Page 5 - GLNG Week 41 2021

GLNG COMMENTARY GLNG

… but the amount of investments that we’re dis- “As an independent developer, that challenge
cussing here – be it electric drives or the intro- of tying down the financing, offtake, not run-
duction of hydrogen … investments of that ning out of money in between and closing an
nature – they’re enormously capital-intensive,” EPC [engineering, procurement and construc-
Brouillette said. As a result, he expects estab- tion contract] – that’s a lot of work,” he said. He
lished players to continue leading the market, went on to explain that the company’s priority
while new projects will face higher barriers. His was bringing the first project online, as it would
thinking can be reflected in the moves Sempra subsequently be easier to add new volumes
has been making recently on the LNG side, incrementally, with each unit for Glenfarne
with the company having pushed back plans to being 2mn tpy.
build its proposed Port Arthur LNG project and
opting instead to prioritise expanding its exist- What next?
ing Cameron LNG terminal in Louisiana. The Glenfarne is not the only new entrant pursuing
company is also building carbon capture and an FID on the US Gulf Coast. Commonwealth
storage (CCS) capacity to help lower Cameron’s LNG’s CEO, Paul Varello, was reported last week
emissions profile. as saying his company was close to finalising
“There’s no doubt doing incremental build supply deals that would cover roughly half of
from an existing platform has a lot of advan- the offtake it needs to sell in order to sanction its Glenfarne is not
tages,” said Duval, speaking from the perspec- 8.4mn tpy plant in Louisiana.
tive of a new entrant to the market. He went on According to Varello, talks have picked up the only new
to say that one of the first things he had learned with potential buyers in Asia, Europe and else- entrant pursuing
as an independent developer was the value of where as gas demand and prices had risen.
starting from a strong financial base for any However, the timeline of expected regulatory an FID on the US
given project. approvals has forced the company to delay its
LNG developers are approaching this chal- planned FID from late 2022 to the first quarter Gulf Coast.
lenge in a growing variety of ways. In the case of of 2023.
Glenfarne’s proposed Texas and Magnolia LNG It comes as no great surprise that buyers
projects in the US, this involves developing sup- are interested in securing long-term supply to
ply to meet the company’s own demand. make themselves less vulnerable to spot mar-
“We got into the LNG export project develop- ket volatility. However, they still appear to be
ment business in order to supply demand-side proceeding with caution amid uncertainty over
projects that we’re developing,” Duval explained. gas’ long-term role in the energy transition. As
The company’s initial plan is to build two 2mn a result, the volumes being locked in via offtake
tonne per year (tpy) trains at Texas LNG. “We’ll agreements are often smaller than some of the
FID that just to support the projects we’re devel- deals struck in previous years, and this trend is
oping, but we’ll still be happy to sell out those expected to continue.
volumes to long-term or medium-term offtake, “Generally, I think we’re going to see smaller
and then shift our internal demand to the next parcels of contracting, so you’re going to have to
train at Magnolia, for example,” Duval added. aggregate more of those,” Walker said.™

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