December 12, 2019 / 5:02 PM / 2 months ago

U.S. allows Tellurian to start site prep work on Louisiana Driftwood LNG export plant

Dec 12 (Reuters) - U.S. energy regulators approved Tellurian Inc’s request to start site preparation work at its proposed $27.5 billion Driftwood liquefied natural gas (LNG) export project in Louisiana.

The U.S. Federal Energy Regulatory Commission (FERC) said on Wednesday that Driftwood could start vegetation clearing and grading, demolition and removal of existing buildings, and dredging of marine berths, among other activities.

“With FERC’s approval, we are doing some preliminary work on the site,” Tellurian spokeswoman Joi Lecznar said in an email on Thursday, noting “we have progressed to completing over 27% of our engineering, and we have ordered some equipment in order to prepare for construction.”

Driftwood is designed to produce 27.6 million tonnes per annum (MTPA) of LNG or about 3.6 billion cubic feet per day (bcfd) of natural gas. One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.

Tellurian has said it plans to start building the liquefaction plant in early 2020 and produce the first LNG from the facility in 2023.

Driftwood is one of about a dozen LNG export projects in North America that said they could decide to build their plants in 2020. Together those plants, which analysts said will not all be built, would produce over 160 MTPA of LNG.

Several of those projects, including Driftwood, had previously said they could make that final investment decision in 2019.

The U.S.-China trade war and a global oversupply of the fuel that caused gas prices in Europe and Asia to fall made it difficult for several LNG developers to sign enough long-term customer agreements this year. Those agreements are needed to secure financing for their billion dollar projects.

Total world demand for LNG reached a record 316 MTPA in 2018 and is projected to soar by around 100 MTPA by 2023, according to the U.S. Energy Information Administration.

Unlike most proposed U.S. LNG export projects that will liquefy gas for a fee, Tellurian is offering customers the opportunity to invest in a full range of services from production to pipelines and liquefaction.

Tellurian has said its partners include units of Total SA , Vitol, Petronet LNG Ltd, General Electric Co and Bechtel, which has a contract to build the $15.4 billion liquefaction facility. Pipelines, reserves and other expenses make up the rest of the project’s cost.

Reporting by Scott DiSavino Editing by Chris Reese

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