Tellurian Targets Summer Construction at Louisiana LNG
Driftwood gets the green light, as demand rebounds and the stars align at last.
Texas LNG developer Tellurian is targeting this summer to start construction of the $1.8-billion Driftwood LNG-export project on the west bank of the Calcasieu River, south of Lake Charles, Louisiana.
“There is a strong need for additional liquefaction capacity and we’re probably the project that is the closest to starting construction,” Tellurian cofounder and executive chairman Charif Souki said.
In November 2017, When Tellurian and US-based Bechtel signed four fixed-price, lump-sum, turnkey agreements totaling $15.2 billion for engineering, procurement, and construction (EPC) services, construction was expected to start in 2018, with operations beginning in 2022.
Over the past 2 years, however, Driftwood and numerous other projects have been delayed as natural gas prices slumped and customers were unwilling to sign long-term deals needed to finance projects.
Last year, demand destruction caused gas prices in Europe and Asia to plunge to record lows below $2/MMBtu, while US gas prices fell to their lowest in 24 years. In the wake of the crash, in June 2020, Tellurian announced it would delay the start of construction until this year.
Now, LNG demand is on the rise as countries like China and India shift power generation away from coal-fired plants. Prices for fuel and shipping fees have soared due to cold weather in Asia and bottlenecked shipments at the Panama Canal.
Souki said he believes that global LNG demand is on track to increase by around 200 million tonnes over the next 7 years. In 2020, global LNG demand hit a record high of 360 million tonnes.
The four staggered phases of the project on the 1,000-acre site will include:
- 20 liquefaction units
- Liquefaction technology
- 20 GE refrigeration compressors
- Three 235,000-m3, full-containment LNG storage tanks
- Three marine loading berths
Bechtel completed the front-end engineering and design study for the project in the first half of 2017, while EPC agreements were concluded in November 2017.
The first phase of Driftwood is slated for operation in 2025 and will produce about 16.5 mtpa of LNG, equivalent to about 2.2 billion scf/D of natural gas.
Once complete, the terminal will be able to export up to 27.6 mtpa to customers worldwide. One billion scf of gas is enough to supply about 5 million homes for a day.