LNG

Tellurian Inc., the developer of the Driftwood liquefied natural gas export plant near Lake Charles in Louisiana, has moved to agree an amendment to the terms of certain debts after a month of various key decisions.

Tellurian said the amendment was expected to enhance near-term liquidity and provide the company with flexibility to successfully complete the sale of its upstream assets. 

Among other items, the amendment provisions include a reduction in Tellurian’s minimum cash balance requirement and the ability for the company to make its upcoming interest payments in-kind.

“This amendment to our debt agreement is pivotal towards establishing a sustainable capital structure and accelerating our strategic priority, Driftwood LNG,” explained Chief Executive Octávio Simões.

“It also provides us the time and flexibility to complete the sale of our upstream assets in a manner that maximizes value for our shareholders while we maintain our focus on the intensive negotiations associated with the commercialization of Driftwood LNG,” stated Simões.

Capacity

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

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.

Analysts note that it has been a busy February 2024 for Tellurian as it also said it was exploring the sale  of Haynesville Shale basin upstream natural gas assets.

Tellurian has engaged the investment bank Lazards to explore opportunities for the sale of the gas assets.

The Houston, Texas-based company said that it had concluded that there were alternative gas supply strategies available to Tellurian from various basins and its ownership of upstream gas wells was not necessary at this stage of the liquefaction plant’s development.

Tellurian’s natural gas assets include 31,149 net acres, interests in 159 producing wells and over 400 drilling locations in the Haynesville Shale.

On the regulatory front, Tellurian was also told in mid-February that the US Federal Energy Regulatory Commission had issued an extension to its order authorizing the construction of Tellurian’s plant.

Building deadline

As extended, the order requires construction to be completed by April 18, 2029. 

Tellurian applied for the extension back in 2023 to ensure it had enough time to complete the construction of all five LNG Trains for the facility with a nameplate capacity of  27.6 MTPA.

Tellurian’s main contractor for the Driftwood construction is the US engineering company Bechtel Energy.

In September 2023, Tellurian signed an agreement with US LNG-equipment supplier Baker Hughes to secure a delivery schedule for eight LM6000PF+ gas turbines, main refrigerant compressors and control units required for Phase One construction.

Tellurian said the Baker Hughes agreement supported its aim of having the Driftwood venture achieving initial LNG production in four years’ time.