Rising Costs and Competition Threaten U.S. Boom in LNG Projects
Energy attorney Kyle Wamstad was quoted in a Financial Times article discussing the natural gas projects on the Gulf of Mexico facing delays as a result of rising costs and competition. The U.S. is experiencing a natural gas boom with the war in Ukraine, which has created a huge demand for American fuel exports. However, developers of multibillion-dollar liquified natural gas (LNG) projects on the U.S. coast are facing delays because of intense competition and rising costs. Mr. Wamstad pointed out that more established players have been successful in capitalizing on the thirst for U.S. molecules and locking in contracts that have allowed them to plow ahead with big new projects.
"You have three leaders in the clubhouse, if you will, that have made the most of the moment and others would like to grab some of that success," he said. "It's one of those things where success follows success... if you don’t get that first one in the door, it can linger."
Mr. Wamstad also commented on the difficulty of securing an offtake agreement to underwrite financing of these big projects.
"They used to be viewed as what was necessary and would trigger everything else that comes afterwards — whereas now that’s not enough," he said.