LNG

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, continues to be the focus of takeover speculation while losses have just doubled in the first quarter of 2024 and revenues halved from natural gas production assets in the Haynesville Shale basin.

Tellurian earlier in 2024 hired the investment bank Lazards to explore a sale of its Haynesville gas production business in East Texas and Louisiana as part of efforts to raise new capital to continue the Driftwood project with full permits to produce 27.6 million tonnes per annum.

Tellurian then added that it would consider offers for the whole of Driftwood LNG after unsuccessfully pursuing long-term sales and purchase agreements to finance the development.

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

According to the regulatory permits and building schedules 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’s natural gas assets include 31,149 net acres, interests in 159 producing wells and over 400 drilling locations in the Haynesville Shale.

Latest earnings

Tellurian’s latest balance sheet showed that income from natural gas sales halved in the first quarter of 2024 to $25.47 million from $50.93M in the same three months of 2023.

Net losses also surged to $42.02M from $27.49M of losses in the same quarter of 2023.

Executive Chairman Martin Houston made no comment on the takeover speculation nor on gas assets sales and said in the earnings statement that Tellurian continued making progress on Driftwood LNG phase one construction with contractor Bechtel Energy of the US.

“Over the past few months, our senior team has sharpened its focus on stability, financial discipline and execution and we are laser-focused on bringing Driftwood to final investment decision,” Houston explained.

“To this end, we continue to take important steps to improve our balance sheet and liquidity position, and we continue to benefit from our strong regulatory standing,” he added.

“In addition, we have better aligned our commercial offerings to meet the needs of potential customers and we are highly encouraged by our ongoing commercial discussions,” Houston stated.

Permit extension

The Chairman noted that Driftwood LNG received an extension through 2029 to both the order authorizing construction from the US Federal Energy Regulatory Commission and its Section 404 permit from the US Army Corps of Engineers.

As of the end of March, Tellurian said it had $1.3 billion in total assets, including around $51.8M of cash and cash equivalents.

New Fortress Energy, the US LNG production and import projects developer, said that it finalized agreements with Mexico’s Federal Electricity Commission (CFE), including plans for an offshore production hub near the Gulf of Mexico import terminal at Altamira.

NFE said that its Mexican accords were fully supported by Mexican President Andrés Manuel López Obrador and by Manuel Bartlett, the Chief Executive of the CFE.

The New York-based company noted that the final versions of the agreements would be signed at a ceremony on November 3 in Mexico City.

The NFE-Mexican accords cover the expansion and extensions of NFE’s supply of natural gas to multiple CFE power generation facilities in the northwest Mexican state of Baja California Sur.

IT additionally includes the selling of NFE’s 135-megawats La Paz power plant to CFE as well as the new FLNG hub off the coast of Altamira in the state of Tamaulipas.

For the LNG production hub, NFE said that the Mexican side through the CFE would be supplying the requisite feed-gas to multiple NFE FLNG units using CFE’s existing and under-utilized pipeline capacity.

Strategic alliance

“We are pleased to complete these agreements and expand our strategic alliance with CFE, which we expect to result in the delivery of our first FLNG unit by mid-2023 and enable the construction of a new LNG hub off the coast of Altamira,” explained Wes Edens, Chairman and CEO of NFE.

“I look forward to seeing President López Obrador next week, appreciate his continued support, and value the opportunity to demonstrate our commitment to producing cleaner, cheaper and more reliable energy for Mexico and the world,” declared Edens.

NFE commenced commercial operations in July 2021 at an LNG regasification terminal in the port of Pichilingue in Baja California Sur.

The US company noted that the terminal, which features NFE’s proprietary “ISOFlex system”, is positioned to supply natural gas to CFE’s generation facilities in the otherwise resource-stranded region.

For the Altamira operations in the Gulf of Mexico, NFE and the CFE are fully collaborating on the creation of the new FLNG hub.

Pursuant to the now finalized agreements, NFE will deploy multiple FLNG units of 1.4 million cubic metres capacity each that utilize CFE’s existing firm pipeline transportation capacity on Sur de Texas-Tuxpan Pipeline to deliver feed-gas volumes to NFE.

The Sur de Texas-Tuxpan Pipeline is operated by Canadian company TC Energy.

NFE’s first FLNG unit, which is under construction at the Kiewit Offshore Services shipyard near Corpus Christi in Texas, is currently expected to achieve mechanical completion in March 2023.

“As part of the agreements, CFE would share in the production and marketing of a portion of the LNG volumes from the new Altamira offshore FLNG hub,” said NFE.

The American Gas Association (AGA) has condemned the Federal Energy Regulatory Commission’s new permit process for US natural gas pipelines, saying FERC’s policy change opens the way for emissions criteria to take precedence over the energy needs of ordinary Americans.

The US Department of Energy’s Office of Fossil Energy has delivered a new report on likely impacts of the “ill-conceived” ban on hydraulic fracturing proposed by the incoming Administration that would cost millions of jobs and make gasoline and electricity prices much higher for all Americans while risking a recession.