Tellurian seeks more time to complete Driftwood LNG terminal

US LNG terminal developer Tellurian has requested more time from the US FERC to complete the construction of its Driftwood LNG project in Louisiana.

In April 2019, the FERC authorized Driftwood LNG to site, construct, and operate facilities for the liquefaction and export of natural gas in Calcasieu Parish, Louisiana.

Besides the 27 mtpa LNG terminal, the regulator also authorized Driftwood Pipeline to build a new 48-inch interstate natural gas pipeline system in Evangeline, Acadia, Jefferson Davis, and Calcasieu Parishes.

The order said that Driftwood LNG’s facilities and the pipeline must be fully completed and made available for service within seven years of the date of order.

However, Driftwood told the FERC in a filling dated October 4 that it would need an additional 36 months to complete construction of the LNG terminal and the pipeline and place the entire project in service, rendering the current inservice deadlines in the order infeasible.

In this regard, Driftwood requests that the FERC grant an approximately 36-month extension of time so that it has the required time to receive its long lead manufactured equipment, which cannot be manufactured and delivered to the site in time to meet the current deadline, install the equipment and construct the remaining facilities, and continue to attract and secure customers, and financing, it said.

“Driftwood respectfully requests that the Commission grant this request for extension by November 16, 2023 so as to help expedite the timely conclusion of ongoing commercial and financial discussions between the project and certain potential partners,” the firm said.

Construction

Tellurian issued a limited notice to proceed to compatriot engineering and construction giant Bechtel in March last year.

Under the first phase, Tellurian aims to build two LNG plants near Lake Charles with an export capacity of up to 11 mtpa.

However, the company is still working to secure financing for the project.

Tellurian expects the first phase to cost about $14.5 billion with about of $6 billion equity investment.

The firm said it has invested up to $1.5 billion in the project up to date.

Driftwood said in the filling with the FERC that Bechtel has driven about 11,800 piles to date as construction continues to progress at the site.

Last month, Tellurian also signed a deal with compatriot energy services firm Baker Hughes for the supply of eight main refrigerant compression packages for its Driftwood LNG project in Louisiana.

The two firm said that the agreement secures a delivery schedule for the eight LM6000PF+ gas turbines, main refrigerant compressors, and control units required for the first Driftwood phase of, supporting Driftwood’s ability to achieve initial LNG production in 2027.

However, the agreed upon expedited delivery time pushes back the in service of the LNG terminal to no earlier than late 2027 for Phase 1 and beyond for the remaining phases, Driftwood said.

“Based upon the Phase I delivery timeline, Driftwood LNG expects the timing to be similar
for the Phase II equipment which will shift the in-service of the Phase II facilities into 2029,” it said.

Commercialization

Driftwood LNG and Driftwood Pipeline encountered “unforeseen circumstances” in recent years that are preventing each from meeting the FERC’s in-service deadline for the LNG terminal and the associated pipeline.

“Global upheaval stemming from the COVID-19 pandemic caused cascading market and logistical impacts on workforce, safety, supply chain, and investment in infrastructure projects,” Driftwood said.

“As noted in many recent orders granting LNG projects extensions of time, these circumstances caused unforeseeable difficulties for LNG project development and made securing long-term LNG commercial commitments difficult over the last several years,” it said.

“However, the pandemic has finally subsided, global energy markets are rebounding, and the need to alleviate dependance on Russian gas after the invasion of Ukraine has led to increased demand for LNG deliveries from the United States to European markets,” Driftwood noted.

Driftwood said is “making progress” on its commercialization of the LNG terminal.

The company “continues to be flexible” and amend its commercial strategy to attract offtake or equity partners.

In that regard, Driftwood remains “actively engaged” in securing final commitments for both the offtake agreements as well as financing for the project, it said.

“However, potential financing counterparties and customers require regulatory certainty that Driftwood will have sufficient time to construct and place the project in service,” it said.

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