US LNG a test case for the Trump administration’s ambitions

Project 2025, a coalition of conservative organisations assembled to provide policy ideas and personnel for the forthcoming Trump administration, has been planning for the new president to hit the ground running, implementing radical changes in his first 180 days in office. One early test case for his ability to make rapid progress on his agenda will be the US LNG industry.

President-elect Donald Trump aims to accelerate investment in LNG. He has pledged to “approve the export terminals on my very first day back”, ending the Biden administration’s pause on new approvals for exports of gas to countries that do not have a free trade agreement (FTA) with the US.

However, his ambitions are likely to run into legal and institutional obstacles that mean the industry’s growth may not be as rapid as he would like.

His election victory does take away one source of the uncertainty that had been hanging over the outlook for US LNG. Vice President Kamala Harris had not made clear what her long-term plan would have been if she became president, but her position would have been informed by studies of the economic and environmental impact of LNG exports that are currently being prepared by the Department of Energy.

Those studies, which are scheduled to appear before the end of the year, could have laid a foundation for new requirements on projects to show they were avoiding adverse impacts before they could be awarded non-FTA export approval.

Under the Trump administration, the aim will be to expedite projects, not to create new hurdles. The president and his nominee for energy secretary, Liberty Energy CEO Chris Wright, are strong supporters of increasing LNG exports, arguing that they will strengthen both the economy and the global influence of the US.

Congress can also be expected to be supportive of the LNG industry. The Republicans will have a majority in the Senate and – narrowly – in the House of Representatives, with support from some Democratic members who favour increased exports. It is being reported that legislation intended to accelerate oil and gas production growth will be one of the priorities for Senate Republicans next year.

The problems come from the US regulatory and legal system. Presidential authority is tempered by a series of checks and balances that restrict an administration’s ability to make changes quickly.

President-elect Trump’s ambition to start issuing new approvals for LNG exports on Day One of his second term will probably have to be moderated. Under the 1938 Natural Gas Act, the administration will approve exports unless it finds that the proposed sales “will not be consistent with the public interest”. Issuing approvals too hastily, without taking time to review the public interest considerations, could open it to legal challenges.

The environmental and economic studies soon to be published by the energy department could provide data and analysis to support those challenges,

Litigation has already been delaying US LNG projects on other grounds. The Federal Energy Regulatory Commission (FERC), which has responsibility for authorising the siting and construction of LNG plants, has been facing a series of legal issues.

The DC Circuit appeals court has twice ordered FERC to re-do its environmental analysis of two projects – NextDecade’s Rio Grande LNG and Glenfarne Energy Transition’s Texas LNG – on the grounds that it had not fully assessed their potential impacts as required by the National Environmental Policy Act. The first orders were issued in 2021 and the second in 2024.

As of November, construction for Phase 1 of the project, including its first three trains, was still underway. But Rio Grande LNG has filed a petition for a review of the court’s latest decision, warning that, if upheld, it would “not only bring a multi-billion-dollar project to a grinding halt but may send the project’s financing — and thus the entire enterprise — into a death spiral”.

While the court considers the case, it is already having a ripple effect across the industry. FERC announced last week that it had ordered a supplemental Environmental Impact Statement (EIS) for Venture Global’s Calcasieu Pass 2 project and its associated pipeline, which it had previously approved. It will not allow construction to proceed until that statement is completed.

The announcement, which followed a legal challenge from environmental and fishing groups, is a pre-emptive move that should help avoid the problems FERC has encountered over Rio Grande LNG. But the effect is to create another source of delay.

Calcasieu Pass 2 was already waiting for non-FTA export approval and now must also wait for the new supplemental EIS, scheduled to be concluded by 9 May next year. FERC’s decision could also delay Venture Global’s planned IPO for a while.

There is not a great deal that the Trump administration can do about these delays. The problem is not at FERC, which has generally been supportive of new LNG plants in granting the permits they need. It is that the DC Circuit court has been willing to push back and reject FERC’s decisions.

Although the new administration can certainly change the mood around the US LNG industry right from the start, making a material difference within 180 days will be hard.

Wood Mackenzie view

Mark Bononi, Wood Mackenzie’s principal analyst for global gas and LNG asset research, says that but for the Biden administration’s pause on approvals, some US LNG projects would probably have taken a final investment decision (FID) this year. As it is, there has not been an FID since July 2023.

Because of the pause and legal challenges, it now looks likely that the next block of US LNG FIDs will not come until late 2025 or early 2026.

The approvals from the administration for non-FTA exports and from FERC for siting and building the plants are only part of the package that a developer needs to put together to get to FID. Projects also need agreements with buyers, engineering, procurement and construction (EPC) contracts, and financing. It can be a difficult task to move all of those elements forward together, and all participants will want to be certain that permitting approvals are legally robust before signing off.

The project that could be quickest to FID is Woodside’s Louisiana LNG. Woodside acquired that project, formerly known as Driftwood LNG, when it bought Tellurian in October, and has all the approvals it needs. But given the scale of capex required, Woodside is keen to secure a partner to support funding and reduce risk before it greenlights the project.

Woodside announced this week that it had agreed a revised EPC contract for the plant with Bechtel. In this context, reaching FID first is important, as there is potential for EPC cost inflation at later projects. The industry is hyper-focused on cost of delivery at the moment, because of recent over-runs at Qatar Energy and ExxonMobil’s Golden Pass LNG, and Venture Global’s Plaquemines LNG.

Other projects, including Calcasieu Pass 2 Phase 1, Train 4 at Rio Grande LNG, Texas LNG, Cheniere Energy’s Corpus Christi Midscale expansion, and Port Arthur Phase 2, could take FID next year, but seem more likely to reach that point in 2026, Wood Mackenzie’s analysts believe.

Given that it generally takes three to four years from FID to first shipments of LNG, that means that gas that could have been coming on to world markets in 2027-2028 would instead be arriving in 2029-2030.

“The US has already come from zero LNG production at the start of 2016 to become the world’s largest exporter today. And the market fundamentals means that growth will continue,” Wood Mackenzie’s Bononi says. “The US is a source of large volumes of cheap gas that can be exported to meet growing needs around the world.”

But while the fundamentals of economics and geology may determine the long-term future for US LNG, law and policy decisions can have a significant impact on how fast it gets there.

In brief

Members of the OPEC+ group of oil-producing countries that have made voluntary cuts in their crude production, including Saudi Arabia, Russia, Iraq and the United Arab Emirates, have delayed planned increases in production. The countries now plan to begin unwinding one set of their cuts in April 2025, phasing them out completely by the end of September 2026. They had previously planned to start increasing production from January. Meanwhile, the OPEC+ group as a whole have agreed to extend their production levels at current rates until the end of 2026. The decisions were made at online meetings of the countries’ ministers on Thursday.

The announcement of the decision appeared to have little immediate impact on oil prices. Brent crude was trading at about US$71 a barrel on Friday morning, down from about US$73 a barrel a week ago.

ADNOC, the energy group owned by the government of Abu Dhabi, has announced the launch of XRG, a US$80 billion international investment company developing businesses in chemicals, gas and LNG, and low-carbon energies. Wood Mackenzie analysts described the move as “a bold step”, adding that a spin-off of this breadth and scale was without precedent. “A US$80 billion enterprise value would make XRG a bigger company, by a distance, than the likes of Eni, BASF or Cheniere,” they said.

Chevron has announced a US$2 billion reduction in capital spending for 2025 compared to 2024. Next year, it is planning capex of US$14.5 to US$15.5 billion for its consolidated subsidiaries, with US$1.7 to US$2 billion for its affiliated companies.

Other views

How ultra-deepwater is revitalising oil and gas exploration – Simon Flowers, Andrew Latham and Simran Bandal

Gridlock: Q&A on how the US power industry can cope with bumper demand – Chris Seiple

Study shows more US LNG is needed to curb Asia’s surging coal use

4 critical moments for North American oil and gas trading – Jim Mitchell, Randall Collum and Eric McGuire

Offshore drilling and completion inflation expected to slow amid cooling floater market – Devin Thomas

Can the Middle East and Africa become a global leader in renewable energy? – Sohan Gwalani

Aluminium: 3 things to know – Ami Shivkar

Cop29 gave us a Putin-friendly deal, and a glimpse of the dark future of climate talks – Fiona Harvey

Trump can win against China, in Ukraine – Simon Johnson and Oleg Ustenko

Saudi Arabia is losing its iron grip on global oil markets – Summer Said, David Uberti and Benoit Faucon

China’s ties with Saudi Arabia buoyed by green tech – Edward White and others

A new reckoning for nuclear energy – Matteo Wong

The end of oil – Ryan Kellogg

Quote of the week

“We want the bureaucrats to be traumatically affected… When they wake up in the morning, we want them to not want to go to work because they are increasingly viewed as the villains. We want their funding to be shut down so that the EPA can't do all of the rules against our energy industry because they have no bandwidth financially to do so. We want to put them in trauma.”

Russell Vought, President-elect Trump’s pick to serve – for a second time – as director of the Office of Management and Budget in his administration, gave a speech in 2023 about his ideas for accelerating the progress of deregulation.

Chart of the week

When Democrats lost control of the presidency and the Senate in the elections last month, one explanation offered by some pundits was that President Joe Biden’s strategy to rebuild US manufacturing had been a failure. The latest US Solar Market Insight from Wood Mackenzie and the SEIA suggests that in one sector, at least, that strategy is starting to pay off. The US added a record-breaking 9.3 gigawatts (GW) of new solar module manufacturing capacity in the third quarter of 2024. US factories now have nearly enough production capacity to meet the nation’s entire demand for solar modules.

As the chart shows, that is a particularly impressive feat given how sharply demand has increased over the past couple of years. Wood Mackenzie is now projecting that US solar installations will level off out to the end of the decade, but will remain at these relatively high levels. Take a look at the full Insight report for a lot more detail on the US solar market.

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