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The United States became the world’s largest exporter of liquefied natural gas a year ago amid a flood of cheap natural gas from the shale wells of Texas and New Mexico that prompted a series of LNG projects along the Gulf Coast.
Lately, however, the industry has started to lose momentum—because of regulations and a federal government that’s all sympathetic ears to climate activists claiming that natural gas is even worse for the atmosphere than coal.
In early August, NextDecade announced a $4.3-billion contract with Bechtel Energy to construct the fourth train of the Rio Grande LNG facility. The company planned to make the final investment decision on Rio Grande LNG in the second half of this year. Everything was going well. The project had even seen foreign investors come on board, including Emirati Adnoc and Saudi Aramco. Then, an appeals court canceled the project’s authorization from the Federal Energy Regulatory Commission.
The court acted on claims by several environmentalist organizations that said the project—and another one, Texas LNG—would negatively impact the local environment and communities. The environmentalists first approached the Federal Energy Regulatory Commission, which had granted a permit for Rio Grande LNG, but after the commission refused to have another hearing, the green group, led by the Sierra Club, went to an appeals court and that court struck down FERC’s permit—and that’s after NextDecade added a carbon capture and storage system to its original design to make it as low-emission as possible.
Rio Grande LNG, then, is being delayed although its first three trains are still under construction. Another LNG project is also being delayed, but that has nothing to do with regulators. It has to do with the bankruptcy of its contractor, Zachry Holdings, which was also announced this month and which has set the Golden Pass LNG project back several months. Per the Financial Times, the contractor fell out with the developers of Golden Pass LNG over the ballooning costs of the project.
“LNG plants are energy infrastructure — and building energy infrastructure in America today is hard,” Kevin Brook, managing director of energy research firm ClearView Energy Partners, told the Financial Times.
It is indeed hard to build energy infrastructure in America today, especially after the Biden administration imposed what it called a pause on new LNG capacity additions following protests from environmentalists that claimed LNG is worse than coal for the climate. A court then overturned that pause after 16 states sued, claiming that the suspension of new LNG export permits would affect the U.S. economy negatively and interfere with the supply of gas to allies in Europe that were trying to quit Russian gas.