The Freeport LNG export project in Texas led by billionaire Michael Smith, has asked for additional time to develop the project’s fourth train.
Freeport LNG has completed the construction and has already placed in service the first three liquefaction trains at the facility located on Quintana Island.
However, due to the current circumstances, the project proponent filed a request with the Federal Energy Regulatory Commission (FERC), seeking additional time for Train 4 development.
In its initial order granting the Train 4 construction, FERC required Freeport LNG to build and place the facility in service by May 17, 2023.
However, in its latest request, Freeport LNG noted that the construction of the fourth train has not yet commenced.
“Given the minimum 42-month period required to construct Train 4, it is not possible for FLNG to meet the May 17, 2023 in-service date established by the Order,” reads in the request.
Freeport LNG further noted that the inability to meet this schedule, along with other factors, is impeding FLNG’s efforts to progress the commercialization of the Train 4 project.
Additionally, the current worldwide economic climate and depressed global LNG prices resulting from the coronavirus pandemic, make it challenging to complete long-term contracts with potential customers, resulting in associated delays for LNG projects in the United States and around the world.
The uncertainty with respect to the in-service deadline under the initial order further exacerbates these challenges for Freeport LNG, the request reads.
Moreover, in May 2020, following a bid review process, Freeport LNG selected KBR as the preferred bidder for the engineering, procurement, construction, and commissioning (EPC) contract for the Train 4 project.
However, KBR recently announced that it plans to refocus its core business mostly on government contracts and technology businesses and will exit the LNG EPC business. Accordingly, Freeport LNG must rebid the EPC contract prior to commencing the construction of the Train 4 project, which adds additional uncertainty as to the ultimate construction schedule.
Given the foregoing, Freeport LNG filed a request with FERC seeking a three-year extension that would see it construct and place the fourth train in service by no later than May 17, 2026.
This timeframe aligns with the requirements in DOE Order which calls for commencement of long-term exports of LNG from the Train 4 to non-Free Trade Agreement countries by no later than May 2026.
Freeport LNG stressed that FERC has recently acknowledged challenging circumstances in granting similar extensions of time to other LNG projects.