While regulatory uncertainty from the Department of Energy (DOE) hangs over U.S. LNG development, former FERC Chairman Neil Chatterjee sees the pathway for permitting at the Commission improving.
The liquefied natural gas industry’s focus has largely been pulled to the DOE since January, when the Biden administration ordered the agency to study the impact of new U.S. export facilities on the domestic market and environment. However, the rate of LNG permit decisions from the Federal Energy Regulatory Commission also has slowed over the last several years.
Chatterjee told NGI’s Jamison Cocklin, managing editor of LNG, the long wait times for LNG facility approvals largely can be attributed to a deadlock on the Commission that was broken with the departure of Commissioner James Danley earlier in the year.
“As somebody who has experience working at the Commission, when things get tied up, staff tends to put their pens down because there’s so much other work to do,” Chatterjee said.
Chatterjee formerly served as commissioner and chairman. He currently is an environmental and energy attorney at Hogan Lovells in Washington, DC.
Three’s Company
While FERC currently only has three sitting commissioners – two Democrats and one Republican – the Commission has made a few decisions so far this year concerning LNG projects, including an authorization extension for Tellurian Inc.’s Driftwood LNG.
Despite the apparent progress, the second phase of Venture Global LNG Inc.’s Calcasieu Pass facility (CP2) in Louisiana has yet to receive a hearing. Analysts have pointed to the project as a potential example of the uncertainty hanging over FERC approvals. A final authorization for CP2 has been pending before FERC for roughly the last eight months, marking the longest consideration process for a U.S. LNG facility.
Both European and Asian offtakers of CP2, as well as politicians and local community members, have participated in a letter campaign lobbying FERC to render a decision.
Chatterjee said the extended timeline is more likely because of FERC staff making up time lost during the deadlock and gathering more information about the project before the Commission renders a decision.
“I’m optimistic that when the staff completes their review and they complete their work, and all the questions are answered, they will act in due course on CP2,” Chatterjee said.
FERC still faces potential issues that could stall both LNG projects and other important energy infrastructure decisions for the foreseeable future. Commissioner Allison Clements told media earlier in the year that she didn’t intend to seek an additional term after her current one expires in June. Clements could serve until the end of the current Congressional session, but her departure would leave FERC without a quorum.
Congress is currently considering the nomination of three potential commissioners introduced in February.
Political Miscalculations?
A functioning FERC also doesn’t necessarily clear the outlook for U.S. LNG development.
If authorized by FERC, CP2 and other projects that aren’t currently authorized by DOE to export to non-Free Trade Agreement countries could have trouble landing more international contracts until the regulatory review ends.
Chatterjee has argued that the pause in DOE export permits should be considered unlawful under the Natural Gas Act, which he said required the agency to take action once FERC determines a project is in the public’s interest.
But, outside of the legality of the pause, he said the review is proving to be bad politics for the Biden administration during a contentious presidential election year.
“I think they believe that this” only affects states on the Gulf Coast where LNG terminals are located, Chatterjee told NGI. “What they’re missing is that these facilities often take up to 10,000 people to construct and they create jobs throughout the value chain. There are pipefitters and manufacturers and the folks who make component parts in states like Ohio, Wisconsin and Pennsylvania that the President is going to need to get reelected.”
