Texas LNG Gains Momentum with Offtake Agreement

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)

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Summary

Glenfarne turned a non-binding commitment for its planned Texas LNG export facility into a sales and purchase agreement. Macquarie has committed to supplies for the next 20 years.

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0.5 MTPA for Macquarie

Designated as medium-probability in the database for IIR Energy, the proposed Texas LNG facility secured support from a 20-year purchase agreement from Macquarie.

Project leader Glenfarne Group (New York, New York) said late Wednesday that it converted a previous non-binding Heads of Agreement arrangement with Macquarie Energy (Sydney, Australia) into a 20-year sales and purchase agreement (SPA). Over the 20-year period, Macquarie, part of a broader Australian conglomerate, will secure 0.5 million metric tons per annum (MTPA) of liquefied natural gas (LNG) from Glenfarne's planned export project.

Brendan Duval, the chief executive officer of Glenfarne, said securing binding support from a company such as Macquarie gives Texas LNG a competitive edge.

"Macquarie is a world-class partner, and their participation in our offtake portfolio demonstrates strong confidence in Glenfarne's ability to deliver a reliable, low-emissions source of U.S. LNG to global markets," he said.

If completed as planned, that SPA would represent a little more than 10% of the proposed full capacity of 4 MTPA, or about 195 billion cubic feet (Bcf), slated for the facility in Brownsville, Texas.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil and Gas Production Project and Plant databases can learn more about Texas LNG--including capacities, investment values and necessary equipment--from detailed project reports and a plant profile.

Texas LNG is planning to build its facility on a 625-acre site situated close to access points for gas flows from the Permian and Eagle Ford shale basins. Of those, the Permian is the most prolific gas producer, averaging around 25 billion cubic feet per day (Bcf/d).

'Green by Design'

LNG is a so-called "bridge fuel" for the transition away from fossil fuels because it's less polluting than coal. Methane emissions are a nagging concern for critics of the industry, however, who note that natural gas is still a polluting fuel.

Texas LNG said it would be able to alleviate at least some of those environmental concerns by using electric motors powered by renewable energy to drive operations at Brownsville.

"Texas LNG is a 'Green by Design' liquefaction facility designed to significantly reduce operational CO2 emissions," Glenfarne said Tuesday.

The Brownsville facility is already sanctioned by the U.S. Federal Energy Regulatory Commission (FERC) for exports to countries that lack a U.S. free-trade agreement.

U.S. Leadership in LNG

The United States is the world leader in LNG exports, supported by its vast shale natural gas deposits inland. President Donald Trump on his return to the White House in January created an energy council that would help steer a handful of new fossil-fuel projects, with new announcements from the LNG sector seemingly coming at least once a week.

IIR Energy reported that domestic LNG terminals received 18.7 Bcf of feed gas on Thursday, just shy of the all-time high of 19.1 Bcf reached November 28. The decline was due to lower pipeline receipts from terminals in Tennessee and Texas. Inland production levels, meanwhile, are about 4% higher than during November as of Thursday.

At the onset of the war in Ukraine in 2022, U.S.-sourced LNG supplies helped ensure European energy security at a time when the bloc was working to lower its dependency on Russian supplies.

But by July, the United States could claim a 24% market share in the form of LNG, though it's Norway that's positioned at the main supplier. This week, the European Commission announced that, by November 2027, it will have phased out Russian gas imports entirely.

Key Takeaways

• Momentum for Glenfarne with the new SPA.
• Texas LNG is considered a medium-probability project, according to IIR Energy.
• It would tap the Permian and Eagle Ford basins.

By the Numbers

• 625 acres: site that could host Texas LNG
• 4 MTPA: expected capacity, should the project be completed
• 25 Bcf/d: average Permian production will support feed gas

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).