Delfin LNG

Delfin LNG has plans to build a floating liquefied natural gas vessel in Cameron Parish, Louisiana. 

Delfin LNG LLC, a Houston-based energy company with plans to build a floating liquefaction vessel and export terminal in Cameron Parish is delaying its project by more than three years, the company told the Federal Energy Regulatory Commission in a recent filing. 

Delfin LNG told regulators that it expects to finish the project 3 years and 6 months later than anticipated and requested an extension. Initial plans were to begin delivering LNG by 2021 at the earliest. 

"Due to the detailed nature of the engineering design of the offshore facilities...and the complexity of developing the necessary commercial arrangements, progress on the project...has been slower than originally anticipated," the company said in a June 21 letter to FERC. 

The Delfin facilities could produce up to 13 million tons of LNG per year across four floating vessels about 50 miles off the Louisiana coast fueled by pipelines under the ocean floor. Delfin has been under contract with Golar LNG Ltd in a joint development agreement since June 2017. 

Delfin signed an agreement in 2015 with BTG Pactual Commodities to sell all of its capacity created at the new LNG export facility.

One LNG project being delayed doesn't likely signal much about the whole market, but there have been changes about its overall outlook. 

While economists were bullish about the potential of LNG exports several months ago, especially for the Gulf Coast, with hundreds of billions of dollars in projects planned between Texas and Louisiana - some are adjusting expectations. 

"The market (for LNG exports) is pretty long, the conventional wisdom is starting to change," said David Dismukes, executive director for the LSU Center for Energy Studies. "I think the catalyst right now is trade negotiations, there's uncertainty about how serious those are and it puts everybody on edge in the near-term." 

Some of the LNG exports are destined for emerging markets, such as China. But as of May, none of the LNG vessels destined for China back in March and April have arrived there, according to Refinitiv Eikon shipping data amid a trade war between the U.S. and China. Only two vessels made it to China's shores, one in January and the other in February - before the trade war began, Reuters reported. 

In Louisiana, the market has excess capacity expected to "burn off" by 2022, according to a 2019 outlook report conducted by the LSU Center for Energy Studies.

"That was before the consensus changed regarding the global economy and a protracted trade dispute both of those have led to a negative outlook," Dismukes said. 

The LSU Center for Energy Studies calculated that there are nearly $20 billion worth of capital expenditures for LNG export projects along the Gulf Coast in 2020. By 2021, total capital expenses for LNG export projects is expected to surpass $30 billion along the Gulf Coast but decline to about $15 billion in investment by 2022 as projects are wrapped up and go online. The LNG export projects are by far the most popular among businesses but there are also cracker and polymer in addition to methanol or ammonia plants in the pipeline as well.  

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