US DOE grants LNG export permit for Altamira LNG, first since permitting ‘pause’

The US Department of Energy has issued a key LNG export permit for New Fortress’ Altamira LNG project offshore Mexico’s Gulf coast, marking the first such authorization by the agency since announcing its “pause” on the approvals in January, the company announced on Sept. 3.

The order issued Aug. 31 for the New Fortress project allows the exporter to ship LNG to countries that lack free trade agreements with the US. Non-FTA countries make up most the global LNG import market, making them critical for developers of large US export projects.

The DOE authorized the exports for a five-year period — stopping short of the approval out to 2050 the developer had sought. While the department concluded the US natural gas market could support the exports for five years and cited energy security benefits during that period, it found greater uncertainty in the longer term about the demand for the exports and energy security benefits.

“Given the increased commitment to diversify energy sources and the wide uncertainty of global natural gas demand beyond 2030, DOE finds that sufficient information about energy security concerns related to US LNG is currently available only for the short to medium-term,” the DOE said in the order.

The order cited “both an unprecedented build-out of carbon-free energy and increased policies to advance clean energy development and implementation by U.S. allies that are expected to slow global natural gas demand in some regions.”

While the DOE approved the exports for a five-year term, it noted that after two years New Fortress may seek an extension through 2050, based on the record at that time.

The New Fortress project off the coast of Altamira, Tamaulipas state, Mexico, can produce 1.4 million metric tons of LNG. It requires the DOE approval because it is supplied with US feedgas. New Fortress and the DOE did not immediately respond to requests for comment.

New Fortress on Aug. 9 shipped the first partial cargo from the Altamira facility to be delivered to an import terminal it operates on Mexico’s Pacific Coast. The tanker carrying the shipment, the Energos Princess, was en route to the facility in La Paz, Mexico, after transiting the Panama Canal.

New Fortress has said it expects the Altamira project to play a pivotal role supplying its operations in Latin America, with Puerto Rico described as a key downstream market for the company. The non-FTA approval will allow New Fortress to supply LNG from Altamira to gas infrastructure it operates in countries including Brazil and Jamaica.

The pause has left several affected US export projects in regulatory limbo. Contracting tied to US LNG supply slowed since the DOE permitting freeze, despite some notable recent deal announcements.

In announcing the pause in January, the White House said it would last until the DOE could update its analyses for determining whether the exports are in the public interest. Biden administration officials expect the policy review to be completed by early 2025.

In early July, a federal district judge in Louisiana granted a request from 16 Republican-led states to halt the permitting freeze. But several analysts, along with opponents of the pause, have described the court order as unlikely to jumpstart the agency’s approval process on its own. The DOE in early August appealed the ruling lifting the pause to the US Court of Appeals for the Fifth Circuit.

Platts, part of S&P Global Commodity Insights, last assessed the Gulf Coast Marker for US LNG FOB cargoes loading 30-60 days forward at $11.47/MMBtu on Sept. 2, down 27 cents from Aug. 30.
Source: Platts