Plans for an $8.5 billion facility to liquefy and export natural gas were unveiled Wednesday for a site along the west bank of Plaquemines Parish, the latest sign that Louisiana's outsized industrial renaissance isn't being confined solely to the still-booming Lake Charles and Baton Rouge regions.
The project, which is being proposed by Washington, D.C.-based Venture Global LNG, is one of two dozen LNG export facilities planned in the lower 48 states.
The 632-acre site includes 7,000 feet of river frontage and is owned by the Plaquemines Port Harbor and Terminal District.
The facility is slated to be built in two phases, with a final export capacity of 22 million tons per year, the company said.
The project, which has been in the works since late 2014, is Venture Global's second LNG export facility proposed in Louisiana, joining a $4.5 billion Cameron Parish project that is under development.
If it's built, the Plaquemines facility will create 250 jobs that pay an average annual salary of $70,000, plus benefits, the company said. State officials estimate the project will generate another 728 new indirect jobs and support 2,200 construction workers.
As part of the deal, Venture Global is expected to use several tax breaks offered by the state. That includes the Quality Jobs program, worth an estimated $35.6 million over a decade, and the Industrial Tax Exemption program, which offers a decade's worth of abatement on local property taxes for new manufacturing facilities. The first year of tax relief is expected to be about $83.6 million, state records show.
Despite the buzz over the announcement, some industry experts contend that the success of proposed LNG export terminals being built hinges on whether energy companies can lock up long-term contracts to sell the fuel at a fixed price.
"There's two types of projects in all of these: the ones that have contracts and the ones that don't," said David Dismukes, director of the LSU Center for Energy Studies. "Other than that, I don't see any really big differentiating factor in all of this."
Arranging a long-term deal can be more challenging in oil's recent up-and-down cycle because LNG prices in countries like Asia — a prime target for U.S. exports — are tied to crude's fortunes.
"It's still a lucrative business to be in, but there's a lot of competition, a lot of people running around, and it's hard to sign long-term deals," Dismukes said. "The market, over the last two to three decades, has moved away from doing long-term deals, and now they're starting to embrace them."
It's unclear whether Venture Global has any long-term contracts in place for potential Plaquemines LNG exports. A spokesman did not respond to a request for comment Wednesday.
The Plaquemines facility is the latest reminder that the U.S. is on track to become the world's third-largest exporter of liquefied natural gas by 2020.
In February, Cheniere Energy’s facility on the Sabine River in Cameron Parish became the first in the continental U.S. to ship LNG overseas.
The company first sought federal approval to convert its LNG import terminal to exports in 2010. Many experts predicted the move would prove to be the first sign of a new era for the U.S. to play a bigger role in the global natural gas market.
When work is finished on Cheniere’s fifth LNG unit by 2019, the $20 billion facility is expected to represent the largest capital investment in Louisiana history.
Throughout the continental U.S., seven LNG export terminals have been approved and are in various stages of construction, according to the Federal Energy Regulatory Commission. Counting ongoing work by Cheniere at Sabine Pass, that includes three in Louisiana.
Rounding out the list, three more LNG export facilities, including two in Lake Charles, have been approved but construction had not started as of last week.
And another five LNG export facilities have been proposed in Louisiana and are awaiting federal approval. That includes Venture Global's two projects.
The Gulf Coast has been a hotbed of activity for proposed facilities largely due to the region's existing pipeline network.
Venture co-chief executive officers Bob Pender and Mike Sabel and Gov. John Bel Edwards announced the project Wednesday.
Construction of Plaquemines LNG is expected to begin in 2018, once the project is authorized by the Federal Energy Regulatory Commission. Full operations are expected to begin in 2022.
Venture Global's Calcasieu Pass LNG project is expected to begin production by late 2019, with full operations starting in 2020. That facility will produce 1.4 billion cubic feet per day of liquefied natural gas for export, with an annual capacity of 11 million tons.
Some industry experts point to a few signs of an improving climate that bolster the timing of Wednesday's announcement.
Crude oil prices recently edged toward the $55 per barrel range, they note. And President-elect Donald Trump has promised a friendlier climate for businesses, with plans to speed up permitting and rolling back regulations.
For some companies, that could drive new infrastructure spending now in order to begin getting projects off the ground.
In August, the Venture Global announced that it had raised more than $280 million inequity investment for its proposed export facilities in Louisiana.
Retired LSU economist Loren Scott, who has tracked the region’s economic outlook for decades, said it makes sense that the company would wait a few years to get started to get past what's viewed as a global gas surplus.
"It makes a lot of sense because their product will start coming on the market just at the time that we switch from a surplus to a deficit," he said. "There's going to be a market for their product out there."