LNG

Chesapeake Energy Corp. and Southwestern Energy Co., two companies that helped enable the start of US liquefied natural gas exports by providing low-priced feed-gas, are reported to be on the verge of a merger deal as early as this week to create a $16.7 billion company that would be the nation’s largest natural gas producer.

Sempra Infrastructure, the subsidiary of California-based utility and energy company Sempra and with stakes in LNG plants and projects in the US and Mexico, has completed the sale of a stake in the Port Arthur LNG project in Texas to US asset management firm Kohlberg Karvis Roberts (KKR), which is already a stakeholder in Sempra Infrastructure.

Sempra said the sale was complete to KKR on a 42 percent indirect, non-controlling interest basis in the Port Arthur LNG Phase 1 project .

The transaction results in Sempra Infrastructure retaining a controlling 28 percent indirect interest in Phase 1 at the project level, and ConocoPhillips owning the remaining 30 percent interest.

“The closing of this transaction continues the positive momentum of our world-class Port Arthur LNG facility and highlights Sempra Infrastructure's ability to access capital to support the growth of its infrastructure business,” said Justin Bird, Chief Executive of Sempra Infrastructure.

“We remain committed to developing energy infrastructure projects with strong partners to continue growing our portfolio while advancing global decarbonization and energy security,” Bird added.

James Cunningham, a Partner at KKR, said the firm was pleased to proceed with the investment.

“Port Arthur LNG Phase 1 has continued its strong momentum and is on track to meet its objectives of helping to deliver energy security, economic growth and a near-term supply of reliable and cleaner energy,” added Cunningham.

Texas FID

Sempra Infrastructure reached a positive final investment decision for Port Arthur LNG Phase 1 in March 2023 and contracted US engineering firm Bechtel Energy to build the facility.

The company has additionally placed major long-lead time orders with equipment and technology companies Air Products and Baker Hughes.

The $13 billion total estimated capital expenditures for the Port Arthur project are being financed with $6.8Bln of non-recourse project-level debt and $6.2Bln of project-level equity.

The company noted that 100 percent of current contractable capacity for Port Arthur Phase 1 had been secured with long-duration contracts and high-quality counterparties.

“The expected commercial operation dates for Train 1 and Train 2 are 2027 and 2028 respectively,” Sempra said.

Progress also continues at Energía Costa Azul LNG Phase 1 on the Pacific Coast of Mexico where construction at the Mexican export project remains on track to reach commercial operations by the summer of 2025.

The San Diego, California-based company is also pursuing a Phase 2 development project at the Cameron LNG export plant in Louisiana. 

Tellurian Executive Chairman Charif Souki, whose Driftwood LNG export venture in Louisiana has sold a combined 6 million tonnes per annum of cargoes to global commodities firms Vitol and Gunvor, has disclosed details of the timing of financing arrangements and the start of full construction.

Souki’s latest declarations set a target of the end of the first quarter of 2022 for engineering, procurement and construction (EPC) contract holder Bechtel to have a notice to proceed with full building work.

The Chairman added that Tellurian also expected to be able to announce the banking group that would finance the Driftwood plant by the end of 2021.

While the Driftwood project has permits to construction liquefaction Trains for up to 27.6 million tonnes per annum, the first phase was likely to be much less, between about 10 MTPA and 16 MTPA.

Souki noted that around 65 percent of the expected first-phase capacity had already been sold to Gunvor and Vitol.

He stated that Tellurian was continuing to work on securing more supply deals to cover the remaining capacity for the project's first phase.

In May and June 2021 Tellurian signed 10-year agreements to sell 3 MTPA LNG each to both Vitol and Gunvor.

Tellurian’s SPAs with Vitol and Gunvor are for volumes indexed to a combination of two indices, the Japan-Korea Marker price for spot cargoes and the European benchmark Dutch Title Transfer Facility (TTF), each netted back for transportation charges.

Tellurian said after the deals that at today’s prices, each of the SPAs with Vitol and Gunvor are valued at around $12 billion in revenue over 10 years for the Gulf Coast venture

The project also signed a long-term lease in June 2021 securing the site to build the plant on the west bank of the Calcasieu River, just south of Lake Charles

Tellurian has also said that it wanted to produce all the feed gas needed for the plant and would not sanction the project until it had secured sufficient upstream reserves for the first phase.

Based on its current drilling programme in the Haynesville Shale in northern Louisiana, Tellurian expects to have production by the end of the year, which is three times the volume it was producing at the end of 2020.

Souki said that the company would need to have substantially more drilling, about 1.5 Bcf per day, to reach its goal. 

Tellurian Inc, the developer of the Driftwood LNG export plant in Louisiana and its three affiliated pipelines, received a draft environmental impact statement from US regulators to stay on track for a start-up in 2023.

Norwegian company Global LNG Services (GLS), a developer of floating liquefaction hulls, said it had selected US energy services company Baker Hughes-GE to supply equipment as it makes progress on its Main Pass FLNG project to be located 16 miles offshore Louisiana in the Gulf of Mexico.