Houston, 29 October (Argus) — The proposed Texas LNG export project near Brownsville, Texas, has received preliminary environmental approval from the US Federal Energy Regulatory Commission (FERC).

The mid-scale project expects to get FERC construction approval in the second half of 2019 and in late 2019 to fund construction of a first phase with capacity of 2mn t/yr, equivalent to 267mn cf/d (2.8bn m³/yr) of gas, at an estimated cost of $1bn-$1.2bn.

With a 45-month construction schedule for the first liquefaction train and associated facilities, the first phase likely would come on line in late 2023, Texas LNG chief operating officer Langtry Meyer told Argus today.

A second liquefaction train and associated facilities that would double the capacity to 4mn t/yr would be funded if Texas LNG can sign enough binding offtake deals to finance the unit. Texas LNG estimates phase 2 could come on line in mid-2025.

FERC will accept public comments until 17 December on the draft environmental impact statement it issued on 26 October, which said the project would not significantly harm the environment if specified mitigation measures are implemented. The positive preliminary review likely indicates FERC will issue final environmental approval. The agency plans to release a final environmental impact statement for the project on 15 March.

Texas LNG has said it has signed eight non-binding 20-year deals with potential customers for a combined volume of 7mn t/yr and plans to finalize enough of those deals to finance phase 1. Five of the potential buyers are in China, two in southeast Asia and one in western Europe.

The potential customers are seeking deals for either liquefaction capacity or delivered supplies. Texas LNG is seeking take-or-pay liquefaction fees of about $2.60/mmBtu.

Texas LNG expects that it would sign three contracts to finance the initial capacity. The estimated pipeline transportation cost is 25¢/mmBtu and an additional pass-through cost for electricity and fuel gas is estimated at 40¢/mmBtu. At an estimated Henry Hub cost of $3/mmBtu, the free-on-board LNG cost likely would be $6.25/mmBtu.

Because of its small size Texas LNG could acquire capacity on pipelines being developed by other entities rather than build its own pipeline. The $1.5bn, 2.6-Bcf/d Valley Crossing pipeline being built from the Agua Dulce hub to Mexico would be near the Texas LNG site.

At full build-out the project would include two 210,000m³ (4.3 Bcf) full-containment storage tanks and a dock capable of berthing ships with capacities in the range of 130,000m³-180,000m³.

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