Cheniere loses emission waiver at US LNG plants

US LNG company Cheniere has lost a request for a carveout from more stringent air emission limits that would have covered 62 gas-fired turbines at its two export terminals on the US Gulf Coast.

The US Environmental Protection Agency (EPA) said it has denied a request from Cheniere to write special air emission rules for the types of gas turbines it uses to liquefy natural gas at its 25mn t/yr Sabine Pass and 15mn t/yr Corpus Christi LNG export terminals. The agency cited the need to control emissions of formaldehyde to protect public health.

"Though EPA is denying Cheniere's request for a special subcategory to comply with the turbines rule, the agency will continue to work with them and with other companies as needed to assure they meet Clean Air Act obligations," the agency said.

Cheniere said it strongly disagrees with the decision but said it would work with state and federal regulators to ensure compliance. Cheniere said its "conviction remains" that the emissions from its gas-fired turbines do not pose a risk to public health, workers or the environment.

"Although this decision may result in unwarranted expenditures, we believe that the steps needed to come into full compliance will not result in a material financial or operational impact and that we will be able to continue to reliably supply LNG to customers and countries around the world," Cheniere said.

Cheniere did not respond to follow-up questions. Cheniere chief executive Jack Fusco, on an earnings call last month, said he believed that the situation was manageable. If EPA denied the company's request, Cheniere would likely work to negotiate "some type of consent decree" with state regulators, Fusco said on the call.

Industry analysts do not expect the decision will cause immediate disruptions at the Sabine Pass and Corpus Christi terminals, which last year exported nearly 2 Tcf of natural gas, or nearly 55pc of all US LNG exports, according to federal data. It is "unlikely" EPA will mandate broad service disruptions, analysts at Tudor Pickering Holt said today.

EPA first set formaldehyde emission limits for stationary combustion turbines in 2004, and at the time sought to exempt gas-fired turbines from that rule. But a federal court blocked the exemption for gas turbines in 2007. Even so, EPA kept the emission exemption for gas turbines until 9 March, when it imposed a 5 September compliance deadline that it expected would apply to 250 turbines built over the last two decades.

Cheniere earlier this year unsuccessfully asked EPA to suspend the regulations, which it said would be "counterproductive" to the push by President Joe Biden's administration to boost US LNG supplies and break Europe's reliance on Russian natural gas.

Cheniere also asked EPA to create a special subcategory of emission limits for the "platform-mounted" refrigeration compression turbines it uses at its Sabine Pass and Corpus Christi export terminals. Cheniere said its turbines have "unique" challenges to installing emission controls, justifying a special subcategory. EPA said it denied the request.

By Chris Knight