IEEFA Opposes CP2 LNG Terminal as Superfluous Amid Global Supply Glut Risk

IEEFA has submitted comments to the US Federal Energy Regulatory Commission opposing the CP2 LNG and CP Express projects, arguing they would worsen an impending global LNG market oversupply and do not serve the public interest. The institute warns that FERC's supporting studies are badly out of date and fail to account for significant shifts in domestic gas price dynamics.

The proposed CP2 LNG project involves an export terminal with 20 million tonnes per annum of liquefaction capacity and 91 miles of natural gas pipeline in Cameron Parish, Louisiana. IEEFA's comments highlight that LNG export projects already under construction will add roughly 78 MTPA of liquefaction capacity to the US by 2028, nearly doubling existing export capacity. Additional new projects in Qatar, Russia, Canada, Australia, Mexico, Mauritania and Mozambique could contribute a further 120 MTPA of LNG exports globally over the same period, raising the risk of a severe market glut.

The International Energy Agency has itself acknowledged that the surge in LNG capacity risks creating a supply glut, as global gas demand growth has slowed considerably. IEEFA argues that the key studies FERC has relied upon to determine that LNG exports are in the public interest are outdated and fail to capture the price impacts of surging LNG exports, which drove US domestic gas prices to their highest level in decades in 2022. The studies also do not account for increased price volatility, COVID-19 demand effects, higher inflation and recessionary demand destruction.

IEEFA concludes that FERC's authorisation of CP2 and CP Express would not be in the public interest, characterising the project as superfluous given the scale of LNG capacity already committed globally. The comments are part of the review process for FERC Docket Nos. CP22-21-000 and CP22-22-000. The submission reflects a broader pattern of IEEFA engagement with US regulators on LNG infrastructure risk — assessments that are also relevant to LNG-importing countries like India, which must evaluate long-term supply contract viability amid potential price and market shifts.

Key figure — 78 MTPA — additional US LNG liquefaction capacity already under construction, set to come online by 2028