Venture Global made two requests to the federal government on separate projects at its Calcasieu Pass facility last week, both related to the transitional state of the LNG market.

The company filed both requests with the Federal Energy Regulatory Commission on Feb. 15.

In one request, Venture sought either a one-year extension on the completion date for the Calcasieu Pass 1 project or a declaration that the project is complete. While the company currently expects work to be completed in fourth-quarter 2024, the deadline extension would set a new date for Feb. 21, 2025.

The move is part of an ongoing dispute with the site’s foundational customers. Calcasieu Pass 1 (CP1) has been producing LNG for more than 20 months, but its unfinished status means the plant is not yet required to deliver previously contracted LNG.

“The project is almost entirely complete, but still not yet fully commercially operational because some equipment still needs to stay in commissioning while remediation is completed,” said Tom Sharp, director of permitting intelligence at analytics firm Arbo.

Specifically, CP1 has run into some reliability issues with its heat recovery steam generators and therefore kept the instruments in a non-commissioned state, according to the FERC filing the company made.

“While its unique design enabled Calcasieu Pass to commence LNG production and export quickly, it also entails a significantly longer commissioning process than for other LNG export projects,” Venture representatives wrote in the extension request.

The site has been in LNG production for more than 20 months. However, Venture Global has told foundational customers, such as BP, Shell and Chevron, that it cannot provide them with term-contract (price guaranteed) cargoes until the FERC certifies the project as complete. Shell claims to have lost more than $1 billion while waiting for availability.

The dispute could have implications for future plants going through the same process. 

“This will undoubtedly further upset some of the foundational customers, but the issue here is primarily related to the contracts,” said Tom Sharp. “Future LNG contracts will probably mirror the pipeline world, where interim capacity is usually prorated to anchor shippers who can exercise a right of first refusal.”

Calcasieu Pass 2

In its second request with the FERC, Venture asked for immediate approval for the Calcasieu Pass 2 project, currently in construction at the same location as CP1.

Once completed, the facility will be able to export at a peak capacity of 24 million tonnes per year (mtpy). Venture Global originally scheduled the project to be online in 2025, but President Joe Biden’s pause on certifications for new LNG projects has made the completion date uncertain. Venture Global executives have stated they plan to complete the facility.

"We respectfully urge the Commission to issue an order authorizing the project no later than the Commission’s next open meeting on March 21," Venture Global representatives wrote in the filing.

Sharp said the request for FERC approval makes sense, even if the project remains in limbo awaiting additional approval from the U.S. Department of Energy (DOE). 

“‘Certainty’ is the name of the game in LNG facility development, and it is often measured by the acquisition of necessary permits and authorizations, any of which can be stalled at any point in the long process for a myriad of reasons,” Sharp said. “So, while DOE’s pause on non-FTA authorizations may temporarily stall progress, a lot can change after an election year, and obtaining a FERC order for CP2 is still critical.”

Sharp also pointed out that the composition and functionality of the FERC commissioner’s board may soon change.

The FERC has seats for five commissioners. Currently, three are seated, as other nominees have not been confirmed by the Senate. Commissioner Allison Clements’ term expires at the end of June, and Clements has stated that she will not seek a second term.

If she departs without a replacement, the number of commissioners will drop to two, meaning the FERC will be unable to reach a quorum and approve permits.

“Venture Global may perceive a sense of urgency to do anything it can to get a FERC authorization before (Clements) leaves,” Sharp said. “Given that, according to its filing, Venture Global has secured binding 20-year offtake agreements for 9.25 mtpy of LNG export capacity, securing a FERC authorization would serve as a significant validation of Venture Global's commitment and capability in the eyes of stakeholders.”

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