US natural gas producer EQT Corporation has entered into a heads of agreement for liquefaction services from Commonwealth LNG’s proposed facility in Cameron, Louisiana.
EQT plans to liquefy 1 million tons per annum of LNG under a 15-year tolling agreement, it said in a statement.
However, final terms remain subject to negotiation of a definitive agreement between the two firms.
EQT’s president and CEO Toby Rice said this deal 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,” Rice said.
FID in Q1 2024?
Houston-based Commonwealth LNG said in a separate statement it still anticipates a final investment decision on the project in the first quarter of 2024, with first cargo deliveries expected in 2027.
It said that the terms anticipated under the HOA would commence at the start of commercial operation of the facility.
“We are very pleased to add a US producer of EQT’s stature to Commonwealth’s customer portfolio,” Commonwealth LNG founder and executive chairman, Paul Varello, said.
He added that this agreement “will connect EQT’s vast natural gas assets to Commonwealth’s LNG facility, thus creating a robust value chain from wellhead to water.”
The company’s 9.3 mtpa plant in Cameron will use gas turbines and other equipment from energy services firm Baker Hughes as part of a deal announced last month.
Commonwealth LNG recently entered into a non-binding 20-year supply deal with Switzerland-based energy trader MET Group for 1 mtpa of LNG and it also closed an investment of development capital from private funds managed by Kimmeridge Energy Management.
This investment completes the development funding required for the firm to reach FID.
The two firms have also agreed in principle on terms for a 20-year, 2 mtpa LNG offtake commitment from the facility along with the associated gas supply.
Last year, Commonwealth LNG also finalized a supply deal with Australian LNG firm Woodside.
The deals are for the supply of up to 2.5 mtpa of LNG over 20 years to Woodside Energy Trading Singapore from Commonwealth’s LNG export facility.
Commonwealth LNG is planning to build the liquefaction and export facility on the west bank of the Calcasieu Ship Channel at the mouth of the Gulf of Mexico near Cameron, Louisiana.
The facility also includes six 50,000-cbm LNG storage tanks, one jetty with the capacity to service vessels from 10,000 cbm to 216,000 cbm, and a pipeline.
An accelerated construction schedule will allow the project to be built in three years using a modular approach with major components being fabricated offsite.