The first floating terminal proposed to export natural gas out of the Gulf of Mexico has been cleared by U.S. regulators to send cargoes overseas.
Fairwood Peninsula Energy Corp.’s Delfin liquefied natural gas project gained approval from the Energy Department on Thursday to send 1.8 billion cubic feet of LNG a day to countries that don’t have free-trade agreements with the U.S. The project had already been cleared for shipments to countries with trade pacts. Fairwood, led by Frederick Jones, who helped found the trading firm that became Glencore Plc, plans to start service at the terminal in 2020.
The Delfin project stands to unleash even more of America’s shale gas into a global market that’s already grappling with an expanding supply glut. It’ll create another outlet for U.S. energy explorers who’ve found ways to cut costs and keep the shale boom going despite low prices. The Energy Department’s approval comes as the Trump administration has sought to encourage the construction of more LNG export terminals along U.S. coasts and more shipments to countries including China.
The authorization will “continue to strengthen the United States as a dominant energy force,” U.S. Energy Secretary Rick Perry said in a statement. “Investing in American natural gas not only helps our economy and our jobs, but also helps our allies maintain their energy security.”
Fairwood couldn’t immediately be reached for comment.
The shale boom already has the U.S. on track to become a net exporter of gas in 2018 for the first time in decades. The Energy Department has now cleared non-FTA gas exports totaling 21 billion cubic feet of exports a day — representing a quarter of the marketed gas that the U.S. is set to produce this year, government data show.
Delfin is the only U.S. LNG terminal proposed that doesn’t require approval from the Federal Energy Regulatory Commission because it’s being built offshore. It instead needs clearance from the Maritime Administration and the U.S. Coast Guard.
The project consists of four floating LNG vessels with a total export capacity of 13 million metric tons a year, according to the company’s website. Cheniere Energy Inc. is currently the only company running an LNG terminal that’s exporting gas out of the lower 48 states. Proposals to build floating export terminals like Fairwood’s are emerging as a way to tap smaller markets in countries that have built their own floating import terminals.