LNG

Glenfarne Group, the US developer and operator of global energy and infrastructure assets and of the Texas LNG Brownsville and Magnolia LNG projects in Texas and Louisiana, has overhauled the business and formed Glenfarne Energy Transition (GET) for its energy assets while giving estimates for LNG final investment decisions.

US engineering company KBR, a world leader in liquefaction plant construction projects, said it would exit most of its LNG on-site building ventures and other related projects because of the global reduction in energy investments.

The Houston, Texas-based company will now refocus on its government contracts and technology businesses, according to a conference call statement to investors and letters to employees from Chief Executive Stuart Bradie.

“KBR will no longer engage in lump sum, blue collar construction services,” said Bradie, explaining that the Covid-19 pandemic accelerated the decision to leave fixed-contract energy projects.

KBR holds contracts for engineering and construction services for several LNG export projects, including Freeport LNG’s Train 4 expansion at Quintana Island in Texas, Pieridae Energy’s proposed Goldboro LNG facility in the Canadian province of Nova Scotia and Glenfarne Group's Magnolia LNG project in Louisiana.

Freeport LNG has delayed its expansion project to 2021 and planned to seek new bids for construction.

KBR gave no details of potential impairments in its next earnings because of the LNG and energy construction pull-back, though it said in a recent strategy Webcast on June 16 that it expected the energy business to be “marginally profitable” in 2020.

CEO Bradie is expected to disclose more details when the second-quarter results are released in July

Bradie told investors in the conference call that about 85 percent of the company's forecast earnings for 2020 are expected to come from the government-related contract business, up from about 11 percent in 2015.

KBR said the changes would mean “significant realignment” in some offices as the management transforms the business to the new structure and to new ways of working, while exiting certain markets and regions.

KBR appears to be only existing “construction services” and is expected to continue with its consulting business in the energy and related sectors.

Its most recent energy contract awarded in May 2020, was a master service agreement and feasibility study by Japanese resources company JX Nippon Oil & Gas Exploration Corp.

The contracts will be executed by KBR’s Energy Solutions division, which includes sectors such as onshore oil and gas, LNG liquefaction and regasification, floating LNG and refining.

KBR said it was building on a strong and successful portfolio in the of options for Carbon Capture and Sequestration (CCS), alongside blue hydrogen production relating to oil and gas fields in Southeast Asia.

In the JX Nippon project, KBR will provide technical consultancy services in relation to developing concepts and technology recommendations for the capture of carbon-dioxide (CO2), re-injection and production of blue (carbon free) hydrogen.

The project will be led primarily from KBR's consulting hub in Singapore.

The Australian-listed developer of the US Magnolia export plant in Louisiana with an agreement to supply cargoes to Vietnam said a Singapore-based private company has withdrawn a planned takeover bid.

The US Magnolia LNG export project in Louisiana, which recently agreed to supply cargoes to a new terminal in Vietnam planned for the Mekong Delta, has agreed to extend its negotiating time and seek a full sales agreement to be signed by the end of May 2020.

The US Magnolia LNG export project in Louisiana, which recently agreed to supply cargoes to a new terminal in Vietnam planned for the Mekong Delta, has received authorization from the regulators to expand production from 8 million tonnes per annum to 8.8 MTPA.

The Federal Energy Regulatory Commission issued the draft supplemental environmental impact statement concluding that the modifications for the capacity increase, with the additional mitigation measures recommended, would continue to avoid or reduce impacts to less than significant levels.

“There would be no substantive change in construction noise or air emissions from that previously analyzed in the Commission’s EIS for the Magnolia LNG project and modeling demonstrates there would be no exceedances of the National Ambient Air Quality Standards,” said the FERC report.

The FERC set 18 November 2019 as the deadline for receipt of public comments on the capacity increase.

The supplemental final environmental impact statement is then expected to be issued by the FERC on or before 24 January 2020.

The Magnolia LNG project developer is the Australian-listed company LNG Ltd, which in September 2019 signed an agreement to supply the Bac Lieu Province import terminal.

LNG Ltd said it Mangolia LNG, would supply 2 MTPA to Vietnam from its revised 8.8 MTPA of output.

The Louisiana shipments would be on a free-on-board (FOB) basis for a 20-year term with options to extend the term.

The Vietnamese project includes the construction of the import terminal, a 3,200-megawatt combined-cycle power plant and delivery of power generation to Bac Lieu Province.

That venture is expected to commence operations in 2023 pending finalization of anticipated government approvals.

“We thank FERC for their expeditious diligence and review of Magnolia LNG’s production capacity amendment, and we are pleased with the findings,” said LNG Ltd Chief Executive Greg Vesey.

“The increased LNG production would be achieved by an increase in the capacity and pressures of the ammonia refrigerant cycle and the mixed refrigerant cycle,” said the FERC.

“The auxiliary boiler stream production would also be increased to provide more power to the ammonia compressor steam turbine driver. In addition to the liquefaction uprate changes, the gas pre-treatment process would change from a single heavy hydrocarbon removal column to separate de-ethanizer and debutanizer columns,” explained the report.

“An electrically driven overhead booster compressor is proposed as part of the heavy hydrocarbon removal changes,” it added.

“Furthermore, the flare stack would be relocated on the project site, and a separate marine flare added,” stated the regulator.

LNG Ltd., the Australian company developing the Magnolia LNG export plant in Louisiana, said it was still concentrating its marketing efforts on closing long-term capacity sales agreements for its proposed export facility while providing acceptable returns to shareholders.

The company’s Chief Executive Gregory M. Vesey gave an update on marketing efforts that have still not resulted in a signed supply contract to enable the go-head for Magnolia LNG and eventually another export project, Bear Head LNG proposed for Nova Scotia in Canada.

“The second quarter of LNG Ltd.’s fiscal year featured continued emphasis on signing long- term offtake contracts for Magnolia LNG while ensuring that our best in class project execution and delivery strategy is fully ready to meet customer needs arising in this LNG market environment,” said Vesey.

In latest developments for the Magnolia project, the company said that at the end of December 2018 it had moved ahead with plans to increase volumes of LNG from 8 million tonnes per annum to 8.8 MTPA and filed an application with US Department of Energy to increase the quantity of authorized exports of domestically produced gas to non-free trade agreement and free trade agreement nations.

LNG Ltd. Has again extended the validity period for six months or its current binding engineering, procurement and construction with the joint venture comprising KBR of the US and South Korea’s SK Engineering and Construction.
The binding lump-sum, turnkey with $4.35 billion contract is now valid through June 30, 2019.

During the fourth-quarter, Bear Head LNG continued to market feed-gas capacity primarily to major Western Canadian Sedimentary Basin producers and to address gas route solutions with Canadian pipeline companies.
“Most LNG industry participants are bullish on the prospects for execution of new long-term offtake agreements in 2019,” said Vesey.

“Consistent with this thesis, active negotiations for Magnolia LNG capacity continue with focus on Asian and European customers,” he added.

“Efforts with select Asian counterparties progressed substantially in the period despite uneven trade discussion rhetoric. Similarly, we are making positive progress with key counterparties in Europe,” stated the CEO.

The company reported that as it moved towards a final investment decision for the Magnolia project, it incurred one-time charges during the quarter working with our existing project partners.

Payments made for work performed with the Kinder Morgan Louisiana Pipeline and Magnolia’s engineering contractors to refresh and update the project’s pipeline capacity and engineering elements, increased cash outflow in the quarter.

“We closed December 2018 with the company’s total cash position at A$36.6 million US$26.6M) and remain debt free. We continue to manage our liquidity closely, consistent with our stated plans,” said LNG Ltd.