Gulf of Mexico draws LNG players with Rio Grande deal and FLNG

Tuesday, 12 July 2022
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New Fortress Energy joins Pemex for LNG off Veracruz as US plant signs China deals 

LNG News Editor: 

New Fortress Energy Inc, the expanding LNG terminals, production, shipping and power assets owner has signed an agreement with Mexico’s national energy company Petróleos Mexicanos (Pemex) to form a strategic partnership including a floating LNG project in the Gulf of Mexico.

At the same time NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a third supply agreement with a Chinese company since the start of 2022.

Joint development

New Fortress, based in New York, said the partnership involves the joint development of the Lakach deepwater natural gas field for Pemex to supply natural gas to Mexico’s onshore domestic market and for NFE to produce LNG for export to global markets.

The Lakach deepwater gas field is located 93 kilometres (58 miles) southeast of Veracruz port in the GoM at water depths ranging between 850 metres and 1,200m.

It was the first deepwater development project for Pemex, which is the sole operator of the field.

“We are honored to enter into this important strategic partnership that strengthens NFE’s commitment to long-term operations in Mexico and demonstrates the tremendous value of our integrated natural gas infrastructure business model,” said Wes Edens, Chairman and Chief Executive of NFE.

“This is the first of a number of offshore development opportunities that leverage what we think is an ideal formula for offshore gas assets around the world, one that combines gas for domestic use with gas for export,” explained Edens.

As part of the deal, NFE will invest in the continued development of the Lakach field over a two-year period by completing seven offshore wells.

In addition, NFE will deploy to the Lakach field a 1.4 million tonnes per annum FLNG unit to liquefy the majority of the produced natural gas.

“Remaining natural gas and associated condensate volumes would be utilized by Pemex in Mexico’s onshore domestic market,” added NFE.

Feed-gas resources

Lakach is one of the largest non-associated gas fields in the GoM with total original gas in place of 1.1 trillion cubic feet.

“Coupled with the nearby undeveloped Kunah and Piklis fields, the area has a total resource potential of 3.3 Tcf and comprises one of the most significant undeveloped offshore gas resources in the Western hemisphere,” said NFE.

The US company will produce the LNG using its own “Fast LNG” design offshore.

NFE’s “Fast LNG” pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure to enable a much lower cost and faster deployment schedule than floating liquefaction vessels.

The US company is involved in other FLNG ventures, including one offshore the US Gulf state of Louisiana and another offshore the Republic of Congo in West Africa.

The Houston, Texas-based company NextDecade signed a 20-year sale and purchase agreement with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings.

Under the SPA, China Gas will purchase 1.0 million tonnes per annum of LNG indexed to Henry Hub and delivered on a free-on-board (FOB) basis.

“The LNG will be supplied from the second Train at Rio Grande LNG, which is expected to start commercial operations as early as 2027,” said NextDecade.

The US company has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.

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