LNG

The founder and executive Chairman of the Commonwealth LNG project in Louisiana, Paul Varello, has announced his retirement while also selling control of his company to the New York-based Kimmeridge asset management firm.

Entergy Texas, one of the main power companies at the centre of the LNG export sector on the US Gulf Coast, has filed an application with the Public Utility Commission of Texas (PUCT) for approval to construct two natural gas-fired power plants to build up electric resiliency in the state.

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, has signed an agreement to sell its Haynesville gas production business in East Texas and Louisiana to Dallas, Texas-based Aethon Energy Management, a private investment firm.

Tellurian said Aethon had agreed to pay $260 million for the shale gas business and additionally signed an accord to purchase 2 million tonnes per annum of LNG from the Driftwood liquefaction plant.

“The assets will expand Aethon’s footprint in the Louisiana Haynesville and Bossier shale basins with approximately 31,000 net acres, including gathering and treating systems that have capacity for up to 100 million cubic feet per day that will bring Aethon’s pro forma gathering and treating capacity to over 3 Bcf per day across its assets,” said a statement.

Lazards role

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

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.

The Tellurian-Aethon Heads of Agreement contemplates the parties negotiating a 20-year offtake agreement which would be indexed to Henry Hub plus a liquefaction fee, with appropriate credit support, to provide the basis for project financing of Driftwood LNG.

The Tellurian-Aethon transaction is expected to close during the second quarter of 2024 and Tellurian will use the proceeds to reduce borrowings and for general corporate purposes.

Project boost

“Agreements with Aethon take us several steps closer to developing the Driftwood LNG project, for which Aethon is a vital partner,” said Tellurian Executive Chairman Martin Houston.

“The offtake agreement for 2 MTPA provides the foundation to accelerate Driftwood and demonstrates that we have successfully aligned our commercial offerings to meet the needs of potential customers,” Houston explained.

“For Tellurian, the proceeds from the sale of our upstream assets allow us to retire senior secured notes and strengthen our balance sheet for the long term,” stated Houston.

The Aethon firm’s Chief Executive for energy funds, Albert Huddleston, said that the expanding scale of its integrated business continues to deliver capital efficiency and industry-leading margins as the firm work to accelerate the role of natural gas in the broader energy transition.

“This Fund II and Fund III acquisition provides complementary growth opportunities alongside our extensive upstream and midstream footprint in the Haynesville with more than 20 years of existing inventory life,” added Huddleston.

Lazard served as financial advisor to Tellurian in this transaction, and Akin Gump served as legal counsel. Gibson Dunn provided legal counsel for Aethon. 

Excelerate Energy Inc., the specialist US company for LNG floating storage and regasification projects from South America to the Nordic region and South Asia, reported steady earnings after a quarter marked by further deals in Qatar and Brazil.

NextDecade Corp. the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a 15-year sale and purchase agreement (SPA) with Japanese trading house Itochu Corp., its first deal with Japan and its seventh SPA overall.

Under the latest SPA, Itochu will purchase 1.0 million tonnes per annum of LNG indexed to Henry Hub on a free-on-board basis.

Itochu was also one of the three Japanese companies that recently signed deals with Oman LNG on the Arabian Peninsula for 800,000 tonnes per annum of deliveries each.

“We are honored to have Itochu as our first Japanese customer,” said Matt Schatzman, NextDecade's Chairman and Chief Executive.

“We look forward to providing Itochu and their customers with LNG, and we are actively working to reduce the carbon footprint of the Rio Grande LNG facility through our proposed carbon capture and storage project,” added the CEO of the Nasdaq-listed company.

NextDecade had previously signed an increase for the SPA with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.

Supplying China

Under that 10-year SPA, ENN will now purchase 2.0 MTPA of LNG. Several other Chinese companies have signed agreements for volumes from the Rio Grande plant.

The company’s sales volumes will be supplied from the first three Trains at the Rio Grande facility.

Houston, Texas-based NextDecade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

The Rio Grande project has been delayed several times since 2020 and was originally expected to start producing LNG in 2023.

NextDecade said it was currently targeting a positive final investment decision on the first three Trains during the first quarter of 2023, with FIDs of its remaining Trains to follow thereafter.

NextDecade had other deals signed in December 2022 and in previous months, including one with Galp Trading S.A. of Portugal.

This was its fifth deal of last year and counting the increase of volumes for ENN Group and the latest Itochu agreement to supply Japan, NextDecade has signed a total of seven supply accords.

NextDecade's other SPAs during 2022 included one with ExxonMobil Corp.

The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.

Cheniere Energy, the largest exporter of US LNG from two plants in Louisiana and Texas, reported third-quarter revenue of $8.85 billion and nine-month income of $24.34Bln in the first nine months of 2022, though posted quarterly and nine-month non-cash losses of $2.385Bln and $2.509Bln because of derivatives.

Excelerate Energy, the US floating LNG import terminal specialist, signed a five-year charter agreement in Berlin with the German Government for the floating storage and regasification unit (FSRU) “Excelsior”.

Cheniere Energy is ending its boardroom links with US activist investor Carl Icahn who swooped on the company in 2015 to force boardroom changes in what he said was in the interests of shareholders.

Cheniere has just signed an agreement to repurchase about $350 million of the company’s common shares beneficially owned by Carl Icahn and certain of his affiliates.

The deal was at the purchase price of $130.52 per share, the closing price of Cheniere’s common shares on June 14.

The purchase of the shares will be funded from Cheniere’s cash on hand and is part of the company’s $1 billion share repurchase authorization. The transaction was expected to close no later than June 21.

“Pursuant to a nomination and standstill agreement entered in 2015, the company agreed to give Icahn Enterprises one board seat for as long as it continued to hold at least 7,741,412 common shares,” explained Cheniere, the owner of the Sabine Pass export plant in Louisiana and the Corpus Christi plant in Texas.

The arrival of Icahn as an investor in Cheniere saw the eventual departures of founder and then CEO and Chairman Charif Souki along with other executives.

Souki went on to start Tellurian Inc. and to develop the Driftwood LNG plant in Louisiana, which has now entered the construction phase.

Last director

“This transaction will result in Icahn Enterprises’ holdings in the company to be under this threshold and the remaining director designee, Andrew Teno, will resign from the board of directors within two business days following the closing of the agreement,” said Houston, Texas-based Cheniere.

Cheniere said the $350M repurchase reflected “efficient execution” of its long-term capital allocation plan at a time when environmental priorities and energy security have natural gas as a key focus globally.

“We appreciate Carl Icahn and his Board representatives for their support of Cheniere over these last almost seven years as we have become the world’s second-largest LNG operator,” said Jack Fusco, Cheniere’s President and CEO.

“They have provided guidance and insight which has meaningfully contributed to Cheniere’s growth and strategy over that time,” added Fusco.

Icahn said his investments in Cheniere was a key example shareholder activism efforts.

“We were instrumental in hiring CEO Jack Fusco, who has assembled a great team and unlocked the value of a fantastic asset,” explained Icahn.

“As we have said many times, when the time for activism is over, we generally take a profit on a portion of our stock. To date, we have made over $1.3 billion in realized and unrealized gains on Cheniere and, even after the sale today, we still remain sizeable owners of Cheniere stock,” he stated.

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

The American Bureau of Shipping, the US maritime classification society, has awarded approval for the design of a one-side spread mooring system for a floating liquefied natural gas facility to South Korean shipyard and offshore equipment-maker Samsung Heavy Industries.

The Approval in Principle (AIP) for SHI will see the FLNG system being safely spread-moored on one side, enabling LNG carriers to berth and load on the opposite side free from obstructions.

“With more than 150 floating oil and gas facilities in the ABS-classed fleet, ABS is the market leader in classification of offshore production units, which includes FLNG assets,” said the Houston, Texas-based company.

Matt Tremblay, ABS Vice President for Global Offshore, explained that the US class society was well placed to understand the unique requirements of these units, with a focus on safety.

“I’m proud to be able to support SHI with this innovation,” stated Tremblay.

Wang K. Lee, Vice President of SHI’s Offshore Business Division, said the one-side spread mooring system is a patented technology that can replace complex turrets in a mild offshore environment.

“It will be the optimized solution for shipping companies looking for economical FLNG models,” he added.
ABS has expertise on the whole of the LNG engineering, shipping and bunkering sector.

One of its 2021 approvals was for a new design by Finnish company Deltamarin and French LNG storage tank firm GTT for an LNG-powered Aframax oil tanker.

The vessel was developed by Deltamarin, a designer of ships and offshore platforms for the energy industry, to increase autonomy and carbon-emission reductions for the Aframax-type vessel, which is a crude oil tanker with a deadweight between 80,000 and 120,000 metric tonnes.

That design is intended to meet current and future environmental targets by introducing GTT membrane-type LNG tanks with LNG fuel stored at atmospheric pressure and designed to ABS Class.

The AiP from ABS certifies that the onboard integration of the membrane fuel tank solution is technically feasible for an LNG-fuelled tanker and that it complies with all safety regulations.

Compared with a conventional oil-fuelled tanker, the LNG-powered design reduces CO2 emissions by at least 20 percent.