FERC greenlights projects that could unleash gas exports

By Zach Bright | 02/16/2024 06:54 AM EST

Federal energy regulators also invoked a policy Thursday that prioritizes tribal opposition to hydroelectric facilities.

Willie Phillips.

Willie Phillips, chair of the Federal Energy Regulatory Commission. Francis Chung/E&E News

The Federal Energy Regulatory Commission approved two natural gas projects Thursday that seek to boost gas exports as a rift widens between the fossil fuel industry and environmental critics.

FERC approved the Saguaro Connector pipeline — proposed by Oneok — that would run about 500 miles and transport 2.8 billion cubic feet of gas per day from Texas to the coast of Mexico.

Commissioner Allison Clements, a Democrat, issued a partial dissent that urged FERC to evaluate the greenhouse gas emissions of such projects. But she said the Saguaro project’s potential greenhouse gas emissions appeared to be insignificant and concurred with the overall decision.


The commission also approved a three-year extension to complete the Driftwood pipeline and liquefied natural gas terminal proposed by Tellurian in Louisiana. The project now needs to be completed by 2029.

Ninety-six miles of pipeline would deliver gas to an LNG facility being built on a 1,200-acre site south of Lake Charles, Louisiana, that aims to ship more than 27 million metric tons of LNG each year to customers.

FERC’s decisions coincided with a vote Thursday by the Republican-led House to give FERC the “exclusive authority” to approve LNG projects. The developments follow the Department of Energy’s LNG export approval freeze late last month, which pauses decisions on new export permits for gas headed to countries that lack a comprehensive free trade agreement with the United States.

FERC Chair Willie Phillips, also a Democrat, said in a press briefing after Thursday’s meeting that the commission has been working on LNG independently from DOE. He said “FERC is responsible for the actual siting of LNG infrastructure” and “the Department of Energy is responsible for the actual export and import of LNG.”

“We do not coordinate with the Department of Energy on those two determinations,” Phillips said.

Environmental groups lauded the Biden administration’s decision at DOE and said it will help limit potent climate-warming emissions that can come from natural gas. But it sparked deep concerns from LNG exporters, Republicans, and some congressional Democrats over fears of impacting international allies and raising the price of natural gas at home.

Tellurian spokesperson Joi Lecznar said in an email that the company is “grateful for FERC’s diligence” and thankful to commissioners for the extension of Driftwood’s construction timeline. Oneok spokesperson Annell Morrow said in an email that the company looks “forward to the opportunity to potentially move ahead” with the Saguaro project.

Driftwood has an existing DOE permit to export LNG to countries that without free trade agreements with the United States.

Environmental critics of natural gas railed against FERC’s gas decisions Thursday.

“It’s alarming that FERC would approve the Saguaro Connector Pipeline based on a narrow environmental assessment that ignores the vast majority of the project and its impacts,” Doug Hayes, senior attorney for Sierra Club’s Environmental Law Program, said in a statement.

Hayes called FERC “out of step with the reality of the climate crisis and communities impacted by these projects.”

Hydroelectric denials

Thursday’s gathering at the Howard University School of Law was the first FERC open meeting that Phillips, the first Black man to lead FERC, oversaw as the body’s official chair. Phillips until last week had served as FERC’s acting chair for over a year, before receiving the official title of chair from Biden.

“As the first Black chairman of FERC, as a graduate of this esteemed law school and as the great-grandson of slaves, it is not lost on me the significance of this moment,” Phillips said in remarks at the meeting.

Phillips’ responsibilities as the commission’s leader remain the same.

Also on Thursday, FERC commissioners announced a new policy that pledges to deny preliminary permits for new hydroelectric sites that tribal governments have opposed on the record during open meetings on the project.

On the basis of the policy, FERC denied four preliminary permits for hydroelectric facilities. All four projects were opposed by the Navajo Nation and would have been sited on Navajo land.

“The commission is committed to ensuring that tribal interests are carefully considered whenever a commission decision could adversely affect Indian tribes or Indian trust resources,” Phillips said at Thursday’s meeting.

The projects would have supplied hundreds of megawatts of hydroelectric power, according to the developers. FERC filings say the Navajo Nation opposed each project because backers did not seek consent from the Nation for the use of the land — and because the proposed projects could adversely impact water rights and rare and culturally important plant and wildlife species.

“We respect FERC’s decision and the Navajo Nation’s right to intervention in the preliminary permit process. As a company, Rye values the importance of ongoing consultation with Tribal Nations to address issues related to cultural, heritage and environmental issues of importance at project sites,” Rye Development — the company behind Navajo Nation Pumped Storage, the developer of one of the four projects — said in a statement.

Nature and People First, the developer behind the other three of the four projects, did not immediately respond to a request for comment.

Phillips said FERC encourages “project sponsors to work closely with tribal stakeholders to shape successful proposals for hydroelectric development.”

FERC also approved new extreme weather standards put forth by the North American Electric Reliability Corp., a key grid watchdog for the United States.

Clements concurred with the new standards but expressed concern over the period it will take to implement grid hardening changes.

“Three years after regulatory approval to implement changes to a Reliability Standard is an awfully long time,” Clements wrote in a concurring statement. “By the time these standards are implemented, recent experience has taught us that we are likely to face one or more dangerous winter storms.”

Missing items

One major project absent from FERC’s meeting Thursday was the Calcasieu Pass 2 project, or CP2.

Backers and opponents of the project — which seeks to export 20 million metric tons of gas overseas per year from Louisiana’s Cameron Parish — have been closely watching the project for months to see if CP2 will appear on FERC’s meeting agenda.

Venture Global LNG, the developer behind CP2, sent a letter to FERC on Thursday before its meeting urging the commission to make a decision on the project no later than its next monthly meeting in March.

“Any further delay in the authorization of the Project could undermine the confidence of global customers and financial markets in the Commission process,” Venture Global CEO Michael Sabel wrote in the letter.

The company did not respond to a request for comment Thursday.

Also missing from Thursday’s meeting agenda were two highly anticipated grid-related matters: the finalization of a transmission planning rule and a possible rehearing over FERC reforms aimed at addressing the interconnection backlog.

Phillips has called finalizing a transmission planning rule a high priority in the past and told reporters Thursday “it will be the greatest development regarding electric transmission rules in the country in over a generation.”

It’s unclear when exactly FERC plans to take up either, but it will likely have to be before Clements leaves her seat. POLITICO reported last week that Clements doesn’t intend to seek another term at the commission.

“What I’m focused on now is the fact that we do have a quorum at work, and I am moving forward aggressively, as I always say, so the urgency is the same,” Phillips told reporters Thursday.

Clements’ departure — which may come once her term on the commission expires at the end of June, although she can stay on the commission through the end of the year — could lead the commission to lose the necessary three-member minimum to maintain a quorum.

FERC currently has three commissioners and two vacant seats.

“We can live with April, but March would be really great. And these things take time,” said Tory Lauterbach, a partner who represents energy companies at Foley Hoag law firm, said Wednesday in an interview.