US LNG expansion may slow this year after developers greenlit 65mn t/yr of new export capacity in 2025, writes Tray Swanson
US firm Energy Transfer (ET)'s decision at the end of 2025 to scrap its long-proposed 16.5mn t/yr Lake Charles LNG plant may have marked the first industry-wide reality check, casting doubt on the viability and scale of other planned projects against a looming global oversupply of the liquefied fuel.
ET was an exception among other US LNG developers — a traditional midstream firm with a vast network of crude, refined products, gas and natural gas liquids (NGL) pipelines. Its Lake Charles regasification terminal, mothballed since 2012, was prime real estate in southwest Louisiana for conversion into an export facility. But the project was marred first by the Covid-19 pandemic, which led then-partner Shell to withdraw in 2020, and then by failure to secure an extension to its export licence under former president Joe Biden's Department of Energy.
Offtaker interest was never an issue for Lake Charles LNG, which had already secured binding contracts for 11.9mn t/yr, or 72pc, of its nameplate capacity — two-thirds of which were signed within six months in 2022. Those deals could be part of the package if ET succeeds in selling the project to a third party. But under the firm's helm, the project faced a tougher environment for securing financing and building, which led ET to seek higher liquefaction fees. Steep competition for labour on the US Gulf coast has driven up construction costs, especially for projects using stick-built liquefaction trains such as Lake Charles. And ET appears to have developed concerns over the long-term profitability of US LNG, especially in comparison with the "superior risk/return profiles" it sees in its gas network.
The firm had sought to sell 80pc of equity in Lake Charles LNG before reaching a final investment decision (FID), which would have still required ET to inject $3.5bn of capital, based on US Gulf coast projects typically costing around $1,050/t. Instead, it plans to spend $5bn-5.5bn on its gas network in 2026, focusing on opening more routes to market for low-cost gas from the Permian basin of west Texas and New Mexico. The company aims to build two new processing plants in the area and two egress pipelines — the 1.5bn ft³/d (15.5bn m³/yr) first phase of the Hugh Brinson line, which will haul gas east to the Dallas area once it starts service in late 2026, and the 1.5bn ft³/d Desert Southwest expansion of its Trans-western pipeline, aimed at boosting flows to the US southwest from 2029. The firm said in November it is also considering converting an NGL pipeline to natural gas. And on 18 December, just as it scrapped Lake Charles LNG, it announced plans to expand Desert Southwest by another 800mn ft³/d.
A changing environment
ET's decision may mark the start of a slowdown in contracting and FIDs, after US developers greenlit more than 65mn t/yr of new LNG export capacity in 2025, a banner year after President Donald Trump ended Biden's pause on export licences.
More are in the works — four other projects with total capacity of 25.7mn t/yr appear close to an FID. Kimmeridge subsidiary Caturus has authorised the purchase of major equipment for its 9.5mn t/yr Commonwealth LNG in Louisiana, suggesting an imminent FID. The 4.4mn t/yr first phase of Delfin's floating LNG terminal offshore Louisiana is also near the finish line, with 4.3mn t/yr of offtake.
But beyond those, large projects may struggle to raise financing. LNG powerhouses Cheniere and Venture Global have large expansions planned at their existing facilities, but may struggle to find customers in an oversupplied market. Cheniere has consistently said it intends to permit as much as possible under the Trump administration while not necessarily developing all of the authorised capacity. The company will take a phased approach to the 20mn t/yr expansion at its 33mn t/yr Sabine Pass facility, with the first adding only 7mn t/yr of new capacity.
