LNG

Tellurian Inc., the developer of the Driftwood liquefied natural gas export plant near Lake Charles in Louisiana, increased third-quarter natural gas production and revenues as it continued to progress with the financing of the venture and discussions with counterparties for offtake and equity.

Tellurian produced 19.5 billion cubic feet of natural gas for the quarter to the end of September compared with 11.4 Bcf for the same period of 2022.

The Houston-based company’s natural gas assets included 31,149 net acres and interests in 159 producing wells.

Its main production area of operations is the Haynesville Basin covering northwest Louisiana and East Texas.

Tellurian posted a loss of $12.55 million in the quarter compared with a profit $40.07M in the same quarter of 2022.

For the nine months the losses came to $44.23M versus a profit of $83.17M in the prior-year period.

Revenues

Tellurian generated around $43.2M in revenues from natural gas sales in the third quarter compared with $81.1M in the third quarter of 2022, a change driven by decreased realized natural gas prices partially offset by increased production volumes.

Tellurian reported a net loss of approximately $65.4M, or $0.12 per share (basic and diluted), for the quarter compared with a net loss of about $14.2M, or $0.03 per share (basic and diluted), for the same period of 2022.

As of the end of September, Tellurian said it had approximately $1.3Bln in total assets, including $59.3M of cash and cash equivalents.

“Tellurian’s upstream segment continues to provide growing natural gas production, improving significantly over the third quarter of last year, and we see natural gas prices on the rise through year end,” said President and Chief Executive Octávio Simões.

“We are having a number of discussions with counterparties for both equity partnership and LNG offtake for the Driftwood project and investment in the Driftwood Line 200/300 pipeline,” Simões explained.

Investments

“We have invested over one billion dollars to develop and advance construction of the fully permitted Driftwood project and remain on target to produce first LNG in 2027,” Simões stated.

The Driftwood 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 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.

Tellurian also signed an accord in April 2023 to sell the site of the Driftwood plant to institutional investors for $1Bln and to lease back the site comprising 800 acres of land.

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 agreement supported its aim of having the Driftwood venture achieved initial LNG production in four years’ time.

The US Delfin floating LNG export project proposed for offshore Louisiana has finalized a binding sale and purchase agreement with the US subsidiary of global commodities firm Vitol.

The deal was between Delfin Midstream Inc. and Vitol Inc. and also includes “strategic investment” by Vitol in the US export project.

Under the SPA, Delfin will supply 500,000 tonnes per annum of LNG on a free-on-board (FOB) basis for 15 years at the Delfin Deepwater Port to be established 40 nautical miles off the coast of Louisiana.

“The SPA is indexed to Henry Hub benchmark. The agreement is valued at approximately $3 billion in revenue over 15 years,” said a statement.

Dudley Poston, Chief Executive of Delfin, said that recent events had accelerated the need for a wider array of potential buyers to source reliable low-cost energy from the safety of the US at “compelling” prices.

“After evaluating multiple projects and running an extensive diligence process, Vitol’s decisions to invest demonstrates the strong trust they have in our ability to deliver a reliable source of LNG,” added Poston.

Delfin added that it had signed other accords and term sheets that are being finalized into fully termed supply agreements.

Modular project

The company declared that as modular project requiring between 2 MTPA and 2.5 MTPA of long-term contracts to begin construction, Delfin is on schedule to make final investment decision on the first FLNG vessel by the end of 2022.

“We are delighted to conclude this agreement with Delfin,” said Pablo Galante Escobar, Global Head of LNG and European Gas and Power at Vitol.

“Global LNG demand is experiencing tremendous growth and Vitol continues to strengthen its position to safely and reliably deliver cost effective, flexible solutions to our customers around the world,” added Escobar.

Vitol’s commitment and investment grade rating will help Delfin on its path to financial close of this exciting project,” he stated. 

Delfin has completed the engineering and design phase of the venture for the vessels being built at South Korea’s Samsung Heavy Industries shipyard and the liquefaction equipment and technology is being provided by Kansas-based company Black & Veatch.

UTOS pipeline

At the outset of the project planning Delfin had purchased the UTOS pipeline, the largest natural gas pipeline in the Gulf of Mexico, and submitted its deepwater port licence application way back in 2015.

The UTOS pipeline is the only 42-inch pipeline in the GoM and was formerly owned and operated by Enbridge Inc.

Delfin then proposed to activate the formerly abandoned offshore pipeline for the FLNG project and construct new connecting pipelines, a compressor station and associated facilities.

Wouter Pastoor, Chief Operating Officer of Delfin, explained that the company had completed permitting work with a positive record of decision from the Maritime Administration and had been granted its Department of Energy export licence.

“Delfin has completed front-end engineering and design with Samsung and Black & Veatch which puts us on pace to execute our project this year and to commence operations in 2026,” he stated.