LNG

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.

Tellurian Inc., developer of the Driftwood LNG export plant with volumes taken by leading commodities firms Gunvor and Vitol, will soon sign a long-term lease near Lake Charles in Louisiana so it can begin preparing the site for full construction.

Tellurian executive Chairman Charif Souki explained the latest plans in a message to investors.

The Houston, Texas-based company is moving ahead after signing firm deals in late May and early June 2021 with commodity trading firms Gunvor and Vitol for a combined 6 million tonnes per annum of cargoes from the Driftwood plant.

Each of the firm agreements is for a period of 10 years with the supply indexed to a combination of the Japan-Korea Marker for Asian spot cargoes and the European benchmark Dutch Title Transfer facility (TTF) price.

The engineering, procurement and construction contract has already been agreed with Bechtel Inc., the leading global builder of LNG export facilities.

The Driftwood plant with production capacity of around 27 MTPA will be built on the west bank of the Calcasieu River, just south of Lake Charles.

Tellurian has also filed a formal application with the US Federal Energy Regulatory Commission to build a new 37-mile pipeline in Louisiana that will originate near Ragley in Beauregard Parish and end near Carlyss in Calcasieu Parish, near where the Driftwood facility will be located.

Tellurian had prevously planned to build four pipelines connecting supplies in the US Gulf Coast region, before deferring three of them because of commercial challenges.

“Look for that lease to be signed, effected and announced so that we can start the work that we need to do this summer. The activities will be taking place this summer,” stated Souki.

The company has noted that to get the Driftwood LNG plant site ready for full construction, a state highway needs to be widened to accommodate traffic for 5,000 workers, while a pipeline currently crosses the plant site and needs to be relocated.

“The new pipeline has been designed and routed to connect the supply located 21 miles north of Lake Charles to the demand located within and south of Lake Charles, bypassing what has become a constrained, complex and expensive transportation pathway,” said Tellurian after making its FERC filing.

As part of the design, the Driftwood Pipeline is proposing to deploy Baker Hughes-supplied electric-driven compression, thereby reducing the pipeline’s carbon-dioxide emissions.

“This new and completed pipeline design provides definitive and measurable results for emissions reduction and is another step in Tellurian’s overall strategy to support and balance the world’s energy needs,” said Tellurian President and Chief Executive Octávio Simões.

“Our latest commercial agreements have included provisions for tracking and documentation of LNG cargo emissions. Tellurian will continue to explore ways to collaborate with the US Administration and contribute to its plan for a cleaner climate with a focus on upending energy poverty domestically and abroad,” stated Simões.