Venture Global LNG has begun commercial operations at its Calcasieu Pass plant in Louisiana, more than three years after it first produced liquefied natural gas, the company said on Tuesday.
The move to commercial operations means the Arlington-headquartered company has brought an end to the extended commission of the plant which resulted in its customers taking legal action to try and force it to provide them with their contracted cargoes.
Commissioning, or making sure a new plant’s systems are functioning as designed, takes months at many LNG facilities. It took three years at Calcasieu Pass, allowing Venture Global LNG to sell large test cargoes to high bidders on the red-hot global market instead of to customers whose contracts called for them to pay less.
Shell, BP, Orlen, Edison and Repsol 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.
Just a startup five years ago, Venture Global is now the second largest LNG producer in the U.S. and helped the country emerge as the world’s largest LNG exporter.
Today’s 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 continue 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.
(Reporting by Curtis Williams in Houston; Editing by Shilpi Majumdar and Emelia Sithole-Matarise)