LNG

Tellurian Inc., the developer of the Driftwood liquefied natural gas LNG export plant near Lake Charles in Louisiana, has given an update of engineering work being carried out by Bechtel Energy and costs per tonne of LNG.

Tellurian Inc., the US LNG developer of the Driftwood project near Lake Charles in Louisiana, said it ended the fourth quarter of 2022 with the first phase of Driftwood LNG under construction and $474.2 million of cash and cash equivalents available as short-term financing and operating costs.

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, reported a rise in revenue from natural gas production because of increased prices and volumes from its Haynesville Shale assets as progress continued on construction preparations and LNG volume agreements.

The company generated $26M in revenues from natural gas sales, compared to $8.7M in the first quarter of 2021. 

Tellurian said it ended the quarter with about $296M of cash and cash equivalents and $732M in total assets.

The Houston-based company also confirmed it had completed its site preparation and issued a limited notice to proceed to US LNG plant engineer Bechtel to begin construction of the Driftwood export facility.

“Tellurian’s own natural gas production and sales provide valuable operating cash and a unique advantage to us as a liquefied natural gas supplier,” said President and CEO Octávio Simões in the first-quarter 2022 earnings statement.

The Driftwood plant has permits to produce 27.6 million tonnes per annum of LNG and has 10-year offtake agreements with Shell North America and global commodities firms Vitol and Gunvor.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity, and built as five blocks of four Trains.

The Phase One development would include the first two of these blocks with 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.

Output

“We are nearing net production of 100 million cubic feet equivalent per day and plan to reach 200 mmcfe per day by year-end,” added Simões.

“Tellurian production is now generating free cash flow after capex and we intend to maintain capex at approximately $150M a year,” explained the CEO.

“With Bechtel now onsite beginning construction of Driftwood, we are on schedule to begin LNG production in 2026,” he stated.

Tellurian produced 6.1 billion cubic feet of natural gas for the quarter to the end of March compared with 4.9 Bcf for the previous
quarter.

Tellurian’s upstream assets include 13,521 net acres and interests in 82 producing wells as of March 2022.

Tellurian Inc., the US company planning the Driftwood LNG export project at Lake Charles in Louisiana, posted a first-quarter loss as it focused on debt reduction and said market fundamentals may favour the signing soon of supply agreements.

The Houston, Texas-based company said it continued to build its integrated global natural gas business and concentrated on paying down debt.

“Subsequent to the quarter end, Tellurian made a voluntary $17M debt repayment on April 23, 2021, and has now paid off all borrowing obligations,” said the company.

President and Chief Executive Octávio Simões said Tellurian now had a much stronger balance sheet and global customers continue to be “very interested” in the integrated, market-based LNG product offering.

The overall project plan for Tellurian now is for the Driftwood liquefaction plant to have first-phase production of 16 million tonnes per annum, rising to 27 MPTA with expansions.

“Additionally, we are looking forward to expanding our drilling program in 2021, having recently spud a new well in the prolific Haynesville Shale, that we expect to provide valuable revenue,” stated the CEO.

Tellurian produced 3.3 billion cubic feet of natural gas for the quarter in the Haynesville basin in north Louisiana to the end of March compared with 3.9 Bcf for the previous quarter.

Tellurian’s upstream assets include 9,704 net acres and interests in 72 producing wells.

The company said it ended the first quarter of 2021 with around $58.7M of cash and cash equivalents and generated $8.7M in revenues from natural gas sales.

Tellurian added that it still had a strong balance sheet consisting of approximately $270.3M in total assets.

Charif Souki, the Executive Chairman of Tellurian, said in a presentation that the use of the gas-fired power option was growing in Asia and his company hoped to start finalising commercial agreements based on the current “very strong gas market fundamentals” in Asia and Europe.

“There is now a tremendous amount of demand for natural gas on a global basis and it's now demonstrated by the very high prices both in Asia and Europe at $9 per MMBtu in Asia and $8 per MMBtu in Europe,” said Souki.

“You also have to consider that 85 percent of the world is growing their demand for energy at 4 percent a year, while the other 15 percent of the market, the United Sates and Europe, is flat,” he added.

Souki stated that Asian countries only had two choices for electricity, either nuclear power or natural gas.

“You can do nuclear but only if you've done it a long time ago and it’s extremely expensive,” added Souki.

“You can do wind but that will not satisfy all your needs, just to a certain extent,” he said.

Tellurian Inc., the developer of Driftwood LNG project on the US Gulf Coast and whose executives were in India pitching for an investment by Indian company Petronet, posted a 20 percent increase in 2019 net losses as the development and marketing process continued.