LNG

Tellurian Inc. has signed an accord to sell the site of the proposed Driftwood liquefied natural gas plant in Lake Charles in Louisiana to a New York-based institutional investor.

Tellurian said in a stock exchange filing that the sale and lease back deal has been the subject of a binding letter of intent for the 800 acres of land owned by Tellurian’s subsidiary, Driftwood LNG LLC.

The agreement with the unnamed investment firm with $120 billion in assets under management will see Tellurian receiving $1 billion for the land and a lease.

“It will consist of the sale by Driftwood LNG and purchase by a special purpose entity to be formed by the investor of Driftwood LNG’s interests in the property for $1.0Bln pursuant to a purchase and sale agreement,” said Tellurian.

On the closing of the transaction a 40-year lease of the property from the purchaser to Driftwood LNG will be signed in the form of a master lease.

The terms of the master lease will include, among other requirements, a capitalization rate of 8.75 percent and annual rent escalators of 3.00 percent as well as a requirement that Driftwood LNG posts a letter of credit equal to 12 months of rent.

Guarantors

There is also a requirement that the equity investors in Driftwood LNG become joint and contingent guarantors of the master lease.

“The master lease contingent guarantors are also required to hold an investment grade rating of BBB or higher or attain an equivalent shadow credit rating, or be otherwise acceptable to the purchaser,” noted Tellurian in its filing.

The Houston-based company is quoted on the American list of the New York Stock Exchange.

The accord contemplates that the parties will use “commercially reasonable efforts” to finalize the purchase agreement and master lease on or before July 14, 2023.

“The LOI will terminate on July 14, 2023 if Driftwood LNG fails to identify the contingent guarantors by such date and will terminate on July 31,” it said.

The satisfaction of the closing conditions in the purchase agreement also including Driftwood LNG securing financing commitments for Phase One of the LNG export project.

Leading US LNG engineering company Bechtel Energy has already been given limited notice to proceed with construction of Phase One of the Driftwood liquefaction plant.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of four Trains.

The Phase One development would include the first two of these blocks with 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.

US LNG exporter Venture Global has received permission from regulators to commission liquefaction blocks five and six at the Calcasieu Pass LNG export plant in Louisiana.

The Calcasieu Pass plant in Cameron Parish in Louisiana, south of the city of Lake Charles, shipped its first cargo at the start of March 2022.

Calcasieu Pass comprises 18 small-scale modular liquefaction Trains each with 0.626 million tonnes per annum of capacity and configured in 9 blocks for total nameplate output of 11.26 MTPA.

Using modular Trains that were built in Italy and shipped to Calcasieu Pass to be installed, Venture Global was able to cut construction costs and to bring forward the start-up schedules.

After the latest FERC authorisation for blocks five and six, the project will be two-thirds complete.

Success

“Given the success of (previous) commissioning operations, Calcasieu Pass respectfully requests authorization to place Blocks 5-6 in service,” said the request from Venture Global which was granted by FERC.

In total, Venture Global has about 70 MTPA of LNG export capacity under construction or development in Louisiana.

The Arlington, Virginia-based company’s three other projects are each expected to have nameplate capacity of around 20 MTPA.

Two of the other plants are called Plaquemines and Delta LNG and are on the banks of the Mississippi River south of New Orleans.

The fourth project, called CP2 LNG, will be built on a 540-acre site in Cameron Parish, adjacent to the existing Calcasieu Pass facility.

Venture Global has host of long-term agreements with customers for its various projects.

The list includes Shell, BP, Chevron, ExxonMobil, Italy's Edison, Portugal's Galp, Spain's Repsol, Polish Oil and Gas Company, Chinese major Sinopec, German utility EnBW and Malysia's Petronas.

Chart Industries, the US LNG equipment-maker and industrial gases technology company, said it was given full notice to proceed on its processing and equipment activities for Cheniere Energy’s Corpus Christi Stage Three LNG expansion project.

The Corpus Christi expansion will consist of up to seven mid-scale Trains, each with an expected liquefaction capacity of about 1.49 MTPA with a total production capacity of more than 10 MTPA.

The existing Corpus Christy facility has nameplate capacity of 13.5 MTPA from three Trains.

In conjunction with the FNTP, Chart said it had booked an order valued at over $260 million, which is in addition to the approximately $50M already in backlog as of the end of March for this project.

The orders were received from Bechtel Inc, the lead engineer in the expansion of Cheniere’s Texas plant.

Chart said it would begin recognizing revenue on the Corpus Christi project in 2022 with a multi-year staggered delivery schedule for its equipment, including its IPMSR® processing technology.

Orders build

Chart's recent equipment orders from Gulf Coast LNG export projects have also included provisions for Venture Global’s Plaquemines Phase 1 project for 10 MTPA of LNG at a Louisiana site on the Mississippi River south of New Orleans.

Additionally Chart said the Driftwood project in Louisiana being developed by Houston-based Tellurian Inc. is anticipated to include over $350M of Chart content.

Chart itself continues to grow its technology and services offerings and completed the acquisition at the start of June 2022 of Fronti Fabrications Inc., a specialist in engineering, machining and welding for the cryogenic and gas sectors.

Chart, based in Atlanta, Georgia believes the acquisition will benefit the company’s growing order base in the “Big LNG” and small-scale LNG sectors in the US and elsewhere.

With over 20 years of experience in liquefaction, heat exchangers and cold boxes, Fronti adds a known team to expand Chart’s cold-box manufacturing capacity and capability.

Chart noted that Fronti, which was purchased for $20M, also supplies newbuild pressure vessels and performs repairs with certification to the code of the American Society of Mechanical Engineers. 

One of the most respected meteorologist groups in the United States has forecast a more active US Gulf Coast hurricane season in 2022 that would lead to the temporary shutting of oil and gas production and LNG export facilities.

Woodside Petroleum, the Australian oil and gas company and LNG operator, has received final approvals for the pipeline to shore and for the field development plan Scarborough Gas project to underpin the Pluto LNG expansion in Western Australia.

French major TotalEnergies and North American US LNG plant owner and developer Sempra are expanding their strategic alliance with the signing of an accord covering the Vista Pacífico LNG export project in Mexico.

The Vista Pacífico LNG project is planned to be a mid-scale facility on Mexico’s West Coast with cargoes pointing at the high-demand markets such as Asia and South America.

California-based Sempra, the main owner and operator of the Cameron LNG plant in Louisiana, has already signed a non-binding agreement with Mexico’s state-owned utility company, the Comisión Federal de Electricidad, for the potential joint development of this project

Sempra said the accord signed with TotalEnergies was in the form of a memorandum of understanding (MoU) for the French oil and gas company to offtake one-third of future LNG production at Vista Pacífico LNG and to become a shareholder in the project with a minimum stake of 16.6 percent.

Sempra’s development of Vista Pacífico LNG is in addition to its Energía Costa Azul LNG export project, which is transforming an existing import terminal into an export plant.

TotalEnergies and Sempra are already partners in the Cameron LNG plant in Hackberry, Louisiana and in the Cosa Azul project.

Global player

TotalEnergies is already one of the world’s leading LNG export developers and traders with interests in liquefaction plants in Angola, Australia, Egypt, the United Arab Emirates, Nigeria, Norway, Oman, Russia and Qatar. It is also developing the Mozambique LNG project.

Mexico’s other LNG export plans also include the US Mexico-Pacific Ltd (MPL) LNG project.

The MPL company is based in Houston and has joined with LNG engineering firm Bechtel Inc. on developing a liquefaction and export facility on the Pacific Coast using US natural gas as the feed gas and processing technology from ConocoPhillips.

The MPL plant is proposed for near Puerto Libertad in the northwest state of Sonora and would have just over 14 million tonnes per annum of output.

Sempra’s LNG interests have been transferred into the Sempra Infrastructure entity under a corporate restructuring and one of its shareholders is the US investment fund Kohlberg Kravis Roberts, now known as just KKR.

A second MoU with Sempra and TotalEnergies provides for the co-development of several renewable energy projects in North America.

This could see Sempra’s acquisition of 30 percent of the TotalEnergies equity interest in a wind project off the coast of California that is preparing for an upcoming auction.

“We are pleased to further strengthen our partnership with Sempra in North America in LNG and to extend it to renewables,” said Patrick Pouyanné, Chairman and Chief Executive of TotalEnergie.

“Over the past years, TotalEnergies has become the leading exporter of US LNG and has built up a pipeline of 4 gigawatts of solar projects and 3 GW of offshore wind projects currently under development in the US,” added Pouyanné.

Bechtel Inc., the dominant US liquefaction plant and energy engineering company that once constructed three export facilities in Queensland in Australia alongside each other, said it would join with researchers from two American universities to develop technologies for living and working on the Moon.

The research awards were announced by the National Aeronautics and Space Administration (Nasa) after it selected proposals from the Colorado School of Mines and Missouri Science & Technology.

“Bechtel started as a frontier company more than 120 years ago,” said Mike Costas, general manager of Bechtel’s Defense and Space business line.

“Now, we’re thinking about the next frontier. What will it take to build permanent infrastructure on the Moon? What an exciting time,” stated Costas.

Most of the current LNG export plants being constructed or proposed along the US Gulf Coast are in the hands of Bechtel.

One of the company’s most notable feats was building the three Australian LNG export plants Queensland Curtis LNG, Gladstone LNG and Australia-Pacific LNG and bringing the six processing Trains onstream between 2014 and 2016.

Bechtel said its selected projects will receive up to $2 million over two years to develop their technologies and the company founded in San Francisco and with main offices in Houston, Texas, will serve as an industrial partner to both teams.

Autonomous construction

“Autonomous Construction - Humans living on the Moon will need structures like habitats and landing pads, which can be made more efficiently if they're constructed autonomously by robots,” explained Bechtel.

“Colorado School of Mines, led by principal investigator Christopher Dreyer, will develop tools and methods for autonomous landing pad construction on the Moon's surface,” it added.

The other award is for “Extracting Resources - Supplies for lunar astronauts” and could be created from what's already on the lunar surface, a process called in-situ resource utilization.

“Missouri S&T, led by principal investigator Leslie Gertsch, will use magnetic and electrostatic technologies to more efficiently separate calcium-containing and aluminum-containing minerals from the Moon's soil, called regolith, to extract materials suitable for construction on the lunar surface,” said Bechtel.

Bechtel said that this was the perfect opportunity to collaborate with the engineering schools.

“Tackling the challenge of building on the Moon will require the know-how of what’s already been done in Earth’s harshest environments, combined with new thinking and approaches,” said Costas.

The US Department of Energy has issued two long-term orders authorizing more liquefied natural gas shipments from the existing liquefaction and export facilities owned by Cheniere Energy at Sabine Pass in Louisiana and Corpus Christi in Texas.

The two DoE orders allow Sabine Pass and Corpus Christi more feed gas to liquefy and export. Sabine Pass started operations in February 2016.

The Cheniere plants can now have the additional flexibility to export the equivalent of 0.72 billion cubic feet per day of natural gas as LNG to any country with which the US does not have a free trade agreement, including all of Europe.

When US LNG export plants were being developed for the first time in the lower 48 states the DoE was tasked with making sure there were export limits that protected US domestic natural gas needs as well.

“While US exporters are already exporting at or near their maximum capacity, with the issuances, every operating US LNG export project has approval from DoE to export its full capacity to any country where not prohibited by US law or policy,” said the DoE.

Top exporter

The statement noted that the US was now the top global exporter of LNG and exports are set to grow an additional 20 percent beyond current levels by the end of 2022 as additional capacity comes on stream.

In January 2022, the US supplied more than half of the LNG import needs of Europe.

“With the expected rise in LNG exports, the DoE is particularly focused on driving down methane emissions in the oil and gas sector both domestically and abroad,” added the statement.

It declared that US LNG remained an important component in global energy security.

“The DoE remains committed to finding ways to help our allies and trading partners with the energy supplies they need,” said the statement.

Cheniere announced in early February 2022 the completion of Train 6 at Sabine Pass in Cameron Parish in Louisiana, formally taking nameplate capacity to 27 million tonnes per annum.

The Corpus Christy facility has nameplate capacity of 13.5 MTPA from three Trains.

Cheniere recently initiated a lump sum, turnkey, engineering, procurement and construction contract with US LNG and energy engineering firm Bechtel Inc. for the Corpus Christi LNG plant expansion.

Bechtel has started early engineering, procurement and other site work for the Corpus Christi expansion, known by Cheniere as the Stage III Project.

The expansion will add up to seven mid-scale Trains, each with an expected liquefaction capacity of around 1.49 MTPA with a total production capacity of more than 10 MTPA.

Tellurian Inc., the developer of the Driftwood LNG plant in Louisiana, said it ended 2021 with more than $300 million in liquidity and over $360M in standardized measure of discounted future net cash flows of proved natural gas reserves.

Tellurian said in its earnings report that it continued advancing the Driftwood LNG project in 2021 with several listed accomplishments, including sales and purchase agreements (SPAs) totaling nine million tonnes per annum of LNG output.

The Driftwood plant in Calcasieu Parish in Louisiana, near Lake Charles, has permits to produce 27.6 MTPA of LNG and the 10-year offtake agreements are with Shell North America and global commodities firms Vitol and Gunvor.

Tellurian said it ended its 2021 fiscal year with a strong balance sheet consisting of around $621.8M in total assets.

The company generated about $71.3M in revenues from natural gas and LNG sales and reported a net loss of around $114.7M, or $0.28 per share (basic and diluted), for all of 2021.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38MTPA of capacity, and built as five blocks of four Trains to reach the maximum planned capacity.

First phase

The Phase One development would include the first two of these blocks with 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 noted in its earnings that it had executed a long-term ground lease agreement with the Lake Charles Harbor and Terminal district and paid some debts to strengthened the balance sheet.

“The global economy is in the early stages of an energy super cycle driven by strong demand for natural gas and several years of underinvestment in energy infrastructure,” said Tellurian President and Chief Executive Octávio Simões.

“Tellurian is optimally positioned with fully executed market-based LNG SPAs and a permitted project,” added Simões.

The CEO confirmed a statement made in early February 2022 by Tellurian Executive Chairman Charif Souki that US engineering firm Bechtel would begin construction of Driftwood LNG in April and the company would seek to conclude the financing process shortly thereafter.

Shale-gas wells

Tellurian added in the report that it had drilled and put into production four new Haynesville Shale operated natural gas wells, increasing proved developed reserves by around 51 billion cubic feet (Bcf) as of the end of December 2021.

“Tellurian will continue our natural gas development program and expects to drill, complete and place into production additional operated Haynesville wells during 2022,” stated Simões.

The Haynesville gas resources produced 14.3 Bcf of natural gas for the year to the end of December and existing natural gas assets include 11,060 net acres, interests in 78 producing wells and estimated proved reserves of 323.3 Bcf.

“The reserve estimates were determined under US Securities and Exchange Commission guidelines and were prepared by an independent petroleum consulting firm,” said the company.

Cheniere Energy has announced the “substantial completion” of Train 6 at the Sabine Pass liquefaction plant in Cameron Parish in Louisiana and formally taking nameplate capacity to 27 million tonnes per annum.

“Commissioning is complete and Cheniere’s engineering, procurement and construction partner, Bechtel Oil, Gas and Chemicals has turned over care, custody and control of Train 6 to Cheniere Energy Partners LP,” said a statement from the Houston, Texas-based company.

“With the achievement of substantial completion, financial results of LNG sales from Train 6 going forward will be reflected in the statement of operations of Cheniere Partners and its applicable affiliates,” added the company.

The work on Cheniere’s Sabine Pass Train 6 started in June 2019 and the peak workforce on the project reached 1,800 workers who installed 12,250 tons of steel, poured 48,500 yards of concrete and laid 2,500,000 feet of cable.

“The accelerated completion of Train 6 once again reflects the world-class standard of execution consistently achieved by the Cheniere and Bechtel teams, and we are proud to have the six-Train vision of Sabine Pass completed safely, ahead of schedule and on budget,” said Jack Fusco, Chairman, President and Chief Executive of Cheniere Partners.

Nine Trains

“With nine total Trains across both the Sabine Pass and Corpus Christi projects, the Cheniere liquefaction platform is the second largest in the world, reliably providing our global customer base with clean, secure and affordable energy,” explained Fusco.

“We look forward to opportunities to build upon our platform with disciplined, brownfield growth at both sites in the future,” stated the CEO.

Brendan Bechtel, Chairman and CEO of Bechtel, said Cheniere plays a vital role in delivering reliable and safe energy to communities around the world.

“For us to be involved in supporting the development of these extraordinary projects is a great source of pride and we’re honored to help bring Cheniere’s vision to reality,” declared the Bechtel Chairman.

Cheniere Partners also owns the Creole Trail Pipeline, which interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines.

Cheniere can now turn its focus to the Texas Corpus Christi plant expansion, known as Stage 3 and comprising the construction of seven mid-scale liquefaction Trains adjacent to the existing facility.

The mid-scale Trains will add nameplate capacity of almost 10 MTPA to the 13.5 MTPA from the three larger existing Corpus Christi Trains, each producing 4.5 MTPA.

Cheniere is aiming to reach a final investment decision on the Texas plant expansion project in 2022.