Does Venture Global’s Louisiana LNG plant profit from pollution?
Venture Global’s Calcasieu Pass liquid natural gas (LNG) export terminal is in the longest ever commissioning period for a plant of its kind. The 19-month duration has enabled the company to sell LNG on the spot market at a much higher price than if the plant was fully operational.
Now, experts say the unprecedented delay raises the possibility that Venture Global is purposefully slow walking the commissioning process and keeping the plant unfit and unclean to make more money. Four companies — including BP and Shell — who say Venture Global hasn’t delivered on its long-term contracts have filed for arbitration, and critics are asking if the firm is profiting from the polluting plant.
In a rush to build an LNG export terminal as fast as possible in coastal Louisiana, in August 2019, Venture Global commissioned Baker Hughes to construct parts of the facility in Italy. Barges carrying the parts, which looked like massive racks of giant test tubes, arrived at the Cameron Parish project site in November 2020.
About 16 months later, in March 2022, Venture Global’s Calcasieu Pass terminal exported its first load of LNG overseas, which was delivered to the Netherlands and France. Since then, the facility’s operational hiccups have caused it to leak toxic air pollution above permitted levels — including carbon monoxide, particulate matter pollution, volatile organic compounds, and nitrogen oxides — and prevented it from reaching commercial operation.
Still, the facility has sold more than 200 LNG cargoes, capitalizing on record-high prices in 2022 as European countries scrambled to replace Russian gas during the Russia-Ukraine War.
They’re making a bunch of money at the expense of Louisiana’s air quality.
In a March 2023 filing to the Federal Energy Regulatory Commission (FERC), Venture Global pointed to the facility’s modular construction as the reason for problems with its on-site power generation units and the resulting pollution. But environmental advocates and neighbors near the plant question why FERC is allowing the company to profit from staying dysfunctional and dirty.
“FERC continues to have this back and forth with Venture Global about problems with operation,” Tyson Slocum, director of Public Citizen’s energy program, tells DeSmog. “But then, Venture Global is allowed to export,” he added. “If the facility is experiencing operational problems, it should not be functioning as an LNG export terminal.”
The company’s long-term contractual obligations to sell LNG to buyers like Shell, BP and Repsol at a pre-designated rate don’t kick in until the company’s facility is deemed commercially operational. In the meantime, as the facility remains in its commissioning phase, a process that ensures a construction project is up to par, Venture Global can sell LNG for higher prices on the spot market – and it has.
The facility exported about 10 percent of the total amount of LNG sent from the U.S. to Europe in 2022 and 2023, according to the company.
“Venture Global is definitely making more money than it would if it were offloading the gas to its contractual counterparties,” Slocum said.
The Arlington, Virginia-based company said it does not expect the south Louisiana plant to reach commercial operation until the first quarter of 2024. That would give the Calcasieu Pass a commissioning period of more than two years, about eight times longer than the industry’s typical three-month commissioning period.
Venture Global did not respond to requests for comment.
Like Shell and BP, the Spanish firm Repsol signed a 20-year agreement with Venture Global to buy LNG from the Calcasieu Pass facility, which FERC approved in 2019. This April, Repsol filed a motion with FERC to intervene in the delayed commissioning of the Calcasieu Pass project. The company also requested to view Venture Global’s weekly commissioning status reports to FERC, which are filed as “privileged” and not available to the public.
In May, FERC denied Repsol’s requests and, since then, the company has urged the commission to reconsider that decision.
“The unprecedented circumstance of an LNG project conducting itself as commercially operational by exporting numerous cargos over the course of a year, but not declaring commercial operation is plainly cause for concern, particularly for a long-term customer like Repsol,” Repsol’s counsel wrote in a June filing to FERC. Shell, BP, and Edison have filed arbitration against Venture Global with the London Court of International Arbitration. Repsol filed arbitration against Venture Global with the International Chamber of Commerce last month.
Shell, Repsol and BP did not respond to requests for comment, including questions about the potential for litigation against Venture Global. “At this time, we cannot comment on pending litigation tied to the arbitration,” BP Media Relations Manager Christina Audisho wrote in an email.
In the future, it’s unlikely that LNG buyers will allow LNG export facility owners to stipulate that long-term contracts can’t start until a facility has reached commercial operations, Slocum said. “What I can tell you is going forward every single contractual offtaker is going to be looking very closely at these contractual terms and trying to avoid the loophole that Venture Global is exploiting there,” he added.
But companies that buy LNG aren’t the only ones paying the price for the ongoing issues at the Calcasieu Pass export terminal. John Allaire lives about a mile from the facility and constantly sees it flaring gases.
A former oil and gas environmental engineer, Allaire knows that’s a sign of operational issues with negative consequences for public health. “They’re making a bunch of money at the expense of Louisiana’s air quality,” he said.
In June, the Louisiana Department of Environmental Quality (LDEQ) threatened Venture Global with potential fines, outlining 139 times that the Calcasieu Pass facility exceeded its air pollution permits in 2022. Venture Global asked state regulators for a hearing to fight potential fines for air pollution violations.
Earlier this year, the company also asked LDEQ permission to modify its air permits to allow a 17 percent increase in toxic air pollution and a 17 percent increase in carbon dioxide emissions, according to an analysis by Allaire for the environmental group, Louisiana Bucket Brigade. But with $184 million in tax breaks for the facility under the state’s Industrial Tax Exemption Program, and the higher prices Venture Global is fetching on the spot market, fines and lawsuits may not be enough to dissuade the company from continuing to export from its Calcasieu Pass LNG facility, despite the ongoing problems.
“I worked with chemical companies. We didn’t go, ‘Oh let’s push forward with polluting, when we know we’re out of compliance,’” Allaire said. “This is monkey business.”
This article was first published by DeSmog, founded in January 2006 to clear the PR pollution that is clouding the science and solutions to climate change with accurate, fact-based information regarding global warming misinformation campaigns.