Shale Gas Export Projects Face U.S. Permit Delays

(Bloomberg) -- The approval of U.S. shale-gas export projects could be delayed by as many as 18 months as the top energy regulator struggles with a backlog of permit requests, according to people familiar with the matter.

The Federal Energy Regulatory Commission is preparing to notify some developers of liquefied natural gas plants of 12- to 18-month delays in reviews, the people said, asking not to be named because the information isn’t public. That could affect the commercial viability of several ventures vying for a spot in the rapidly growing global gas market.

FERC, an independent agency under the U.S. Department of Energy, is already tapping outside help, with Chairman Kevin McIntyre saying last month that FERC is hiring private contractors for the first time to help work through LNG reviews.

Tamara Young-Allen, a FERC spokeswoman, confirmed the agency had asked the companies to pay for the external contractors, but would neither confirm nor deny the delay notifications coming in the future.

The surge in applications for new export projects is testament to the American shale gas boom that turned old plans to import the fuel on their head. The U.S. has two major LNG export facilities in operation today, with four more set to enter service by the end of 2019. Another four have received all major regulatory permits and are awaiting the final go-ahead from their developers. And more than a dozen are seeking approval from FERC.

‘Center of the World’

On Wednesday, Commissioner Neil Chatterjee took to Twitter to offer possible solutions to the problem, including increasing pay for agency staffers in a bid to retain them or opening a regional office in Houston, which he called “the center of the world” for natural gas legal and technical expertise.

Paul Varello, president and CEO of Commonwealth LNG, said he’s heard that it will take 18 months to two years to prepare an environmental review for his proposed project -- compared to the six to eight months traditionally spent on those assessments.

"Right now, it is a startling revelation to me that it will take me twice as long to permit the plant as to build it,” he said in an interview in Washington. “Five years to permit it, and two and a half years to build it."

©2018 Bloomberg L.P.

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