By Curtis Williams
HOUSTON (Reuters) - Venture Global LNG has begun commercial operations at its Calcasieu Pass plant in Louisiana, ending a more than a three-year commissioning process at the plant, the company said on Tuesday.
Venture Global will now sell LNG to its long-term customers at lower prices rather than test cargoes to the highest bidders in the red-hot global market.
Just a startup five years ago, Venture Global is the country’s second-largest LNG producer, helping the U.S. lead the world in LNG exports.
Commissioning, or making sure a new plant’s systems are functioning as designed, takes months at many LNG facilities but the process dragged on at Calcasieu Pass due to several unforeseen circumstances.
These included the global pandemic, two hurricanes, and a force majeure event triggered by issues with the facility’s power island, the company based in Arlington, Virginia, said on Tuesday.
"Having completed a multi-year rectification and remediation of key components of the facility that underpin the redundancy features inherent in the project’s design, Calcasieu Pass is now ready to operate safely and reliably," Venture Global said in a statement.
Shell, BP (NYSE:BP), Orlen, Edison and Repsol (OTC:REPYY) filed arbitration claims saying Venture Global LNG deliberately failed to fulfill their supply contracts, dragging its feet to commission the plant so it could profit from higher spot prices. Venture Global argued that a faulty power system delayed normal operations.
The Gaslog (NYSE:GLOG) Wellington tanker is the first vessel to receive LNG from the Calcasieu Pass plant and was at its port loading 170,000 cubic meters of the supercooled gas, according to LSEG cargo flows.
It was not immediately clear which of Venture Global’s long-term customers would get the first shipment but Orlen has said it expects its first cargo on April 23, with Shell expected to receive its cargo at the end of the month, a person familiar with Shell’s timeline told Reuters.
Shell and BP declined to comment.
Venture Global’s stock price was down by 1%, at $8.38 in late-afternoon trading. It has declined by 66% since the company went public in January.
The move to commercial operations is unlikely to stop ongoing arbitration cases brought by the long-term customers against Venture Global as Shell, Orlen and Repsol have all said they will pursue their legal battle with Venture Global even after they start receiving cargoes.
Venture Global is also likely to keep profiting from strong global spot market prices, as its newer and larger Plaquemines facility ramps up production.