LNG

Tellurian Inc., developer of the Driftwood LNG export plant with volumes taken by leading commodities firms Gunvor and Vitol, will soon sign a long-term lease near Lake Charles in Louisiana so it can begin preparing the site for full construction.

Tellurian executive Chairman Charif Souki explained the latest plans in a message to investors.

The Houston, Texas-based company is moving ahead after signing firm deals in late May and early June 2021 with commodity trading firms Gunvor and Vitol for a combined 6 million tonnes per annum of cargoes from the Driftwood plant.

Each of the firm agreements is for a period of 10 years with the supply indexed to a combination of the Japan-Korea Marker for Asian spot cargoes and the European benchmark Dutch Title Transfer facility (TTF) price.

The engineering, procurement and construction contract has already been agreed with Bechtel Inc., the leading global builder of LNG export facilities.

The Driftwood plant with production capacity of around 27 MTPA will be built on the west bank of the Calcasieu River, just south of Lake Charles.

Tellurian has also filed a formal application with the US Federal Energy Regulatory Commission to build a new 37-mile pipeline in Louisiana that will originate near Ragley in Beauregard Parish and end near Carlyss in Calcasieu Parish, near where the Driftwood facility will be located.

Tellurian had prevously planned to build four pipelines connecting supplies in the US Gulf Coast region, before deferring three of them because of commercial challenges.

“Look for that lease to be signed, effected and announced so that we can start the work that we need to do this summer. The activities will be taking place this summer,” stated Souki.

The company has noted that to get the Driftwood LNG plant site ready for full construction, a state highway needs to be widened to accommodate traffic for 5,000 workers, while a pipeline currently crosses the plant site and needs to be relocated.

“The new pipeline has been designed and routed to connect the supply located 21 miles north of Lake Charles to the demand located within and south of Lake Charles, bypassing what has become a constrained, complex and expensive transportation pathway,” said Tellurian after making its FERC filing.

As part of the design, the Driftwood Pipeline is proposing to deploy Baker Hughes-supplied electric-driven compression, thereby reducing the pipeline’s carbon-dioxide emissions.

“This new and completed pipeline design provides definitive and measurable results for emissions reduction and is another step in Tellurian’s overall strategy to support and balance the world’s energy needs,” said Tellurian President and Chief Executive Octávio Simões.

“Our latest commercial agreements have included provisions for tracking and documentation of LNG cargo emissions. Tellurian will continue to explore ways to collaborate with the US Administration and contribute to its plan for a cleaner climate with a focus on upending energy poverty domestically and abroad,” stated Simões.

Demand for liquefied natural gas cargoes continued at a high seasonal level as liftings increase this week along with prices at all points, including North Asia spot volumes, Indian delivered cargoes, US Gulf Coast futures and Dutch and UK European gas values.

Lake Charles LNG, the US export project being pursued by pipeline and midstream company Energy Transfer and Royal Dutch Shell, has issued a tender package for engineering, procurement, and construction and for contractors to submit firm bids.

Korea Gas Corp., the South Korean utility and owner of four LNG import terminals and worldwide volumes, said it signed an agreement to buy US LNG shipments from UK energy major BP.

Engineering firms McDermott International and partners Chiyoda Corp. of Japan and the US Zachry Group said the first liquefaction Train at the Freeport LNG project on Quintana Island in Texas has reached the final commissioning stage.

This includes the introduction of feed gas into Train 1 of the natural gas import facility that is being transformed into a liquefaction and LNG export plant after several project delays.

“We are extremely proud of the Freeport LNG project team for reaching this major milestone at this unique LNG production facility,” said Mark Coscio, McDermott's Senior Vice President for North, Central and South America.

“First of its kind in the US, with the largest electric-motor driven refrigeration compressors, the Freeport LNG facility will significantly improve the energy export capabilities we have in the US, and McDermott is pleased to be part of its development from the ground up,” added Coscio.

Once Train 1 is fully operational, it will have the capacity to produce more than 5 million tonnes of LNG per annum.

Zachry Group, as the joint venture lead, engaged McDermott for the Pre-FEED in 2011, followed by FEED works to support the early development stage of the project.

Later Chiyoda joined the partnership and the joint team provided engineering, procurement and facility construction as well as commissioning and initial operations for the project.

It includes three liquefaction Trains with 15 MTPA of capacity, a second loading berth and a 165,000 cubic metres full containment LNG storage tank.

The orginal Freeport terminal was completed in 2008 with one berth and two storage tanks, each of 160,000 cubic metres capacity.

The Freeport project is led by oil and gas entrepreneur Michael Smith, who is Chairman and Chief Executive of the development company.

Freeport received regulatory approval in 2019 to build an additional Train 4 and permits from the US Department of Energy for the export of Train 4 volumes to Non-Free Trade Agreement countries, opening the way for marketing.

The Freeport Train 4 will take overall output to 20 MTPA. About 13.5 MTPA of this capacity has been contracted under 20-year tolling agreements to Japanese utilities Osaka Gas and JERA Co. Inc., BP of the UK, South Korea’s SK E&S, while a fifth deal with Toshiba Corp. was off-loaded in June 2019 by the troubled Japanese company to French energy major Total.

There is also a sixth deal, a sales agreement for 500,000 tonnes per annum contracted to international commodities firm Trafigura in the form of a three-year accord starting in 2020.