HomeNewsEnergy Dept. refuses Energy Transfer's rehearing request for LNG project

Energy Dept. refuses Energy Transfer's rehearing request for LNG project

6/23/2023

(Reuters) - The U.S. Department of Energy (DOE) will not rehear pipeline operator Energy Transfer's request for a second extension of its Lake Charles liquefied natural gas (LNG) export project.

The decision could spell an end to the project, according to the company's own filings with the DOE. Energy Transfer said it has spent $350 MM on the project.

Energy Transfer did not immediately comment on the decision.

In an order published on Wednesday, the DOE said it was not convinced by the arguments put forward by Energy Transfer for the second extension.

The company sought the extension in part due to a variation in the design of the project to include a major carbon capture and sequestration (CCS) component.

Adding CCS to the liquefaction process would necessitate amendments to Lake Charles LNG's DOE authorizations and even a new Federal Energy Regulatory Commission (FERC) authorization, the DOE pointed out in its order.

In its May request for reconsideration, the company had said the DOE's rejection at the time wrongly relied on an interpretation that "will likely result in a project's demise."

The DOE in May denied Energy Transfer's request for a three-year extension of its multibillion-dollar Lake Charles LNG project, saying it did not meet its criteria for granting second extensions. The decision prompted one potential customer to suspend contract talks, the company said.

The DOE did give Energy Transfer some hope in its latest ruling, saying it would be open to considering another application if the company is unable to meet its export deadline in 2025.

Energy Transfer had said the three-year extension was needed to accommodate the unplanned delays and "severe shortages" of equipment needed to build the Lake Charles project.

The LNG developer has spent $350 MM 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.

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