LNG

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, continues to be the focus of takeover speculation while losses have just doubled in the first quarter of 2024 and revenues halved from natural gas production assets in the Haynesville Shale basin.

Tellurian earlier in 2024 hired the investment bank Lazards to explore a sale of its Haynesville gas production business in East Texas and Louisiana as part of efforts to raise new capital to continue the Driftwood project with full permits to produce 27.6 million tonnes per annum.

Tellurian then added that it would consider offers for the whole of Driftwood LNG after unsuccessfully pursuing long-term sales and purchase agreements to finance the development.

The Driftwood project as it currently stands involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of Trains.

According to the regulatory permits and building schedules the Phase One development would include the first two of these blocks for 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.

Tellurian’s natural gas assets include 31,149 net acres, interests in 159 producing wells and over 400 drilling locations in the Haynesville Shale.

Latest earnings

Tellurian’s latest balance sheet showed that income from natural gas sales halved in the first quarter of 2024 to $25.47 million from $50.93M in the same three months of 2023.

Net losses also surged to $42.02M from $27.49M of losses in the same quarter of 2023.

Executive Chairman Martin Houston made no comment on the takeover speculation nor on gas assets sales and said in the earnings statement that Tellurian continued making progress on Driftwood LNG phase one construction with contractor Bechtel Energy of the US.

“Over the past few months, our senior team has sharpened its focus on stability, financial discipline and execution and we are laser-focused on bringing Driftwood to final investment decision,” Houston explained.

“To this end, we continue to take important steps to improve our balance sheet and liquidity position, and we continue to benefit from our strong regulatory standing,” he added.

“In addition, we have better aligned our commercial offerings to meet the needs of potential customers and we are highly encouraged by our ongoing commercial discussions,” Houston stated.

Permit extension

The Chairman noted that Driftwood LNG received an extension through 2029 to both the order authorizing construction from the US Federal Energy Regulatory Commission and its Section 404 permit from the US Army Corps of Engineers.

As of the end of March, Tellurian said it had $1.3 billion in total assets, including around $51.8M of cash and cash equivalents.

Cheniere Energy, the owner of the Sabine Pass liquefaction and export plant in Louisiana and the Corpus Christi facility in Texas, has signed another long-term LNG sale and purchase agreement with Equinor, the Norwegian LNG and pipeline gas supplier to Europe.

Under the latest SPA, Equinor has agreed to purchase about 1.75 million tonnes per annum of LNG from the Cheniere Marketing unit of the Houston, Texas-based company on a free-on-board (FOB) basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee.

Delivery of half of the volume associated with the SPA will commence in 2027 and delivery of the remaining half, which is subject to a positive Final Investment Decision with respect to the first Train of the Sabine Pass Liquefaction Expansion Project, will start at the end of the 2020s. 

The Sabine Pass deal follows an SPA signed with Equinor in June 2022, also for 1.75 MTPA of volumes, from the Corpus Christi LNG expansion.

Half of the Corpus Christi volumes, or about 900,000 tonnes, were subject to Cheniere making a positive FID to construct additional liquefaction capacity at the Corpus Christi facility beyond the seven-Train Corpus Christi Stage III Project

The terms of the Sabine SPA is 15 years from the commencement of delivery of the full 1.75 MTPA of LNG volumes to Equinor, which also operates its own LNG export plant in northern Norway at Hammerfest, supplying European import terminals.

The Equinor Hammerfest plant in Norway had initially been built and started in 2007 to send LNG cargoes to the US before the shale-gas boom began the liquefaction and export build-out in the Lower 48 states of the US.

Project

The Sabine expansion will comprise three large-scale liquefaction Trains, each with capacity of 6.5 MTPA, a boil-off-gas re-liquefaction unit with output of 750,000 tonnes a year and two 220,000 cubic metres capacity storage tanks.

Cheniere has engaged US engineering company Bechtel Energy to complete a front-end engineering and design study of the Sabine Pass project.

“We are pleased to expand our relationship with Equinor, one of Europe’s leading energy companies, building upon the SPA we executed last year,” said Jack Fusco, Cheniere’s President and Chief Executive.

“This SPA underscores Cheniere’s and Equinor’s shared vision of an energy future built upon reliable, flexible, and cleaner energy solutions,” Fusco stated.

“It will provide further commercial support to the SPL Expansion Project, which we continue to rigorously develop in order to meet the world’s growing demand for secure, long-term energy supplies and the economic and environmental benefits of Cheniere’s LNG,” the CEO added. 

Helge Haugane, Equinor’s senior vice president for Gas & Power, said he was very pleased to sign the long-term agreement with Cheniere.

“Europe will need natural gas to ensure flexible energy on demand to support the build-out of more intermittent renewables and LNG will play an important role. In other markets, for example in Asia, demand for LNG is expected to grow as a solution to energy security,” stated Haugane.

FERC process

The Cheniere group in May 2023 entered the pre-filing review process with respect to the Sabine expansion with the Federal Energy Regulatory Commission under the National Environmental Policy Act.

Cheniere has also recently signed a long-term SPA with the South Korean utility company, Korea Southern Power (KOSPO) for the Sabine expansion.

KOSPO agreed to purchase 400,000 tonnes per annum of cargoes, which will be delivered ex-ship whereby Cheniere will supply the transportation.

Cheniere said it would begin delivering a smaller amount to the Koreans in 2024, though the full SPA runs from 2027 through to 2046.

The Houston company is additionally progressing with the expansion at the Corpus Christi plant where three liquefaction Trains currently produce 15 MTPA.

The Stage 3 expansion is adjacent to the existing plant and consists of seven mid-scale Trains with an total production capacity of over 10 MTPA.

It is also proceeding with an additional Corpus Christi expansion known as the Corpus Christi mid-scale Trains 8 and 9 project.

Chart Industries Inc., the liquefied natural gas equipment-maker and industrial gas technology company, posted first-quarter results helped by LNG orders and the signals of strong future results from the acquisition of UK group Howden.

Sempra Infrastructure, the liquefaction and LNG export affiliate of California utility Sempra, has signed an agreement with French and Japanese partners to develop the expansion project of the Cameron LNG export plant in Hackberry in Louisiana.