The Institute for Energy Economics and Financial Analysis (IEEFA) submitted comments to the Federal Energy Regulatory Commission (FERC), raising issues omitted in the Draft Environmental Impact Statement (EIS) for the CP2 LNG and CP Express projects.
The proposed projects involve the construction of an LNG export terminal with 20 million tonnes per annum (MTPA) of nameplate liquefaction capacity and the construction of 85 miles of natural gas pipeline to supply feed gas to the export terminal located on the Calcasieu Ship Channel in Cameron Parish, Louisiana. These comments address the question of whether or not the projects align with “public interest.”
FERC should consider that assumptions about global demand for additional LNG export capacity were based on long-term relatively low gas prices prior to the COVID-19 pandemic and old commissioned studies. Global demand conditions have also changed since Russia’s February 2022 invasion of Ukraine. In addition, a wave of new global LNG facilities is expected to come online by 2026, causing a potential glut. Current events and their economic impacts should be reflected in updated data and used for economic modeling.
Today’s shifting global demand outlook, a key determinant of whether an additional LNG export facility will yield local, statewide, or national economic benefits, may not point to the same conclusions as data from five years ago. The significant risk of mismatches between LNG supply and demand, which can lead to volatility in prices and underutilization, calls into question the viability and economic benefit to the public. FERC must scrutinize these issues to determine whether or not the project is consistent with public interest.