Houston-based Commonwealth LNG has entered into a Heads of Agreement (HOA) with Pittsburgh-based EQT for 1 mtpa of liquefied natural gas (LNG) under a 15-year tolling agreement, and associated gas supply to Commonwealth LNG's facility in Cameron, Louisiana. Final terms remain subject to negotiation of a definitive agreement between the parties.
Commonwealth LNG Founder and Executive Chairman Paul Varello said the agreement will "connect EQT's vast natural gas assets to Commonwealth's LNG facility, thus creating a robust value chain from wellhead to water. Accessing EQT's natural gas production, which achieved a 20% year-over-year reduction in Scope 1 and Scope 2 greenhouse gas emissions, supports Commonwealth's goal of achieving best-in-class environmental standards."
The US Federal Energy Regulatory Commission approved the project in November 2022 in a 5-0 vote. Preliminary site work is planned to begin in the second half of 2023. The project will be built in 3 years using a modular approach, with major components fabricated offsite.
Toby Rice, president and chief executive of EQT, said, "The HOA with Commonwealth represents another step forward in EQT's risk-adjusted LNG strategy, which seeks to diversify a portion of our production to international markets via arrangements that offer the best combination of upside exposure and downside risk mitigation. Our tolling capacity gives us the flexibility to sell our gas directly to end users globally, and we are currently pursuing long-term purchase agreements with prospective international buyers."
He added that the EQT's scale, inventory depth, and environmental attributes "uniquely position us to provide energy security while driving emissions reductions via coal displacement both domestically and abroad. We are excited to begin unleashing EQT's reliable, low-emissions natural gas on the global stage."
This HOA comes about 3 weeks after Commonwealth LNG announced a strategic agreementwith Baker Hughes to maximize the facility's output and reduce emissions using the energy technology company's LM9000 aeroderivative gas turbine technology.
Commonwealth said it anticipates a final investment decision (FID) on the project in the first quarter of 2024, with the first cargo deliveries expected in 2027.
