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Delfin Midstream subsidiary Delfin LNG LLC has been granted a four-year extension by the Federal Energy Regulatory Commission (FERC) to construct and place into service the onshore metering, compression, and piping facilities for its planned deepwater liquefied natural gas (LNG) port in Cameron Parish, Louisiana.
The original 2017 certificate order from FERC authorized Delfin to construct the onshore project, which would be used exclusively to deliver domestic natural gas into Delfin’s planned, non-jurisdictional deepwater LNG port facilities located offshore Louisiana. The order required Delfin to have the facility available for service by September 28, 2019. Delfin requested several extensions, and the latest deadline given was September 28, 2023.
Delfin filed the current request for an extension of time until September 28, 2027, arguing that “it has demonstrated good cause for an extension because since the Commission granted Delfin’s 2022 extension request it has entered into further offtake contracts for the deepwater port project”, according to the recent FERC order document. Specifically, Delfin has entered into sale and purchase agreements with Hartree Partners for 0.6 million tons per annum (mtpa) with Centrica for 1.0 mtpa, bringing the total volume under contract to 2.1 mtpa. The company also asserted that it is in negotiations with Devon Energy Corporation over an additional offtake agreement for 1.0 mtpa.
Further, Delfin said it is nearing a final investment decision for its first floating LNG vessel (FLNG). Delfin expects that the construction, transport, and installation of its first FLNG vessel and the start of operations at the deepwater port will take approximately four years. Centrica LNG Company also filed comments in support of the requested extension, according to the document.
In the document, Delfin emphasized that the onshore facilities subject to Commission jurisdiction are integral to the deepwater port project under the jurisdiction of the Maritime Administration (MARAD) and the U.S. Coast Guard, and denying an extension would undermine the jurisdiction of those agencies.
According to FERC, construction deadlines may be extended for “good cause”, which can be shown by a project sponsor demonstrating that it made good faith efforts to meet its deadline but encountered circumstances that prevented it from doing so. FERC said that “the sole purpose of the onshore facilities is to provide transportation service for feed gas to the deepwater port, but the single customer, the deepwater port, is not yet able to receive that service”, and “unanticipated difficulties in receiving service can also be an appropriate basis for granting an extension of time”.
FERC confirmed that the onshore project over which it has jurisdiction is “a small component of the larger deepwater port project subject to the jurisdiction of MARAD and the Coast Guard”, and noted that Delfin continues to hold a valid deepwater port license from the U.S. Department of Transportation. “Under these circumstances, we find that Delfin’s continued efforts to enter into commercial agreements and finalization of the design of the deepwater port are sufficient evidence of continued commitment to proceeding with the project and demonstrate good cause for granting the requested extension of time to construct the Onshore Project and place it into service”, FERC concluded in the document.
According to the company website, Delfin LNG is a brownfield deepwater port “requiring minimal additional infrastructure investment to support” up to four FLNG vessels. Delfin LNG received a positive record of decision from the Maritime Administration (MARAD) and approval from the Department of Energy for long-term exports of LNG to countries that do not have a Free Trade Agreement with the United States for up to 13.3 mtpa.
In July, Centrica and Delfin Midstream announced an $8 billion long-term sale and purchase agreement for one million tons per annum of LNG for 15 years on a free-on-board basis. Operations and first LNG are expected to begin at the Delfin Deepwater Port in 2027, and Centrica will receive delivery of around 15 LNG cargoes per year, according to an earlier statement.
To contact the author, email rocky.teodoro@rigzone.com
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