Commonwealth LNG applies for FERC approval

The Commonwealth LNG export project in southwestern Louisiana has applied to the US Federal Energy Regulatory Commission (FERC) for construction approval, after being in FERC's pre-filing process for two years.

Proposed US LNG projects are required to be in pre-filing at least six months to evaluate potential environmental and siting issues before filing a formal FERC application.

Commonwealth asked FERC to authorize construction by January 2021 so it could come on line by the first quarter of 2024.

Commonwealth is among a number of projects vying to be part of a second wave of US LNG export capacity expected to come on line in the early to mid-2020s. Most of the six facilities comprising the first wave are on line or are expected to start operating by this year. Two other projects started construction this year.

Ten projects have pending FERC applications and five others are in the agency's pre-filing stage. In addition, eight projects that have received FERC authorization have not started construction, and a number of proposed projects have not begun FERC regulatory reviews.

Commonwealth is owned by Houston entrepreneur Paul Varello and may have difficulty competing against projects sponsored by large firms that are already active in the LNG industry. Commonwealth would comprise six small liquefaction trains with combined baseload capacity of 8.4mn t/yr, equivalent to 1.07 Bcf/d (11.1bn m³/yr) of gas, and combined peak capacity of 9.5mn t/yr.

Commonwealth in June signed a non-binding deal to sell Swiss trading firm Gunvor 1.5mn t/yr of LNG for 15 years. Varello previously told Argus the project would need to sign long-term deals totaling at least 7mn t/yr to be funded.

Varello said Commonwealth would be competitive by offering liquefaction fees less than the roughly $2.50/mmBtu reportedly being offered by some other projects. Commonwealth, which has an estimated cost of $4bn-$5bn, would reduce construction costs and time by building modular liquefaction and storage units and bringing them to the terminal site along the west side of the Calcasieu Ship Channel, near the entrance to the Gulf of Mexico.

Each Commonwealth storage tank would have capacity of 40,000m³, equivalent to about 825mn cf of gas, compared with typical site-built LNG tanks with capacities equivalent to 3-3.5 Bcf.

The project would include a small 3-mile (4.8km), 30-inch (76cm) diameter pipeline in Cameron parish, Louisiana, that would connect with existing pipelines owned by Kinetica Partners and EnLink Bridgeline Holdings.