LNG

Energy Transfer, the owner of pipeline and other assets in the Permian Basin and other shale basins in the Gulf Coast states as well as the Cushing crude oil delivery system and with a currently stalled LNG export project at Lake Charles, has signed a deal to acquire WTG Midstream for $3.25 billion in cash and shares.

The latest US oil and gas acquisition comes in the busiest year on record for US mergers and acquisitions numbering more than a dozen in the past 12 months and involving energy majors like ExxonMobil Corp. and Chevron Corp. as well as second-rung operators.

Energy Transfer said it was buying WTG Midstream from affiliates of US assets manager Stonepeak, the Davis Estate and Midland, Texas-based Diamondback Energy.

Transaction terms

The total consideration for the transaction will comprise $2.45Bln in cash and around 50.8 million newly issued Energy Transfer common units.

The transaction is expected to close in the third quarter of 2024, subject to regulatory approval and customary closing conditions.

Energy Transfer, based in Dallas, Texas, said that WTG provided comprehensive midstream services including wellhead gathering, intra-basin transportation and processing services.

“The company’s 6,000-mile pipeline network serves significant operators in some of the most active areas of the Midland Basin including Martin, Howard, Upton, Reagan and Irion counties,” said a statement on the deal.

WTG also operates eight processing plants with a total capacity of around 1.3 billion cubic feet per day and is constructing two new plants with an additional capacity of 0.4 Bcf per day.

The first new plant is expected to be in service in the third quarter of 2024 and the second plant the third quarter of 2025.

Huge portfolio

Energy Transfer currently owns and operates one of the largest portfolios of energy assets in the US comprising more than 125,000 miles of pipeline and associated energy infrastructure.

The company’s strategic network spans 44 states with assets in all of the major US production basins.

Energy Transfer’s acquisition also includes a 20 percent interest in BANGL Pipeline, a 425-mile Natural Gas Liquids pipeline with an initial capacity of 125,000 barrels per day, expandable up to more than 300,000 barrels per day and connecting the Permian Basin to markets on the Texas Gulf Coast.

“The company benefits from well positioned assets in the Permian which is the most active region in the US and this acquisition is expected to provide future upside as the basin continues to develop on and around Energy Transfer’s infrastructure,” explained the company.

RBC Capital Markets is serving as financial advisor to Energy Transfer, and Vinson & Elkins LLP is acting as Energy Transfer’s legal counsel on the transaction.

Jefferies LLC is serving as financial advisor to WTG and Sidley Austin LLP is acting as WTG’s legal counsel.

Williams Companies, a leading US natural gas pipelines operator with projects aimed at boosting feed-gas supplies for Gulf Coast LNG export plants, successfully closed two strategic transactions that now position the company as the third-largest gatherer in the Denver-Julesburg Basin.

June 23 (LNGJ) - Energy Transfer, the owner of pipeline and other assets in the Permian Basin and other shale basins in the Gulf Coast states as well as the Cushing crude oil delivery system, has learnt from regulators that its Lake Charles LNG project would not be proceeding as planned. The DoE has released a statement saying it would not rehear pipeline operator Energy Transfer's request for a second extension of its permit to export cargoes from its Lake Charles LNG export project.

   However, the Dallas, Texas-based company had a door left open for the Lake Charles venture when the DoE added that it would consider a fresh application from Energy Transfer if the company was unable to meet its deadline of 2025 for exports to begin from the plant. Energy Transfer is seeking to transform the existing Lake Charles LNG import terminal into an export facility.

Energy Transfer, the US midstream company transforming the Lake Charles LNG import terminal in Louisiana into an export plant, has signed a long-term sales agreement with a unit of China Gas Holdings, one of the Asian nation’s leading natural gas services company.

Energy Transfer LP, the owner of pipeline and other assets in the Permian Basin and Haynesville Shale as well as the Cushing crude oil delivery system, has signed an LNG sale and purchase agreement (SPA) with global commodities firm Gunvor and its third in the past two months for its Lake Charles LNG export project in Louisiana.

Energy Transfer LP, the owner of assets in the Permian Basin and Haynesville Shale as well as the Cushing crude oil delivery system, has signed two LNG sale and purchase agreements with ENN Group for its almost forgotten Lake Charles LNG export project in Louisiana.

Under the two SPAs, Energy Transfer is expected to supply 1.8 million tonnes of LNG to ENN's natural gas subsidiary and 900,000 tonnes of LNG to the ENN Energy unit per annum on a free-on-board (FOB) basis.

Energy Transfer said the purchase price was indexed to the Henry Hub benchmark plus a fixed liquefaction charge.

Both SPAs are for a term of 20 years and first deliveries are expected to commence as early as 2026.

China’s ENN has an annual LNG distribution capacity of over 10 billion cubic metres of natural gas and runs the first large-scale private LNG terminal in China, the Zhoushan LNG facility in eastern Zheijang province south of Shanghai.

The SPAs will become fully effective upon the satisfaction of the conditions precedent by Energy Transfer’s plan and final investment decision to transform the existing Lake Charles LNG import terminal into an export plant.

Almost forgotten

The Lake Charles LNG import terminal once had BG Group of the UK as a main customer. Shell then become a terminal partner before later withdrawing from the export plant joint venture.

The Federal Energy Regulatory Commission has issued permits for the Lake Charles transformation and to produce 16.5 million tonnes per annum of LNG.

Energy Transfer had acquired the Lake Charles terminal in mid-2011 with the takeover of Southern Union Co. for $7.9 billion.

“The signing of these long-term SPAs will further enrich ENN’s LNG resources, expand resource supply channels, and improve ENN’s natural gas supply capacity to meet the rapidly growing natural gas demand in the domestic market,” said Zheng Hongtao, President of ENN’s natural gas unit and Vice Chairman of the Board.

Tom Mason, President of Energy Transfer LNG, said the Dallas, Texas-based company was pleased to have ENN Energy onboard.

“The execution of these two SPAs represents a significant event in moving the Lake Charles LNG project towards FID,” he explained.

“We are experiencing strong demand for long-term offtake contracts for Lake Charles LNG and we are optimistic that we will be in a position to take a positive FID by year-end,” stated Mason.

“The Lake Charles LNG project is expected to be financed primarily through infrastructure funds and strategic partners, with Lake Charles LNG retaining an equity stake and operatorship of the liquefaction facility,” he added.

Lake Charles LNG will be constructed with the existing brownfield site of regasification facility and will capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure.

“Lake Charles LNG will also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines,” said Energy Transfer.

“These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale,” the company declared.

The official Inventory of US Greenhouse Gas Emissions has been released showing that annual emissions from the natural gas distribution pipeline system for utilities and latterly to supply LNG export plants had dropped 73 percent in the past 18 years.

The US Environmental Protection Agency (EPA) figures for emissions from 1990 to 2018 illustrated the sizeable decline even as natural gas utilities added more than 760,000 miles of pipelines to serve 20 million more customers.

The report noted that distribution systems owned and operated by local natural gas utilities emit only 0.08 percent of produced natural gas.

“The greenhouse-gas emissions from the natural gas distribution system are low and getting lower and we remain committed to further reductions,” said American gas Association President and Chief Executive Karen Harbert.

“As companies continue to modernize our natural gas infrastructure and connect homes and businesses to the system, new opportunities arise to continue to drive down greenhouse gas emissions by leveraging new and existing natural gas infrastructure,” added Harbert.

For more than two decades, the EPA has developed and published estimates of greenhouse-gas emissions in its Inventory of US Greenhouse Gas Emissions and Sinks.

The EPA Inventory represents the most comprehensive assessment of US greenhouse-gas emissions available.

The EPA made further updates to its Inventory released in April 2020.

“The analysis characterized new estimates for methane emissions and the implications for the greenhouse gas profile for natural gas,” said the AGA.

“The Inventory affirms a low methane emissions profile for natural gas distribution systems shaped by a declining trend,” said the industry body.

“Industry-wide natural gas emissions as a rate of production is now 1.0 percent - a level well below even the most stringent thresholds for immediate climate benefits achieved through coal-to-natural gas switching,” stated the AGA.

The AGA said it remained committed to reducing greenhouse-gas emissions through innovation, new and modernized infrastructure, and advanced technologies that maintain reliable, resilient and affordable energy service choices for consumers.

Energy Transfer, the US pipeline and infrastructure company developing the Lake Charles LNG export plant with Royal Dutch Shell, has launched a binding supplemental open season for the Bayou Bridge Pipeline system from Texas to Louisiana.

The Dallas, Texas-based company said it was soliciting additional shipper commitments for transportation service from Nederland in Texas to Lake Charles in Louisiana.

The company said that “bona fide” potential shippers who desire to receive copies of the open season documents were required to execute a confidentiality agreement.

The Bayou Bridge Pipeline to near the existing Lake Charles LNG import terminal which is being transformed into an export plant, will provide light and heavy crude oil services from multiple sources to Lake Charles and the St. James crude oil hub, which are both home to important refineries located in the Gulf Coast region. 

The 30-inch Nederland-to-Lake Charles segment went into service in April 2016 and the 24-inch Lake Charles-to-St. James portion was completed in March 2019. 

“The Bayou Bridge pipeline offers producers, refiners, and marketers an efficient option to move crude oil from origins in the Nederland, Texas, area to the refining demand centers around Lake Charles and St. James,” said Energy Transfer.

The pipeline, owned 60 percent by Energy Transfer and 40 percent by Phillips 66 Partners, is operated by Energy Transfer.

In addition to its other energy transportation projects and commitments, LNG will be a significant part of the Energy Transfer portolio on the Gulf Coast

Energy Transfer had announced in December 2019 with Shell US LNG a comprehensive commercial tender package for engineering, procurement and construction contractors for Lake Charles LNG.

The proposed Lake Charles LNG liquefaction project being jointly developed by Energy Transfer and Shell on a 50-50 basis would modify Energy Transfer’s existing LNG import facility in Lake Charles to add LNG liquefaction capacity of 16.45 million tonnes per annum for export.

Energy Transfer also noted that in October 2019 that the Permian Express pipeline expansion went into full service.

The Lake Charles facility was the longest-serving US import terminal before the shale-gas boom and previously imported cargoes from Trinidad and Equatorial Guinea.

Under the transformation, Lake Charles will become an export facility and the successful EPC bidder is expected to be chosen after the second quarter of 2020.

The commercial tender focused on the technical scope of the project, specifically verifications of the engineering and design of the liquefaction facility.

Energy Transfer sees the Lake Charles project would capitalizes on “repurposing” the existing brownfield regas assets to achieve cost savings in the construction of the liquefaction facility.

It added that the project would also benefit from the unique strength of Energy Transfer as a leading natural gas pipeline operator with extensive connectivity to the Lake Charles facility.

Energy Transfer and Shell have signed a framework agreement designating Shell as the project leader and as construction manager and operator of Lake Charles LNG.

The Federal Energy Regulatory Commission has authorized a deadline for the Lake Charles plant to be completed by mid-December 2025.

Energy Transfer, the US pipeline owner and shareholder with Royal Dutch Shell in the Lake Charles liquefied natural gas export project, reported solid fourth-quarter results as the LNG venture makes more progress.

The Dallas, Texas-based company said fourth-quarter net income attributable to partners amounted to $1.01 billion, primarily due to higher operating income.

It reported adjusted gross earnings of $2.81 billion, up 5 percent from the fourth quarter of 2018.

Energy Transfer said that among the quarterly highlights was the announcement in December 2019 with Shell US LNG of a comprehensive commercial tender package for engineering, procurement and construction contractors to submit final commercial bids.

“The proposed Lake Charles LNG liquefaction project being jointly developed by Energy Transfer and Shell on a 50-50 basis would modify Energy Transfer’s existing LNG import facility in Lake Charles, Louisiana to add LNG liquefaction capacity of 16.45 million tonnes per annum for export to global markets,” the company explained.

Energy Transfer also noted that in October 2019 that the Permian Express pipeline expansion went into full service.

The Lake Charles facility was the longest-serving US import terminal before the shale-gas boom and previously imported cargoes from Trinidad and Equatorial Guinea.

Under the transformation, Lake Charles will become an export facility and the successful EPC bidder is expected to be chosen after the second quarter of 2020.

The commercial tender focused on the technical scope of the project, specifically verifications of the engineering and design of the liquefaction facility.

Energy Transfer sees the Lake Charles project would capitalizes on “repurposing” the existing brownfield regas assets to achieve cost savings in the construction of the liquefaction facility.

It added that the project would also benefit from the unique strength of Energy Transfer as a leading natural gas pipeline operator with extensive connectivity to the Lake Charles facility.

Energy Transfer and Shell have signed a framework agreement designating Shell as the project leader and as construction manager and operator of Lake Charles LNG.

The Federal Energy Regulatory Commission has authorized a deadline for the Lake Charles plant to be completed by mid-December 2025.

Shell gained its stake in the Lake Charles facility from its takeover in 2015 of BG Group of the UK.

Energy Transfer began in 1995 as a small intra-state natural gas pipeline operator and is now one of the largest energy infrastructure firms in the US.

Lake Charles would be Shell's largest liquefaction foothold in North America, rivalling its LNG Canada joint venture in the province of British Columbia.

With liquefied natural gas prices hitting historic Northern Hemisphere winter season lows in the Atlantic Basin and the Pacific Basin, it is likely in the year ahead that US exports in particular will be more price sensitive with the possibility of shut-ins along the Gulf Coast of Louisiana and Texas.