LNG

Japanese trading house Mitsui and Company Ltd, has purchased more shale-gas assets in Texas and plans to bring them to full-scale development and production as possible feed-gas supplies for LNG output.

EQT Corp., the leading US natural gas producer in the Appalachian shale basins and an emerging LNG player, reported a dropped in net income in the first quarter of 2024 as prices were lower, sales increased and a merger was agreed with Equitrans Midstream Corp.

The US Supreme Court has removed all obstacles to completing the long-delayed $6-billion Mountain Valley Pipeline to send natural gas from West Virginia to the state of Virginia and onwards to consumers further South and being developed by energy company Equitrans Midstream.

The Court granted Mountain Valley Pipeline LLC's request to lift legal blockages imposed by a lower court that had halted construction of a final short section of the 303-mile (488km) natural gas pipeline.

That final section to be completed is a 3.5-mile (5.6km) corridor through the federally owned Jefferson National Forest.

The gas pipeline being developed by Canonsburg, Pennsylvania-based Equitrans has been delayed by numerous court decisions since construction began in 2018.

Investors

Equitrans is the lead partner building the pipeline with several other companies including NextEra Energy, Consolidated Edison, AltaGas and RGC Resources.

The Court’s ruling was in response to a request from Equitrans to overturn an appeals court orders in early July 2023 to stop building in the Jefferson National Forest while that court considered legal complaints from environmental groups against the project.

Legal challenges to the pipeline continued even after West Virginia Democratic Senator Joe Manchin and other politicians wrote to encourage a positive decision on the Mountain Valle Pipeline into the Debt Ceiling Bill in Congress.

“The Supreme Court has spoken and this decision to let construction of the Mountain Valley Pipeline move forward again is the correct one,” Manchin said in a statement issued by his office.

“I am relieved that the highest court in the land has upheld the law Congress passed and the President signed,” added Manchin.

Final stage

Equitrans had argued that if it did not resume construction soon, it would have been unable to complete before winter weather arrives in November and halts work until the Spring.

The pipeline is designed to transport natural gas from the prolific Marcellus and Utica Shale Basins to the growing demand markets of the mid-Atlantic and southeast regions of the US where LNG export projects are expanding.

The 42-inch diameter pipeline that will link an existing transmission and storage system in Wetzel County, West Virginia, to the Transco Station 165 in Virginia.

The pipeline has capacity of 2 billion cubic feet per day and is fully subscribed under long-term contracts with a diverse group of shippers.

EQT Corp. the largest producer of natural gas in the United States through hydraulic fracturing, has announced the completion of a programme to eliminate methane emissions from natural gas-powered pneumatic devices in production operations.

Delfin Midstream, the US liquefied natural gas developer, and US oil and gas exploration and production company, Devon Energy, have entered into an LNG export partnership.

The companies agreed to a strategic investment deal and a Heads of Agreement that would give Devon up to 2 million tonnes per annum of liquefaction capacity.

The Delfin floating LNG project is based on the deployment of vessel-borne liquefaction facilities with other moored production and storage vessels and recently asked the Federal Energy Regulatory Commission to extend the deadline for the onshore completions of the venture to the 28th of September 2023.

The Delfin developers have already been awarded a deepwater port licence by the US Maritime Administration (MARAD) and the project has been approved by the US Coast Guard.

Delfin is additionally seeking to construct, operate and maintain certain onshore metering, compression, and piping facilities located onshore in Cameron Parish in Louisiana.

Offshore Louisiana

Delfin, based in Houston, Texas, said the HOA provided the framework for finalizing a definitive long-term tolling agreement representing 1 MTPA of liquefaction capacity in Delfin’s first FLNG vessel offshore Louisiana, with the ability to add an additional 1 MTPA in Delfin’s first or a future FLNG unit.

In addition to providing Devon with up to 2 MTPA of total liquefaction on a long-term basis, the HOA also provides opportunities for additional future equity investments in Delfin.

“We are delighted to execute this agreement with Devon, representing a truly strategic partnership between a US producer and a liquefaction provider,” said Dudley Poston, Delfin Chief Executive.

“We believe our unique liquefaction solution provides significant structural flexibility that allows producers to maximize the value of their natural gas, while providing a much-needed source of additional supply to the world LNG marketplace,” added Poston.

Devon is a leading independent E&P company in the US with a premier multi-basin portfolio and a world-class acreage position in the Delaware Basin of West Texas and southern New Mexico.

Investment

“Our decision to invest in Delfin was the result of a thorough process intended to create additional pricing diversification for our natural gas portfolio and deliver a sustainable and capital efficient return for our shareholders,” said Rick Muncrief, Devon’s President and CEO.

“Devon has a strong track record of finding best-in-class midstream and downstream solutions for our production and we are excited to partner with Delfin to meet the need for safe, clean and reliable energy,” stated Muncrief.

Delfin has additionally signed a binding SPA with global commodities company Vitol and an HOA on supply with UK utility Centrica.

As a modular project requiring only 2 MTPA to 2.5 MTPA of long-term contracts to begin construction, and with all necessary permits in hand, Delfin is on schedule to make its FID on its first FLNG vessel by the end of 2022.

In the Delfin-Devon deal discussions, Latham & Watkins LLP served as legal advisor to Delfin and Kirkland & Ellis LLP was legal advisor to Devon.

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 developer of the US Driftwood LNG export plant proposed for Lake Charles in Louisiana, has resumed natural gas drilling in the Haynesville Shale basin in the north of the Gulf Coast state and could acquire more acreage.