“ First, the new and evolving nature of the FLNGV industry is a factor outside of Delfin’s
control that required it to spend years “to refine its project repeatedly to reflect advances being
made in the FLNG industry, to comply with the ‘best technology’ requirements of the DWPA,
market demand and expectation, and the desire to improve efficiency and environmental
performance.” These actions -- including switching from the original plan of a conversion
FLNGV to a new-build FLNGV, and improving on existing FLNGV design to reduce emissions
– which are not present for land-based LNG export projects, have delayed the Project.
Second, the U.S. – China trade war was an extenuating circumstance outside of Delfin’s control which set back the development of its Project after an early concentrated focus on Chinese investment, construction, and off-take.
Third, the COVID-19 pandemic, an incontestable albeit generally applicable extenuating circumstance, had an adverse impact that caused further delays on Delfin’s project by retarding the necessary commercial contracting. Sierra Club and CBD fault Delfin for “fail[ing] to provide any explanation addressing how COVID-19 continues to hinder their construction and operational plans.” Delfin did not and would not suggest that COVID continues to do so: rather the point is that the pandemic further delayed the commercial success of the Project, which took off starting in 2022.
A fourth extenuating circumstance, the MARAD final licensing process – detailed in the Request at 22-27 and updated in the next section of this Answer – is manifestly outside of Delfin’s control. This regulatory process, not applicable to any of the other LNG export projects with non-FTA authorizations, has undoubtedly and significantly further delayed Delfin’s Project.
Finally, in yet another extenuating circumstance outside of Delfin’s control, there are only a few shipyards in the world capable of constructing Delfin’s FLNGVs and they all have limited slots allocated for ship construction and require binding commitments to proceed.
Combining the unique nature of Delfin’s FLNGV approach and the MARAD process, this extenuating factor of world ship-building capabilities has further delayed the Project. Delfin submits that the combination of all of these extenuating factors resulted in significant delays in the Project and Delfin’s inability to comply with its original export commencement deadline, clearly satisfying one criteria of the Commencement Extension Policy.
Turning to the other criteria of the Commencement Extension Policy, Sierra Club / CBD also argue that Delfin fails to satisfy the “physical construction” requirement. To the contrary, the bulk of Delfin’s Deepwater Port (which does not include the FLNGVs themselves) has already been constructed, as Delfin is efficiently re-purposing existing offshore pipelines to transport feedgas to its vessels.
In response, Sierra Club / CBD counter that “this construction was already completed prior to authorization of this project.”
They do not explain why pre-
existing facilities cannot satisfy the construction prong of the Commencement Extension Policy. Moreover, as stated in the Request, “Delfin has invested tens of millions of dollars purchasing, maintaining, and preparing this infrastructure for use as the foundation of its Deepwater Port.” Thus, Delfin has moved forward with the already constructed infrastructure in the development
of its Project.
Furthermore, as suggested above and emphasized in the Request, project construction for Delfin is very different than for land-based LNG export projects. A land-based project with a FERC authorization in hand – presumably the model contemplated in the Commencement Extension Policy, as the status of all non-FTA authorization holders other than Delfin – can readily commence construction by hiring available labor to begin physical construction of the authorized project facilities. In contrast, absent its final DWPA license, Delfin can neither construct its Deepwater Port (with the limited additional construction that will be added to the existing offshore pipelines) nor rationally commence construction of a multi-billion-dollar FLNGV in an overseas shipyard.”
