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Energy Transfer scraps development of Lake Charles LNG export project (www.reuters.com)

submitted 1 day ago* (last edited 1 day ago) by AcidiclyBasicGlitch@sh.itjust.works to c/news@lemmy.world

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Energy Transfer said on Thursday it was suspending the development of its Lake Charles liquefied natural gas export facility in Louisiana, the first LNG project to be halted after U.S. President Donald Trump expedited permits for them in January.

The suspension comes as the company has been facing rising costs and amid fears of a looming global oversupply as new LNG output comes online.

The pipeline and storage company said it remains open to discussions with third parties that may have an interest in developing the LNG project. Energy Transfer executives became nervous about Lake Charles LNG in the final stretch of development because the company still sees itself as a pipeline operator rather than an LNG-focused company, said a person familiar with the project. Offtake agreements for Lake Charles LNG had been structured in a way to protect Energy Transfer from a potential glut in LNG supply, the person added.

Energy Transfer did not immediately respond to a request for additional comment. The company had previously said it would only give the facility the financial go-ahead if it sold 80% of the project to equity partners.

Lake Charles LNG was projected to have a liquefaction capacity of 16.45 million metric tons per annum (mtpa).

The suspension could impact customers including U.S. oil producer Chevron. Energy Transfer said in June it would supply Chevron with an additional 1 mtpa from Lake Charles, bringing the total contracted volumes to Chevron to 3 mtpa. The oil producer did not immediately respond to a request for comment.

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[–] partial_accumen@lemmy.world 3 points 17 hours ago

Contracting has slowed down across all LNG facilities, and contract rates on sale and purchase agreements are much lower than previous rates, squeezing margins for LNG developers, analysts said.

I hadn't heard about the decline of contract rates on LNG, and honestly its surprising to me. A huge increase in LNG was created when Russian gas was essentially removed from the market via sanctions. The contract rates from this Western company suggests that not only has the existing LNG export infrastructure replaced all the gas previously entering from the Russian market, but that there was enough excess that prices are falling. This is even after the majority of Europe has already transitioned away from Russian sources.