LNG Infrastructure Projects Routinely Run Billions over Budget and Years Behind Schedule
New report finds that North American LNG terminals have average cost overruns approaching 60 percent, raising questions about industry practices, taxpayer costs
WASHINGTON — Liquefied natural gas (LNG) infrastructure projects across North America routinely exceed original project estimates and exceed scheduled construction time, calling into question the financial assumptions behind the rapid expansion of the U.S. LNG exports and exposing taxpayers to potentially massive liabilities, according to a new report released today by Public Citizen.
“Fossil fuel companies and developers consistently promise investors and policymakers that LNG projects will be delivered on time and on budget,” said Lois Parshley, research director with Public Citizen’s Climate Program. “But those promises simply don’t square with the data. When costs explode, taxpayers often absorb the risk. These projects still frequently receive tax breaks, and are disproportionately concentrated in environmental justice communities. The people living closest to these projects end up paying both through the foregone tax revenue, and again through the deep impacts on their health.
The report draws on public filings, company disclosures, regulatory records, and industry reports, examining more than twenty LNG export terminals operating or under construction in the United States, Canada, and Mexico. The completed projects exceeded their original cost estimates by an average of 59 percent, while projects still under construction have already seen average overruns of 38 percent.
The report highlights the proposed Alaska LNG project as a case study in the dangers of relying on optimistic assumptions. Developers currently estimate costs between $44.5 billion and $54.5 billion, but applying historical LNG cost-overrun averages suggests the project could ultimately cost more than $100 billion.
“Taxpayers are being asked to underwrite some of the largest fossil-fuel infrastructure bets in history,” said Parshley. “Before governments commit billions in subsidies, loan guarantees, and tax breaks, policymakers should reckon with the industry’s long record of underestimating costs.”
Among the report’s findings:
- Projects currently under construction have already experienced cost increases ranging from 15% to 72%
- Delays in project completion between one to three years are common across the industry.
- Government subsidies, tax abatements, and public financing mechanisms transfer these financial risks from developers to taxpayers.
The report also notes that global LNG markets are expected to face oversupply before many approved U.S. projects begin operating, increasing the possibility that facilities could become stranded assets before investors recover their costs.
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