Energy Factoid: FERC approves two Texas LNG projects & Energy Secretary backs Mountain Valley Pipeline

Two pieces of good news for U.S. oil and gas industry

As the federal government gears up to distribute trillions of dollars in green energy subsidies, the Federal Energy Regulatory Commission (FERC) approved on April 20, 2023, two large LNG projects to be built at the Port of Brownsville, Texas.

One of the liquefaction and export terminals, Rio Grande LNG, is owned and operated by Houston-based NextDecade Corp. The Rio Bravo pipeline, which is associated with the Rio Grande LNG facility, was also approved. The other LNG facility that FERC approved is being developed by Glenfarne Energy Transition based in New York City.

This is good news for oil and gas producers operating in the Permian Basin because it opens up new markets for their natural gas production, some of which is currently being flared due to inadequate pipeline capacity out of the Permian and the lack of natural gas pipeline capacity to get gas into such markets as California and the upper Northeast. The lack of pipeline capacity in the U.S. is the result of the efforts of anti-fossil fuel NGOs, such as The Sierra Club, which have stopped many pipeline projects in recent years with lawsuits that tie up pipeline projects with years of litigation.

The number of LNG plants and export terminals in coastal communities along the U.S. Gulf Coast is expected to grow exponentially as a result of soaring demand in Asia, where some nations are transitioning from coal to cleaner energy sources, and in Europe, which stopped buying natural gas from Russia after their invasion of Ukraine.

According to Rystad Energy, global demand for LNG is expected to lead energy companies to spend $42 billion a year building liquefaction plants and export terminals, particularly along the U.S. Gulf Coast.

The next good news is that last Friday, April 21, Energy Secretary Granholm sent a letter to the FERC expressing the administration’s support of the Mountain Valley Pipeline. The letter said in part:

Energy infrastructure, like the MVP project, can help ensure the reliable delivery of energy that heats homes and businesses, and powers electric generators that support the reliability of the electric system.

Natural gas—and the infrastructure, such as MVP, that supports its delivery and use—can play an important role as part of the clean energy transition, particularly with broad advances in and deployment of carbon capture technology facilitated by the Bipartisan Infrastructure Law and Inflation Reduction Act. Similarly, new pipeline infrastructure is needed to support the rapid growth of hydrogen as an emissions-free fuel, and to transport carbon dioxide from its point of capture to the location of its use or sequestration.

In closing, Granholm said

While the Department takes no position regarding the outstanding agency actions required under federal or state law related to the construction of the MVP project, nor on any pending litigation, we submit the view that the MVP project will enhance the Nation’s critical infrastructure for energy and national security.

Both of these developments at the FERC meeting last Friday are very good news for the U.S. oil and gas industry. Let’s hope that these are just the beginning of more good surprises out of the Biden Administration.