Tellurian Cuts Pipelines to Reduce Phase 1 Costs at U.S. LNG Export Plant

(Reuters) — U.S. liquefied natural gas (LNG) developer Tellurian Inc reduced the cost of the first phase of its proposed Driftwood LNG export project in Louisiana by around 30% to roughly $16.8 billion by deferring some planned pipelines. 

The first phase will now include liquefaction units capable of producing 14.4-16.6 million tonnes per annum (MTPA) of LNG and the Driftwood pipeline to deliver up to 4.0 billion cubic feet per day (bcfd) of gas to the plant, Tellurian said at the Citi Midstream/Energy Infrastructure Conference on Wednesday.

It will not include Tellurian's proposed 2.0-bcfd Permian, Haynesville or Delhi pipes.

Oil and gas companies worldwide have delayed decisions to build new LNG export plants as gas prices in Europe and Asia fell to record lows as demand for energy collapsed because of the novel coronavirus pandemic. 

Even before the pandemic, gas prices were already trading at their lowest in years after a record number of LNG plants entered service in 2019 and caused a supply glut.

Tellurian, which reduced the cost of Driftwood's first phase to $1,042 per tonne from $1,473, said it expects global demand to rebound in coming years. 

The company said the lack of investment in new projects this year will result in LNG capacity constraints by 2021.

Earlier this month, Tellurian Chief Executive Meg Gentle said the company "continues working to secure equity partners ... and looks forward to delivering reliable energy in 2024.” 

But to start producing LNG in 2024, the company would have to start building the liquefaction plant this year or next. Tellurian has already started to do some early site preparation work at Driftwood.

Tellurian has said the Driftwood project, including all liquefaction trains capable of producing about 27.6 MTPA of LNG, the pipelines and other assets, would cost about $27.5 billion.


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