Page 7 - NorthAmOil Week 18 2021

NorthAmOil COMMENTARY NorthAmOil

has issued a series of announcements recently Cancellations
relating to its plans to decarbonise its proposed While some projects are further ahead in the
Rio Grande LNG project. race to FID, and others’ prospects remain uncer-
The plans, which revolve around the devel- tain, other schemes have been scrapped alto-
opment of an accompanying carbon capture gether. Since the start of this year, NextDecade
and storage (CCS) project, have attracted vari- has abandoned plans for a second project, Gal-
ous other companies to partner with NextDec- veston Bay LNG, while Annova LNG in the Port
ade. Following the flurry of announcements, of Brownsville has also been cancelled.
it is increasingly anticipated that an FID on at Meanwhile, it emerged last week that Can-
least two trains at the 27mn tpy Rio Grande ada’s Pembina had paused development of the
project could come online as scheduled this Jordan Cove LNG project on the US Pacific
year. Coast, in Oregon. (See NorthAmOil Week 17)
Another high-profile LNG developer is Tellu- It is increasingly thought that this project will
rian, which was co-founded by former Cheniere eventually be cancelled altogether too.
Energy CEO Charif Souki. The company has Internationally, meanwhile, turmoil in
long been talking up the prospects for its Drift- Mozambique bodes badly for the projects Venture Global is
wood LNG project in Louisiana, but has had to under development there, but could result
deal with some significant setbacks. Most nota- in reduced competition for US developers if not the only US
bly, this includes India’s Petronet LNG backing there are significant delays – or even outright LNG developer
out of a preliminary agreement to buy offtake cancellations.
from Driftwood last year, as well as the with- In the shorter term, there are concerns that to be pushing
drawal of an application for one of the pipelines a new wave of liquefaction capacity will lead to
proposed to supply the terminal. the market becoming oversupplied again, espe- forward with
Despite this, Tellurian continues to sound a cially after Qatar starts up its LNG expansion
positive note over the prospects for Driftwood. mega-project. Indeed, Tudor, Pickering, Holt & plans for new
Earlier this month, Souki alluded to supply Co. (TPH) has warned of “material oversupply” liquefaction
deals that the company has been working on for re-emerging over 2026-30.
a long time, with his comments suggesting such In the longer term, though, a supply gap is capacity on the
deals could be announced soon. And this week anticipated to emerge and widen in the 2030s.
he said the company had paid off all of its debt. And consultancy Rystad Energy has forecast Gulf Coast.
Tellurian is targeting the start of construc- that 104mn tpy of new LNG supply must be
tion this summer. However, plenty of observers sanctioned in the coming five years to meet the
remain sceptical about Driftwood’s ability to gap between supply and demand in 2030.
proceed, given that Tellurian laid off more than This set of circumstances presents an oppor-
40% of its staff last year, saw its losses widen and tunity for US LNG developers. However, the
is still thought to lack sufficient financing to competition internally in the race to FID
underpin the $18bn project. remains considerable.™

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