U.S. appeals court scraps Sempra's Port Arthur LNG emissions permit

(Reuters) - A U.S. court has removed an emissions permit for Sempra's Port Arthur LNG export terminal in Texas, but the company said construction of the facility will continue for now.

The approximately 13.5 MM-mtpa Port Arthur plant has approval to export LNG to both Free Trade Agreement (FTA) and non-FTA countries, including Europe, and is part of the U.S. LNG expansion to meet growing global demand for the superchilled gas.

In its decision, the U.S. Court of Appeals for the Fifth Circuit on Tuesday found that the Texas Commission on Environmental Quality (TCEQ) failed to impose the same emissions limits on the Port Arthur plant as on other projects, including the Rio Grande LNG project which is now under construction.

In a statement on Wednesday, Sempra said construction is continuing on the project under existing permits and it remains committed to working with the TCEQ.

"We will continue to actively evaluate options to mitigate any potential impacts of the decision on project schedule and cost", said Sempra.

"The Commission is not forever bound to the emissions limits that it set for Rio Grande LNG for all subsequent permits ... But in making those individualized determinations, the Commission must demonstrate that it is treating permit applications consistently" the court held.

The decision sends the Port Arthur LNG permit application back to the TCEQ for new evaluation.

"We are committed to meeting or exceeding the expectations of our regulators and other stakeholders and will continue to work with TCEQ and are confident that the agency will act quickly and appropriately to resolve this matter", said Sempra.

Sempra Infrastructure retains a 28% indirect stake in the plant's Phase 1, while oil and gas company ConocoPhillips owns 30%. Investment firm KKR owns a 20% stake in Sempra Infrastructure while Sempra Energy owns 70% and Abu Dhabi Investment Authority owns 10%.

John Beard, executive director of the Port Arthur Community Action Network, which brought the lawsuit challenging TCEQ, said of the ruling: “We’ve won by standing up for Port Arthur communities of color to breathe free from toxic pollution. When attacked, we fight back – and win!”

The court's decision is in keeping with increased pressure being placed on regulators and the Biden administration to limit the expansion of LNG projects in the US, said Alex Munton, director of Global Gas & LNG Research at Rapidan Energy Group.

"This creates additional risk, that are already high due to the difficulties the industry faces from building several large scale projects at the same time," Munton said.

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