The U.S. Department of Energy (DOE) is allowing New Fortress Energy Inc. to export up to 1.4 million metric tons/year of LNG to non-free trade agreement (FTA) countries from its recently commissioned Fast LNG facility in Mexico, marking the first non-FTA permit granted this year.
In an order issued over the U.S. Labor Day weekend, DOE staff noted ongoing concerns about U.S. liquefied natural gas development, including an ongoing study into the impacts of gas exports, but ultimately concluded Fast LNG’s shipments to the international market were in the public interest.
“DOE is continuing to monitor market developments closely as the impact of successive authorizations of LNG exports and re-exports unfolds,” agency staff wrote in the order. “DOE also acknowledges that proposals to re-export U.S.-sourced natural gas in the form of LNG from Mexico or Canada to non-FTA countries raise public interest considerations that are not present for domestic exports of LNG.”
After becoming the first new North American LNG project to ship a commissioning cargo this year, NFE’s project has also become the first test of DOE’s response to a recent court ruling.
In January, the Biden administration ordered DOE to halt considerations for pending non-FTA export permits while agency researchers compiled a market study on how the expansion of U.S. LNG export capacity since 2016 has impacted domestic fundamentals.
Six months later, a federal court ruled that DOE overstepped its authority by halting the permit review process and ordered the agency to restart considerations for non-FTA licenses. However, the decision initially raised more questions than answers, as DOE retained most of its power to determine how long a review process can take.
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The facility offshore of the Altamira coast was one of at least seven commercially advanced projects in the United States and Mexico that had a pending application for a non-FTA permit impacted by DOE’s pause on new authorizations.
NFE previously requested to re-export 145 Bcf/year, or 400 MMcf/d, from Texas through Altamira until 2050. It received partial authorization last March and an updated environmental assessment in December.
Instead of granting the full request, DOE permitted Fast LNG’s non-FTA shipments until 2029. DOE staff wrote that in two years, NFE could request a review to extend the permitted term through 2050 once it has a “more complete record” to evaluate export projects.
Non-FTA authorization is usually considered essential for large-scale LNG export projects because of the flexibility in the customer base. While an FTA permit gives an exporter access to customers in 20 countries, including Asian buyers in Singapore and South Korea, non-FTA approval makes far more demand centers available and makes a project more attractive to financial backers and large portfolio players.
With the first cargo from Fast LNG 1 nearing its destination in southern Baja California and a non-FTA permit secured, CEO Wes Edens said NFE is a step closer to expanding its reach in the global market as it grows LNG export capacity in Mexico.
“This important authorization cements NFE’s position as a leading global vertically integrated gas-to-power company and enhances the marketability of our FLNG 1 asset,” Edens said. “NFE is now able to freely supply cheaper and cleaner natural gas to underserved markets across the world and further our goal of accelerating the world’s energy transition.”
