually, these new projects will cover five sites and result in 8.47 billion cubic feet per day (bcfd) of LNG exports. But right now, they’re being bogged down by further bureaucratic red tape.

You see, the green light from the Department of Energy is just the first step in the approval process. The next step – getting past the Federal Energy Regulatory Commission (FERC) – is proving to be a tougher task.

FERC Approval Delays

In order to secure FERC approval, a project must show that it will meet environmental, safety and government regulations. And for the moment, FERC seems to be in no great hurry to grant these approvals.

You see, environmental groups are organizing against LNG projects, much like they did against the Keystone XL Pipeline. These groups hope to delay the projects long enough so that they become economically unviable.

To avoid falling into any traps, FERC wants to make sure that all of the T’s are crossed and the I’s are dotted. Unfortunately, that’s left the U.S. LNG export boom stuck in neutral.

Just ask Sempra Energy (SRE), which is involved with the Cameron project in Louisiana . . .  or ConocoPhillips (COP), which is involved with the Freeport LNG project.

Executives at these firms thought they’d receive FERC approval last year. Yet, so far, they’ve only received a first-draft environmental impact statement.

Both projects face months of further “consultations” with the government before any FERC green light is given . . .  which means other projects – like the Cove Point LNG project in Maryland, controlled by Dominion Resources (D) – will face even longer delays.

Cheniere Energy

The regulatory morass facing LNG projects highlights the one and only LNG export company that has received FERC approval so far . . . Cheniere Energy (LNG), which made Oil & Energy Daily’s list of top energy stocks to own in 2013.

That turned out to be a good call. Hard to believe Cheniere was trading at around $20 per share at the beginning of 2013. It’s now at about $58 a share, nearly tripling in price in one year.

Of course, other FERC approvals will come . . . eventually. And when FERC grants approval to any other company besides Cheniere, I’ll let you know immediately.

And “the chase” continues,

Tim Maverick

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