Plaquemines LNG: Racing Against Time or Overly Optimistic?

Venture Global’s Plaquemines LNG project in Louisiana is approaching completion, with the company targeting in-service in Q3 2024. Despite this target, Q3 has passed, raising questions regarding how far behind schedule the project is.

As one of the key LNG export facilities under construction in the United States, Plaquemines LNG's timeline has significant implications for the global LNG market, as phase 1 will be capable of exporting 1.3 billion cubic feet per day (bcf/d) of LNG. Any delays or accelerations in its completion could impact LNG supply projections and influence market dynamics.

While Venture Global has recently remained optimistic about its Q3 2024 target for in-service, our analysis has consistently suggested the project is behind schedule. Several critical FERC authorizations are likely still pending, and historical data from similar projects indicates that the remaining steps typically require more time than Venture Global's projections account for.

Project Status and Recent Milestones

Venture Global's Plaquemines LNG project is approaching completion of its first phase, which includes trains 1-18. The project has made significant progress, as indicated by recent authorizations and other developments including:

1. Energizing the electrical substation on March 19, 2024.
   
   
2. Commencing natural gas intake, albeit in small amounts, since late June.
   
   
3. On August 13, 2024, in a filing related to Venture Global’s other major project, Calcasieu Pass (a motion to stay a request for rehearing that challenges FERC’s authorization of its other project), Venture Global reported that construction at Plaquemines LNG was nearly 80% complete.
   
   
4. Using a "cooldown cargo" delivered from the LNG tanker Qogir in late August to accelerate preparation for initial exports by chilling LNG tanks before the liquefaction process begins in earnest.
   
   
5. While not an approval, FERC’s August 29, 2024 denial of Venture Global's request to introduce hazardous fluids and commission the first LNG cargo indicates that, in Venture Global’s view, construction is mostly complete. FERC’s denial based on pending safety inspections also underscores the regulatory hurdles that remain.
   
   
6. Most recently, on September 20, 2024, FERC granted Plaquemines LNG's request to commission hot oil systems, marking another key milestone in the project's development.

Methodology and Timeline Analysis

Our approach to analyzing LNG project timelines starts with a comprehensive review of historical data from existing terminals, focusing on ten key FERC orders common across most projects. As explained in our article Demystifying LNG Terminal Timelines, these orders typically follow a pattern: a series of construction authorization orders, a prolonged construction phase, and, finally, a series of activity and commissioning authorization orders typically issued about a year before a terminal goes into service. The key orders in the construction phase — all of which Plaquemines has received — are shown below in relation to in-service.

For Plaquemines LNG, we've assessed its progress against this historical data, considering the time between key authorizations and eventual in-service dates for previous projects. It's important to note that while we track these key authorizations across all LNG projects, the privileged nature of some FERC filings means we haven't seen every authorization in every case.

Timeline and Remaining Hurdles

After receiving its authorization to commission hot oil systems, at least three additional key FERC authorizations are most likely still required before the trains can be fully operational, proceed through commissioning, and be placed into service. Based on our analysis of previous LNG projects, these final authorizations typically occur within the following timeframes:

• Introduction of fuel gas into the trains: 3-9 months before in service
• Introduction of feed gas: 2-6 months before in service
• Introduction of hazardous fluids: 3 weeks to 3 months before in service

We have plotted these key authorizations on the graph below, including historical median and upper range timelines, with the orange line representing both the in-service dates for completed projects and, in Plaquemines’s case, its projected in-service date.

Viewed from this perspective, there are a few indicators that Plaquemines LNG is behind schedule. First, the period between receiving authorization to energize electrical substations and achieving in service is typically much longer than what Plaquemines LNG has been projecting. Additionally, the orders Plaquemines has yet to receive following its most recent authorization to commission hot oil historically occur in tight clusters towards the end of the timeline, suggesting the project is between two and six months away from being in service. Finally, this authorization occurred much earlier than in other projects with respect to another key authorization — introducing fuel gas. Some of this variation could be the result of Venture Global's use of modular technology.

A Caveat: Potential Implications of Modular Technology

Like Venture Global's Calcasieu Pass project, the Plaquemines facility uses modular train technology consisting of 0.626 mtpa (million tons per annum) liquefaction modules fabricated offsite and delivered to the site fully assembled. After the second stage, the project will have a capacity of 20 mtpa coming from 36 modular units, configured in 18 blocks. The difference in technology from other terminals, particularly that the modules are pre-tested before delivery to the site, could theoretically hasten the authorization process. But as we have seen in Calcasieu Pass, it could also result in a longer commissioning period.

To add additional color to this potential technological outlier, we compared timelines for Plaquemines and Calcasieu Pass, and found that certain key authorization orders we typically see in other LNG projects were absent from the public record for Calcasieu Pass. This could be related to the modular design, or the result of the privileged nature of some filings in the FERC process for LNG facilities. We are watching Plaquemines closely to see if it follows the same pattern.

We also compared the timelines for the two projects based on the last key order they have in common — the construction of aboveground piping, which Plaquemines LNG received authorization for on July 7, 2023. At this same point, it took Calcasieu Pass 23 months for the first eight trains, 26 months for trains 9-12, and 40 months for the remaining six trains to begin first LNG production and enter the (rather prolonged) commissioning phase. Applying the fastest commissioning timeline from Calcasieu Pass (23 months) would put Plaquemines at the commissioning phase on June 7, 2025, 701 days behind its projected in-service date. The main conclusion we can draw from this analysis is that Plaquemines was able to construct its facilities faster — Plaquemines has already requested to commission its first LNG cargo, so we know the facilities are largely complete.

Calcasieu Pass’s lengthy commissioning process, which we discuss in our rollup of the most recent Commission meeting The Five Faces of FERC Faceoff . . . Mostly Against Protestors and the D.C. Circuit, also adds contextual value because it is the result of reliability challenges. Coupled with FERC’s denial of Venture Global’s request to commence commissioning and introducing hazardous fuels due to pending safety inspections, it could indicate remaining regulatory hurdles and that offsite fabrication and testing may not decrease ultimate time to in service.

Implications and Outlook

While Plaquemines LNG’s modular technology and cooldown strategy introduce interesting variables into our timeline analysis, the remaining regulatory steps, broader historical precedent, and comparisons to Calcasieu Pass all suggest that achieving first LNG by the end of Q3 2024 was an ambitious goal.

Moreover, the ongoing issues at Calcasieu Pass serve as a cautionary tale. The prolonged commissioning period and disputes over transparency at Calcasieu Pass could potentially foreshadow similar challenges for Plaquemines LNG. We will be watching to see if history repeats itself.

We will also continue to monitor, as we do for all LNG projects, a wide range of disparate data sources to maintain comprehensive awareness of all factors impacting LNG project timelines. By synthesizing information from these diverse sources, we can provide a more accurate and contextual understanding of LNG project timelines, helping stakeholders navigate the complex landscape of energy infrastructure development. In particular we will be watching for:

1. The interaction between modular design approaches and traditional FERC authorization processes;
   
   
2. Potential delays in the commissioning process and their impact on long-term contract activation; and
   
   
3. The transparency and consistency of developer communications regarding project milestones.

For more detailed analysis on the progress of Plaquemines LNG or other LNG projects, including customized timelines and regulatory insights, please get in touch.