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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy Transfer LP's (NYSE:ET) (Dallas, Texas) plans to build a liquefied natural gas (LNG) export facility in Lake Charles, Louisiana, have been in the works for a number of years. Last year, the company received a three-year extension from the U.S. Federal Energy Regulatory Commission (FERC) allowing construction to be completed in 2028 rather than 2025. After this, Energy Transfer applied to the U.S. Department of Energy (DOE) to allow exports to countries without a free trade agreement (FTA) with the U.S. to begin in late 2028 rather than 2025. The DOE denied the application. In the company's recent earnings conference call, Chief Financial Officer Tom Long said Energy Transfer would appeal the decision and discussed the status of other company projects.
The DOE first issued LNG export authorization from the Lake Charles plant to non-FTA countries in 2016 and in 2020 granted an extension for exports to begin by late 2025. In its most recent application to the DOE, Energy Transfer stated that global events, including the onset of the COVID-19 pandemic, had made it difficult to construct large-scale infrastructure projects. However, the DOE stated that Energy Transfer had failed to show in a specific manner how such events had delayed the project and that the company had shown little action to progress the project after the DOE's original extension granted in 2020.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can click here for reports on the Lake Charles project.
While noting that Energy Transfer had signed several offtake agreements for the plant, bringing total contracted offtake to 7.9 million tons per year, the DOE stated, "We agree with environmental advocates that these contracts alone do not demonstrate that Energy Transfer has made significant progress toward physical completion of the liquefaction project since 2020, including 'progress towards reaching FID,'" the DOE said in its denial of the extension application.
Citing examples of other projects, the DOE stated that since 2022 Venture Global LNG's (Arlington, Virginia) Plaquemines LNG plant in Louisiana, Cheniere Energy's (Houston, Texas) Corpus Christi Stage 3 project and Sempra Energy's (NYSE:SRE) (San Diego, California) project in Port Arthur, Texas, had reached positive final investment decisions and begun construction within three to four years of receiving non-FTA export authorization.
Subscribers can learn more by viewing reports on the Venture Global, Cheniere and Sempra projects.
"For these reasons, we do not believe that the 'difficult circumstances' cited by Lake Charles LNG Export warrant a second extension," the DOE said.
In the conference call, Long spoke of the situation: "In May 2022, we received an extension from FERC of the deadline for completion of the construction of Lake Charles LNG facility to December of 2028. And in June 2022, we applied to the Department of Energy. As many are now aware, on April 25th, the Department of Energy denied our request for this extension. We strongly disagree with this decision, and we plan to file an appeal with the DOE within 30 days of the DOE decision."
But while the Lake Charles LNG project is probably first and foremost in the company's plans for immediate action, Energy Transfer also is progressing with other midstream projects. Long said, "In the Delaware Basin, we placed our 200 million-cubic-foot-per-day Grey Wolf processing plant into service in December of 2022." The plant joins six other Energy Transfer gas processing plants in the region and will produce up to 16,000 barrels per day (BBL/d) of natural gas liquids (NGL). Subscribers can click here for more details.
The Grey Wolf plant will soon be joined by another Energy Transfer gas processing plant in the Delaware Basin, the Bear plant. The facility will be able to process up to 200 million cubic feet of natural gas per day. Construction commenced in late 2022 and is expected to wrap up this summer. Subscribers can click here for the full report.
Like other U.S. midstream companies, Energy Transfer is building out its NGL fractionation capacity. At the company's complex in Mont Belvieu, Texas, fractionation throughput averaged more than 1 million BBL/d in April, a new monthly record. Throughput is planned to increase later this year with the addition of an eighth fractionator at the complex with a capacity of 150,000 BBL/d. Long said, "We continue to expect Frac 8 to be in service in the third quarter of 2023. This addition will bring our total Mont Belvieu fractionation capacity to approximately 1.15 million BBL/d." Construction of the fractionation unit started in 2019 but was halted due to poor market conditions brought on by the onset of the COVID-19 pandemic in 2020 before being restarted last year. Subscribers can click here for more information.
Energy Transfer reported net income of $1.11 billion in first-quarter 2023, compared with $1.27 billion in the prior-year quarter.
Subscribers to Industrial Info's GMI Database can click here to see reports for all of the projects discussed in this article, and click here for the related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
The DOE first issued LNG export authorization from the Lake Charles plant to non-FTA countries in 2016 and in 2020 granted an extension for exports to begin by late 2025. In its most recent application to the DOE, Energy Transfer stated that global events, including the onset of the COVID-19 pandemic, had made it difficult to construct large-scale infrastructure projects. However, the DOE stated that Energy Transfer had failed to show in a specific manner how such events had delayed the project and that the company had shown little action to progress the project after the DOE's original extension granted in 2020.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can click here for reports on the Lake Charles project.
While noting that Energy Transfer had signed several offtake agreements for the plant, bringing total contracted offtake to 7.9 million tons per year, the DOE stated, "We agree with environmental advocates that these contracts alone do not demonstrate that Energy Transfer has made significant progress toward physical completion of the liquefaction project since 2020, including 'progress towards reaching FID,'" the DOE said in its denial of the extension application.
Citing examples of other projects, the DOE stated that since 2022 Venture Global LNG's (Arlington, Virginia) Plaquemines LNG plant in Louisiana, Cheniere Energy's (Houston, Texas) Corpus Christi Stage 3 project and Sempra Energy's (NYSE:SRE) (San Diego, California) project in Port Arthur, Texas, had reached positive final investment decisions and begun construction within three to four years of receiving non-FTA export authorization.
Subscribers can learn more by viewing reports on the Venture Global, Cheniere and Sempra projects.
"For these reasons, we do not believe that the 'difficult circumstances' cited by Lake Charles LNG Export warrant a second extension," the DOE said.
In the conference call, Long spoke of the situation: "In May 2022, we received an extension from FERC of the deadline for completion of the construction of Lake Charles LNG facility to December of 2028. And in June 2022, we applied to the Department of Energy. As many are now aware, on April 25th, the Department of Energy denied our request for this extension. We strongly disagree with this decision, and we plan to file an appeal with the DOE within 30 days of the DOE decision."
But while the Lake Charles LNG project is probably first and foremost in the company's plans for immediate action, Energy Transfer also is progressing with other midstream projects. Long said, "In the Delaware Basin, we placed our 200 million-cubic-foot-per-day Grey Wolf processing plant into service in December of 2022." The plant joins six other Energy Transfer gas processing plants in the region and will produce up to 16,000 barrels per day (BBL/d) of natural gas liquids (NGL). Subscribers can click here for more details.
The Grey Wolf plant will soon be joined by another Energy Transfer gas processing plant in the Delaware Basin, the Bear plant. The facility will be able to process up to 200 million cubic feet of natural gas per day. Construction commenced in late 2022 and is expected to wrap up this summer. Subscribers can click here for the full report.
Like other U.S. midstream companies, Energy Transfer is building out its NGL fractionation capacity. At the company's complex in Mont Belvieu, Texas, fractionation throughput averaged more than 1 million BBL/d in April, a new monthly record. Throughput is planned to increase later this year with the addition of an eighth fractionator at the complex with a capacity of 150,000 BBL/d. Long said, "We continue to expect Frac 8 to be in service in the third quarter of 2023. This addition will bring our total Mont Belvieu fractionation capacity to approximately 1.15 million BBL/d." Construction of the fractionation unit started in 2019 but was halted due to poor market conditions brought on by the onset of the COVID-19 pandemic in 2020 before being restarted last year. Subscribers can click here for more information.
Energy Transfer reported net income of $1.11 billion in first-quarter 2023, compared with $1.27 billion in the prior-year quarter.
Subscribers to Industrial Info's GMI Database can click here to see reports for all of the projects discussed in this article, and click here for the related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
