Natural Gas
FERC OKs Cross-Border Gas Pipeline Despite US LNG Export Pause
FERC approved pipeline link set to feed US natural gas to proposed $15B export terminal in Mexico that would ship LNG to Asia and South America.
Image courtesy of Mexico Pacific
The Federal Energy Regulatory Commission last week approved a presidential permit for a cross border connection to link a proposed natural gas pipeline in the Texas Permian basin and a proposed 500-mile line in Mexico leading to an estimated $15-billion LNG export terminal under development in that country.
At its Feb. 15 open meeting, FERC also approved a 1,000 ft, 48-in. cross-border gas pipe connector on the Rio Grande. Commissioner Allison Clements supported that project but disagreed with the agency statement that it was “incapable” of assessing impact of the connector's greenhouse gas emissions.
Tulsa-based energy firm Oneok Inc. is developing the 155-mile, 48-in. dia. Saguaro Connector pipeline that would send 2.8 billion cubic ft of gas per day from Pecos County, Texas to the border. In Mexico, it would connect to the Sierra Madre pipeline set to transport the gas to the three-train, 15-metric-ton-per-year Saguaro Engeria liquefaction project on the coast of the northern state of Sonora for gas shipment to Asia and South America.
The project is the anchor for developer Mexico Pacific, which has a strategic partnership with Bechtel, and says its goal is to position Mexico as the world’s fourth largest LNG exporting country. Mexico Pacific awarded the EPC contract last year for the pipeline and compressor stations to a joint venture of Mexico contractor GDI Sicim Pipelines and Italy-based Bonatti.
Mexico Pacific reached a long-term deal last year to supply LNG to ConocoPhillips but it has not confirmed a final investment decision on the export terminal.
FERC, DOE 'Do Not Coordinate'
The FERC approvals come a few weeks after the U.S. Energy Dept. announced it would pause licenses for LNG export to countries without U.S. free trade agreements
Democrat Willie Phillip, just elevated to commission permanent chairman, said at a press briefing that the two agencies "do not coordinate" on energy infrastructure decisions, which is FERC's purview, or on "actual export and import of LNG,” which is the department's jurisdiction.
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But Republican-sponsored legislation that would remove that export approval authority and give FERC exclusive jurisdiction to approve LNG facilities passed the House of Representatives on Feb. 15 by a 224-200 vote. Supporters included nine Democrats, but observers question if those in the U.S. Senate will back the bill or even consider it. The administration said in a statement it opposes the bill but did not confirm a planned presidential veto.
Sierra Club Senior Attorney Doug Hayes said FERC approval of the Saguaro Connector pipeline based on a narrow environmental assessment "is out of step with the reality of the climate crisis and communities impacted by these projects.”
The project also has been approved by the U.S. State Dept. and by a Texas transportation regulator.
FERC also approved a three-year extension, to 2029, for developer Tellurian to complete its 96-mile Driftwood pipeline and proposed 27-million metric tpy LNG terminal south of Lake Charles, La., that the firm said is delayed by COVID-19-related supply chain issues. That project, on which Bechtel started first-phase construction in 2022, already has a federal export permit.
More Project Decisions Await
But the regulator did not announce a decision on the CP2 LNG project in Cameron Parish, La., intended to export 20 million metric tpy of gas per year when complete.
In a letter to FERC, CP2 developer Venture Global LNG said it wants a project decision by the commission's next open meeting on March 21. “Any further delay in the authorization of the project could undermine the confidence of global customers and financial markets,” the firm said.
Also not addressed at the meeting were key initiatives to alleviate power grid congestion: a final long-term transmission planning rule and a possible rehearing of FERC reforms to resolve major grid connection backlogs for renewable energy projects.
But the commission did unveil a new policy to deny preliminary permits for new hydroelectric projects on Native American lands if tribal governments have officially opposed them, denying permits for four facilities set to be sited on Navajo Nation land. Tribal leaders claim developers did not seek their approval in advance.
One developer, Rye Development, said in a statement that it "values the importance of ongoing consultation with Tribal Nations to address issues ... of importance at project sites.”
Despite Phillips' elevation, the normally five-person commission now is operating with just three members and could lose one more this year, which would affect decisions requiring a quorum, with the term of Commissioner Clements expiring in June. According to recent reports, Clements may not seek another, although she can continue work until Dec. 31.
