Biden steps up scrutiny of U.S. LNG, new projects risk delay

The Biden administration is set to freeze the permitting process for a massive U.S. LNG project proposed for Louisiana, according to The New York Times. The move could also delay as many as 16 proposed LNG projects.

On Jan. 24th, the Times reported that Biden’s Department of Energy (DOE) will pause approvals of new LNG and begin a review of its regulatory parameters for new projects, which will include a more detailed analysis of the greenhouse gas impacts. Up until now, U.S. LNG projects have not faced meaningful scrutiny on their climate impacts, and the agency has never rejected a project on climate grounds.

But under tremendous pressure from local community groups, mostly on the Gulf Coast, along with national environmental NGOs, the White House is set to raise the regulatory bar. The call for a slowdown and heightened scrutiny for LNG has also been gaining strength among Democrats in Congress.

They singled out one particular project, Venture Global’s CP2, which, if built, would be one of the country’s largest. Venture Global is already having operational problems at its existing Calcasieu Pass facility. CP2 would be constructed in the same manner adjacent to Calcasieu Pass.

Even though CP2 has become the face of a nationwide environmental movement – with echoes of the movement against Keystone XL – community groups and environmental NGOs want a broader halt to the U.S. LNG buildout, much of which is concentrated on the Gulf Coast.

In recent weeks, the Biden administration began to meet internally to decide on a change of course, and it now appears poised to act.

“The White House is directing the Energy Department to expand its evaluation of the project to consider its impact on climate change, as well as the economy and national security,” reported The New York Times. As of Wednesday, the announcement had not yet been made official, but Biden administration officials suggested that one was imminent.

As Gas Outlook recently reported, overhauling the regulatory process could delay and prevent final investment decisions on all new U.S. LNG projects, at least until the review is completed. Analysts expect that DOE’s work would not be finished until after the election in November, effectively preventing the five or six LNG projects that had commercial momentum and were potentially set up to issue FIDs this year. Without permits in hand, many projects will have a tougher time finding buyers and securing financing, likely pushing off their investments.

Venture Global denounced the news. “If this leaked report from anonymous White House sources is true, it appears the Administration may be putting a moratorium on the entire U.S. LNG industry,” Shaylyn Hynes, a spokesperson for the company, said in a statement. “Such an action would shock the global energy market, having the impact of an economic sanction, and send a devastating signal to our allies that they can no longer rely on the United States.”

The news was welcomed by Louisiana residents who oppose the project. Roishetta Ozane, a resident of Sulphur, Louisiana, and the founder of the Vessel Project, a Louisiana-based environmental organisation, celebrated the news.

“What this means is that for once, the United States government is listening to people who are impacted by their decisions,” she said in a statement.

But she cautioned that the move from the Biden administration is only temporary for the time being. “Until we can halt these permits and get them to stop being approved permanently, until we can kick polluters out of our communities, the fight must continue.”