Page 12 - NorthAmOil Week 14 2023

NorthAmOil PROJECTS & COMPANIES NorthAmOil

Tellurian agrees to $1bn deal for

Driftwood LNG project land

LOUISIANA US LNG developer Tellurian has reached an to $1.52 in early trading on April 6.
agreement with an unnamed New York-based “It is just the tip of the iceberg with respect to
institutional investor to sell around 800 acres (3.2 capital needs,” Stifel analyst Benjamin Nolan told
square km) in Louisiana where it is building its Reuters in a note, adding that the lease would
Driftwood LNG project, the Houston-headquar- bring with it a 40-year liability of $87.5mn per
tered company revealed on April 6. year that would rise by 3% annually.
In a filing with the US Securities and The deal has been reached just over six
Exchange Commission (SEC), Tellurian signed months after Tellurian cancelled a plan to sell
a letter of intent (LoI) to have the institutional over $1bn in debt as it searches for funding to
investor purchase the land in Lake Charles for build the Driftwood LNG plant, which will pro-
$1bn and then lease it back to the LNG developer duce 27.6mn tonnes per year (tpy) of the super-
for 40 years at a capitalisation rate of 8.75% and chilled fuel.
a letter of credit (l/c) equal to 12 months of rent. Driftwood LNG received regulatory approv-
Meanwhile, the proposed deal also includes a als in January to begin construction; however,
clause requiring Driftwood’s investors to ensure the project has encountered a rocky road with a
the master lease and for the firm to secure con- number of setbacks. Last year, two large poten-
tingent guarantors that the institutional investor tial customers expressed doubts about the com-
will approve. Finalisation of the sale-leaseback pany’s ability to finish the project, which was
will be completed by mid-July. News of the deal followed by the cancellation of some LNG sup-
saw the company’s shares skyrocket close to 30% ply deals.™

Venture Global to make repairs at Calcasieu

Pass, delaying start of commercial operations

LOUISIANA US-BASED Venture Global LNG will make located south of the city of Lake Charles on the
repairs at the Calcasieu Pass export plant in US Gulf Coast. At full capacity the export plant
Louisiana, delaying the start of the facility’s full will produce 10mn tonnes per year (tpy) of LNG.
commercial operations, the company revealed Construction began on the project in the first
on March 31. For now, the facility remains in the quarter of 2019, with financial close achieved in
commissioning stage. the third quarter of the same year. Full commer-
According to Venture Global, the Calcasieu cial operations had been scheduled to start in the
Pass facility had “failures in the five horizontal third quarter of 2023 prior to the discovery of
Venture Global has heat recovery steam generator (HRSG) units the leaks.
been exporting LNG that facilitate combined-cycle power genera- Venture Global has already been producing
from Calcasieu Pass tion”. Leaks were reported by employees in the LNG from the Calcasieu Pass project for around
for over a year but the welds between the upper carbon steel header and a year, with gas flows averaging around 1.6bn
project has not yet finned tubes of the HRSG units 2 and 3. cubic feet (45.3mn cubic metres) per day so far
started full commercial Venture Global has now requested that its this year. Gas flows in March averaged 1.4 bcf
operations. supplier General Electric Co. (GEC) inves- (39.6 mcm) per day.
tigate the cause of the leaks. It also acknowl- Although the start of full commercial opera-
edged that the units would need extensive tions has been delayed, the facility began export-
repairs before the power island will be able to ing cargoes in March 2022, with 138 cargoes
function reliably again, with the firm promis- shipped from the plant as of March 21, according
ing to update the timing of the repairs and the to S&P Global Commodity Insights. Based on
new date for the commencement of commer- average free on board (FOB) cargo prices over
cial operations. the last year, that would give the facility revenue
The 1,000-acre (4 square km) facility is easily surpassing $10bn.™

P12 www. NEWSBASE .com Week 14 06•April•2023