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Released March 30, 2022 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Energy security initiatives mean U.S. liquefied natural gas (LNG) facilities can move forward without secure finances, though the nature of the interdependent market suggests that security is a relative term.
Tellurian Incorporated (NYSE:TELL) (Houston, Texas) said it was moving forward alongside Bechtel Energy, part of Bechtel Corporation (Reston, Virginia), on the construction of the Driftwood LNG export terminal planned for Lake Charles, Louisiana.
Phase I of the facility will have two LNG plants with a nameplate export capacity of 11 million tonnes of U.S.-sourced product annually. First deliveries are expected by 2026. For related information, see March 29, 2022, article - Tellurian Proceeds with Driftwood LNG Project.
Tellurian President and Chief Executive Officer Octavio Simoes said the start of construction is a sort of down payment on global energy security.
"Energy security is a leading concern in many countries today and the United States must do our part to supply LNG to the global market as quickly as possible," he said in a statement.
European economies are looking to diversify their gas supplies in the wake of the Russian invasion of Ukraine. Russia is one of the main natural gas suppliers to the European continent, though the interdependent relationship is riddled with geopolitical complexities. As it stands now, both sides need each other -- Russia needs the income, and Europe needs the gas.
With a vast network of Soviet-era pipelines running through Ukraine, and concerns that Russia is using its energy resources as political leverage, energy security concerns are now real enough to warrant an "if you build it, they will come" mentality for the industry.
Shane Mullins, a vice president here at IIR, said that's the case for Tellurian, which is moving forward without securing complete financing for Driftwood.
"The Driftwood project already has secured three 10-year, long-term contracts from Vitol (Geneva Switzerland), Shell plc (NYSE:SHEL) (London, England) and Gunvor Group Limited (Geneva) for LNG and can certainly play its part to assisting the Biden administration's goals to improve Europe's energy security, while lowering global greenhouse gas emissions using responsibly sourced natural gas by early 2026."
Natural gas took the early spotlight in the energy transition pathway last year as a bridge to a cleaner future. The war-driven push for diversity and energy security only adds to its attractiveness.
Click on the image at right for a graph showing U.S. LNG export destinations from January 1 to March 31. This graph is provided by Refinitiv.
The U.S. Energy Information Administration (EIA) reported that U.S. exports of LNG set a record last year, with volumes surging 50% from 2020. Expanded liquefaction capacity and increased demand from Asia and Europe helped lead the surge. At some point in the not-too-distant future, the U.S. will leapfrog Australia and Qatar to become the world's leader in LNG exports.
New deliveries, meanwhile, only add to recent initiatives from the U.S. and the European Union. Both sides are looking to ensure that U.S. LNG supplies offer a safe alternative to Russian natural gas. Even Germany, a terminal point for the controversial Russian-backed Nord Stream gas pipeline network, has recently pivoted toward Western supplies.
U.S. Energy Secretary Jennifer Granholm recently equated the energy relationship with Europe to the Marshall Plan, the multibillion-dollar aid package meant to rebuild Europe after World War II. That, however, also gave the U.S. a foundation to step up to global hegemony by creating markets that depended on its goods.
With U.S. LNG, it may be that Europe is replacing one interdependent relationship with another. Ed Crooks, the vice chairman for Americas research at Wood Mackenzie (Edinburgh, Scotland), espoused the benefits that U.S. LNG offers to energy security, while also -- albeit briefly -- exposing the potential vulnerabilities.
"Like the Marshall Plan, it is a program that is not purely altruistic for the U.S.," he said of Granholm's message. "Achieving its goals will both serve U.S. strategic interests, and expand markets for American exporters."
Industrial Info is tracking 10 projects, worth more than $15 billion, that are tied to the Driftwood liquefaction and export terminal. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Tellurian Incorporated (NYSE:TELL) (Houston, Texas) said it was moving forward alongside Bechtel Energy, part of Bechtel Corporation (Reston, Virginia), on the construction of the Driftwood LNG export terminal planned for Lake Charles, Louisiana.
Phase I of the facility will have two LNG plants with a nameplate export capacity of 11 million tonnes of U.S.-sourced product annually. First deliveries are expected by 2026. For related information, see March 29, 2022, article - Tellurian Proceeds with Driftwood LNG Project.
Tellurian President and Chief Executive Officer Octavio Simoes said the start of construction is a sort of down payment on global energy security.
"Energy security is a leading concern in many countries today and the United States must do our part to supply LNG to the global market as quickly as possible," he said in a statement.
European economies are looking to diversify their gas supplies in the wake of the Russian invasion of Ukraine. Russia is one of the main natural gas suppliers to the European continent, though the interdependent relationship is riddled with geopolitical complexities. As it stands now, both sides need each other -- Russia needs the income, and Europe needs the gas.
With a vast network of Soviet-era pipelines running through Ukraine, and concerns that Russia is using its energy resources as political leverage, energy security concerns are now real enough to warrant an "if you build it, they will come" mentality for the industry.
Shane Mullins, a vice president here at IIR, said that's the case for Tellurian, which is moving forward without securing complete financing for Driftwood.
"The Driftwood project already has secured three 10-year, long-term contracts from Vitol (Geneva Switzerland), Shell plc (NYSE:SHEL) (London, England) and Gunvor Group Limited (Geneva) for LNG and can certainly play its part to assisting the Biden administration's goals to improve Europe's energy security, while lowering global greenhouse gas emissions using responsibly sourced natural gas by early 2026."
Natural gas took the early spotlight in the energy transition pathway last year as a bridge to a cleaner future. The war-driven push for diversity and energy security only adds to its attractiveness.
The U.S. Energy Information Administration (EIA) reported that U.S. exports of LNG set a record last year, with volumes surging 50% from 2020. Expanded liquefaction capacity and increased demand from Asia and Europe helped lead the surge. At some point in the not-too-distant future, the U.S. will leapfrog Australia and Qatar to become the world's leader in LNG exports.
New deliveries, meanwhile, only add to recent initiatives from the U.S. and the European Union. Both sides are looking to ensure that U.S. LNG supplies offer a safe alternative to Russian natural gas. Even Germany, a terminal point for the controversial Russian-backed Nord Stream gas pipeline network, has recently pivoted toward Western supplies.
U.S. Energy Secretary Jennifer Granholm recently equated the energy relationship with Europe to the Marshall Plan, the multibillion-dollar aid package meant to rebuild Europe after World War II. That, however, also gave the U.S. a foundation to step up to global hegemony by creating markets that depended on its goods.
With U.S. LNG, it may be that Europe is replacing one interdependent relationship with another. Ed Crooks, the vice chairman for Americas research at Wood Mackenzie (Edinburgh, Scotland), espoused the benefits that U.S. LNG offers to energy security, while also -- albeit briefly -- exposing the potential vulnerabilities.
"Like the Marshall Plan, it is a program that is not purely altruistic for the U.S.," he said of Granholm's message. "Achieving its goals will both serve U.S. strategic interests, and expand markets for American exporters."
Industrial Info is tracking 10 projects, worth more than $15 billion, that are tied to the Driftwood liquefaction and export terminal. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a list of detailed project reports.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
