ARKANSAS, Nov 16 (Future Headlines)- A recent decision by the U.S. Court of Appeals for the Fifth Circuit has nullified the emissions permit for Sempra’s Port Arthur LNG export terminal in Texas, citing regulatory inconsistencies. While this legal development has prompted a reevaluation by the Texas Commission on Environmental Quality (TCEQ), Sempra asserts that construction will persist under existing permits. This incident adds to the challenges faced by the U.S. LNG industry, highlighting the broader debate around regulatory scrutiny and environmental impact amid a global demand surge for liquefied natural gas.

The Port Arthur LNG export terminal, owned by Sempra, has a capacity of approximately 13.5 million metric tons per annum (mtpa) and holds approval to export liquefied natural gas (LNG) to both Free Trade Agreement (FTA) and non-FTA countries, including Europe. The project aligns with the broader U.S. LNG expansion to meet rising global demand for LNG.

The U.S. Court of Appeals’ decision questioned the emissions limits set by the Texas Commission on Environmental Quality (TCEQ) for the Port Arthur plant, highlighting disparities compared to other projects like the Rio Grande LNG, currently under construction. The court found that the TCEQ failed to impose uniform emissions limits and sent the Port Arthur LNG permit application back to the regulatory body for reassessment.

Despite the court’s decision, Sempra has confirmed that construction at the Port Arthur LNG terminal will proceed under existing permits. The company remains committed to collaborating with the TCEQ and is actively exploring options to mitigate potential impacts on the project schedule and cost.

Sempra Infrastructure retains a 28% indirect stake in Phase 1 of the Port Arthur LNG terminal. ConocoPhillips owns 30%, KKR holds a 20% stake in Sempra Infrastructure, while Sempra Energy and Abu Dhabi Investment Authority own 70% and 10%, respectively.

The legal challenge against TCEQ was brought forth by the Port Arthur Community Action Network, emphasizing environmental justice concerns. The court’s decision was hailed as a victory for the local community, emphasizing the importance of safeguarding against toxic pollution.

The court’s decision aligns with a broader trend of increased pressure on regulators, particularly in the context of the Biden administration, to scrutinize and potentially limit the expansion of LNG projects in the U.S. The ruling reflects growing environmental considerations and demands for stringent regulatory oversight.

The decision introduces additional challenges for the U.S. LNG industry, which already faces complexities associated with the simultaneous construction of multiple large-scale projects. Regulatory uncertainties and environmental impact assessments contribute to the heightened risks surrounding LNG ventures.

Reporting by Emad Martin