After 12 years, Energy Transfer (ET) is walking away from the Lake Charles LNG export project. The decision left many investors stunned, following on recent assurances from executives that the facility was close to sanctioning. It would be a fitting coda for a project that often seemed on the cusp of success yet always fell short of the finish line.
ET on Dec. 18 announced the decision to suspend development of Lake Charles. “Energy Transfer management has determined that its continued development of the project is not warranted … but remains open to discussions with third parties who may have an interest in developing the project,” the company said.
The announcement represents a stark pivot for ET. The company had set a target early in 2025 to reach a final investment decision (FID) on Lake Charles by year-end, and reported good progress toward that goal on its 3Q25 earnings call. Executives said ET was in advanced discussions with MidOcean Energy to finalize a preliminary funding deal for a 30% project equity stake, and was holding talks with other potential equity investors. ET also was in the process of converting non-binding purchase agreements with several offtakers into binding contracts for the 16.5 Mtpa project.
Energy Transfer wanted to sell down about 80% of the equity in Lake Charles. On the Nov. 5 earning call, co-CEO Marshall McCrea said diversifying the ownership structure was “the last big, most important box” before reaching FID.
ET said suspending Lake Charles will allow it to allocate capital to other natural gas projects with superior risk/return profiles, including several Permian-based transmission pipelines (e.g. Hugh Brinson, Desert Southwest) and expansions to feed data centers. That rationale makes perfect sense in a market now thick with concerns over a looming LNG supply glut, though it elides over a long history of unmet expectations.
For years, Lake Charles was on many analysts’ short lists of projects likely to advance as the US transformed into a global LNG player. When ET announced the decision in 2013 to add liquefaction at the Lake Charles import terminal, the project checked many of the boxes for success. Lake Charles already had much of the infrastructure required for an export project, including LNG storage tanks, jetties and tanker berths. ET also owns the giant Trunkline pipeline connecting to Lake Charles, a significant advantage over competitors who would need to build their own pipelines to access gas for LNG exports.
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Despite those advantages, the project never materialized following several setbacks. For one, ET needed a partner to bridge its lack of experience in LNG project design, and it struggled to find an appropriate match. Initially, ET partnered with UK-based BG Group (later acquired by Shell) to develop Lake Charles. But BG had other irons in the fire, signing on as the first anchor customer for Cheniere Energy’s (LNG) nearby Sabine Pass project. In 2019 ET reached an agreement to sell a 50% stake in Lake Charles to Shell, only to see the global company pull out of the project during the Covid-19 pandemic.
ET’s love for dealmaking also became an obstacle. The company has built its US midstream empire through a series of major acquisitions, most recently acquiring Crestwood Equity for $7.1B in 2023 and WTG Midstream for $3.25B in 2024. But the company has frequently carried high leverage to finance its expansions, a red flag for lenders considering the $10B-plus commitment required to fund a liquefaction project.
Lake Charles’ cancellation could signal the end of the latest LNG investment cycle. Six US projects reached FID in 2025, including Woodside Energy’s (WDS) Louisiana LNG, Venture Global’s (VG) CP2 LNG, and Phase 2 of Sempra Energy’s (SRE) Port Arthur LNG. Depending how you count, the US industry is riding the third or fourth wave of the global LNG boom. Lake Charles has been there from the outset, seemingly stranded in the surf as competitors capitalized on market momentum. – Andrew Ware Tickers: ET, LNG, SEL, SRE, WDS.
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