Freeport LNG receives final authorisation; could start 2018

Ruth Liao

31-Jul-2014

The 13.2mtpa Freeport LNG export project in south Texas has been awarded final authorisation from the US Federal Energy Regulatory Commission (FERC) meaning the project is clear to start construction, the regulatory agency said on 30 July.

A final investment decision (FID) for Freeport LNG could come shortly, depending on whether the sister energy regulatory authority, the US Department of Energy (DOE), issues final export approval for the project.

Freeport LNG is the third project to receive a full FERC permit, alongside the 12mtpa planned Cameron LNG facility in Hackberry, Louisiana, and the first 18mpta of Sabine Pass developed by US-based Cheniere in Cameron Parish, Louisiana, which is now under construction.

The three-train Freeport LNG facility has long-term tolling agreements with British BP, Japanese utilities Chubu Electric and Osaka Gas, and Korea’s SK E&S and Japanese industrial manufacturer Toshiba.

The estimated $14bn project is an existing brownfield terminal. Freeport LNG was the second project to submit an export application to the DOE, but more than a year elapsed since the authority first approved Cheniere’s Sabine Pass and Freeport LNG’s application. The agency cited the need for more time to consider the implications of increased LNG exports.

Freeport LNG received a conditional non-free trade agreement (non-FTA) export license for 13.5mtpa from the DOE in May 2013, although the project must still receive final non-FTA clearance.

Should a final investment be made in 2014, the project could start construction this year and produce first LNG by 2018, with the third train estimated to be in place by 2019.

The DOE recently proposed revamping its approval process in order to clear a growing backlog of LNG export project applicants and announced its intent to only approve final non-FTA orders once a project has completed the full FERC permitting process. This typically takes 18 months and an investment of hundreds of millions of dollars.

The agency has yet to formally implement the proposed changes, which were announced in late May, but did say at the time that the DOE would continue considering the approvals for the conditional non-FTAs that had been passed.

Freeport LNG and Cameron LNG are the two projects that have already gained FERC approval but now must wait for their final non-FTA licence.

Cameron LNG is expecting its final licence imminently, and FID is expected sometime in August, according to market sources.

So far, only Cheniere has declared final investment on Sabine Pass out of all of the proposed US Gulf export projects.

A total of 10 export projects are currently awaiting approval through FERC, and three more projects have begun the pre-filing process with the agency. Ruth Liao

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