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.

The US export project, Magnolia LNG, and its owners LNG Ltd have been purchased by a London-listed energy infrastructure firm for US$2.25 million from Australian insolvency administrators appointed to oversee asset dispersals.

The Australian-listed developer of the US Magnolia export plant in Louisiana with an agreement to supply cargoes to Vietnam said a takeover bid by a Singapore-based private company has been pushed back to mid-April, while its own temporary financing is not now forthcoming from a US equity and capital fund.

The Commonwealth LNG project in the US, a liquefaction and exports plant proposed for the west side of the Calcasieu Ship Channel near Johnson Bayou in Louisiana, has signed a preliminary supply deal with Singapore-based commodities trading firm Gunvor.

Commonwealth said it signed a heads of agreement with Gunvor Singapore outlining the principal details of a future firm accord for the supply of 1.5 million tonnes per annum of LNG for a term of 15 years.

The project has a schedule to make a final investment decision in 2020 and to start commercial operations by 2024.

Its plant will have a total liquefaction capacity of 8.4 MTPA and LNG storage capacity volumes of 240,000 cubic metres and has chosen a modular construction format, according to filings with the Federal Energy Regulatory Commission.

A total of eight liquefaction Trains are planned with each having production capacity of just over 1 MTPA.

There would additionally be six LNG storage tanks, each with a capacity of 40,000 cubic metres.

An adjacent electric plant would be powered by an 80-megawatt gas turbine and there would be boil-off gas handling systems, utilities, and communications system.

A 3.7-mile natural gas receiving pipeline for feed-gas is also proposed, extending from existing pipelines operated by Kinetica Partners and Bridgeline Holdings.

The marine berth would have the size to accommodate LNG carriers with capacity up to 215,000 cubic metres.

“The agreement with Commonwealth LNG is a significant step in executing Gunvor’s overall strategy of uncovering and securing low-cost resources and seamlessly delivering them to high value markets,” said Kalpesh Patel, Gunvor Co-Head of LNG Trading.

“We look forward to working with the Commonwealth team as they continue to progress their project,” added Patel.

Paul Varello, Commonwealth’s President and Chief Executive, said he was delighted at securing the first step towards a firm supply deal.

“We are proud to be entering into an agreement for a portion of our LNG offtake with the Gunvor Group, one of the world’s premier commodities trading houses,” explained Varello.

“Our mantra is to develop LNG solutions for the next generation and in Gunvor we have found a commercial partner who not only shares that vision, but through its creativity and innovation exemplifies it,” stated the CEO.

Sempra Energy said the Cameron liquefied natural gas export plant at Hackberry in Louisiana was in the final stages of commissioning and production would be starting soon as the California-based utility forecast higher future LNG earnings.

Venture Global, the US LNG project developer with two export plants proposed for Louisiana, has filed with regulators to permit its construction of a third plant in the Gulf Coast state.

The Arlington, Virginia-based company filed with the Federal Energy Regulatory Commission for a venture called Delta LNG and its associated Delta Express pipeline.

The company’s first and most advanced plant is at Calcasieu Pass in Louisiana with current nameplate export volumes of 12 million tonnes per annum and is expected to come on stream in 2022, along with associated facilities, including the TransCameron Pipeline.

Venture Global, owned by former investment banker Michael Sabel and lawyer Robert Pender who act as joint chief executives, is also constructing a second plant at Plaquemines near river mile-marker 55 on the west side of the Mississippi River, 30 miles south of New Orleans.

The Mississippi River project has current output targets of 20 MTPA of LNG and was set to include small-scale liquefaction Trains, four LNG storage tanks and three marine loading berths.

The Delta LNG plant is also proposed for Plaquemines Parish and would have peak capacity to process 24 MTPA.

The filing made on April 17 also requested the start of a permit process for a 287-mile pipeline called Delta Express between Perryville in Louisiana, crossing into the neighbouring state of Mississippi, and then back into Louisiana to connect to the LNG plant.

According to a preliminary schedule the third Venture Global project could see construction start in late 2021 and the plant shipping its first cargo by November 2024.

Venture Global had in March 2019 that it planned to expand the scope of its LNG development business on the US Gulf Coast to 60 MTPA of production based on customer demand, almost doubling current plans for 32 MTPA of output.

Co-CEOs Pender and Sabel said that having fully contracted Calcasieu Pass and anticipating completion of Plaquemines LNG an expansion was being studied to meet additional customer demand.

“We believe our model of mid-scale modular liquefaction is the future of low-cost LNG production,” they said.

Venture Global noted that the Calcasieu Pass project with its planned 10 MTPA of output had received all federal authorizations.

The project’s engineering contractor, Kiewit Energy of Omaha, Nebraska, is now carrying out site preparation in advance of construction.

The Calcasieu Pass plant has signed binding 20-year sale and purchase agreements with companies such as Royal Dutch Shell, BP of the UK, Italian utility Edison, Portugal’s Galp Energia, Repsol of Spain and Poland’s national oil and gas company.

The Plaquemines project is expected to receive its final regulatory authorization in August and commence construction later in 2019.

Chart Industries, the US liquefied natural gas equipment-maker and supplier to the liquid gas sector, said it would be ramping up manufacturing to meet new LNG project orders on the Gulf Coast and in Asia, while more business is expected in trucking and rail transportation of the fuel.

Tellurian Inc., developer of the Driftwood LNG export project in Louisiana, ended its year with a loss of around $125.7 million, as it made commercial progress on its plant to be constructed near Lake Charles with affiliated pipelines.

Tellurian, listed on the Nasdaq exchange, said it ended the year with $133.7M of cash and cash equivalents and about $57.0 million in debt.

The final environmental impact statement was issued by the Federal Energy Regulatory Commission in January 2019 to develop the liquefaction plant to produce around 27.6 million tonnes per annum of LNG.

Tellurian stands ready to make a final investment decision and begin construction in the first half, with the first LNG expected in 2023.

In its initial trading operations, Tellurian generated $5.9 million in revenue from LNG marketing and around $4.4M from natural gas sales.

It also received a $50 million investment from US energy and LNG engineering company Bechtel, which will organise the building of the plant.

“The company advanced the sale of LNG and Driftwood Holdings’ partnership interests, with approximately 35 customer-partners conducting due diligence,” said Tellurian.

Among other highlights it signed two accords, one with commodities firm Vitol for the supply of 1.5 MTPA of LNG for 15 years and a second with Petronet LNG of India for equity investment in the Driftwood project.

Tellurian additionally closed two open seasons on proposed pipelines, the Permian Global Access Pipeline and the Haynesville Global Access Pipeline, and received non-binding indications of interest for both projects in excess of available capacity.

“Tellurian distinguished itself in the market through our innovative equity interest investment strategy, and by introducing a new pricing benchmark for LNG agreements,” said President and Chief Executive Meg Gentle.

The CEO was referring to pricing being offered to customers on the Platts Japan Korea Marker (JKM) instead of the US benchmark Henry Hub price.

“We recently received our final Environmental Impact Statement for Driftwood LNG and look forward to receiving our Federal Energy Regulatory Commission order to proceed,” added Gentle.

Cheniere Energy said strong global liquefied natural gas demand fundamentals call for supply growth and the Houston-based company said it would be investing along the value chain to boost capacity, feed-gas supplies and LNG marketing opportunities.

North American LNG plant developer LNG Ltd has put back its final investment decision on the Magnolia export project in Louisiana, citing trade tensions that affected its discussions with potential Chinese customers.