LNG Plants Don't Come Cheap: Tellurian Seeks Louisiana Project Investment

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Researched by Industrial Info Resources (Sugar Land, Texas)--Raising money for a new business venture can be a monumental task, particularly when it comes to energy production. Such is the case for Houston, Texas-based Tellurian Investments Incorporated, which was formed earlier this year with the goal of producing and exporting liquefied natural gas (LNG).

Earlier this week, the company announced it received a $25 million investment, which is 0.1% of the $25 billion it needs to fully build out a planned LNG facility in Louisiana.

Tellurian was formed by Charif Souki, a founder of Gulf Coast LNG giant Cheniere Energy (NYSE:LNG) (Houston) and Martin Houston, former chief operating officer of BG Group plc (now part of Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands)). Souki left Cheniere in late 2015, telling the host of CNBC's Mad Money in April his departure was due to a "difference of opinion" with key shareholder Carl Icahn over cash flow distribution and future capital investment.

In announcing the new company last February, the co-founders said Tellurian would make use of several advantages offered in the U.S., including "low-cost natural gas, superb locations for facilities on the Gulf Coast, low-cost manufacturing, availability of labor and a regulatory environment which is well suited for and has a track record for approving these projects."

The company's grassroot Driftwood LNG Liquefaction and Export Terminal in Lake Charles, Louisiana, initially would produce 5.2 million metric tonnes per year of LNG starting in 2022, increasing to more than 26 million metric tonnes by mid-2026.

But first, Tellurian still needs to raise a lot of money. Souki told Mad Money in April that the company had received $24 million in investments, plus $15 million from his own accounts.

In August, Tellurian and Magellan Petroleum Corporation (NASDAQ:MPET) (Denver, Colorado) announced a merger agreement with Tellurian to develop the Driftwood project. As part of the deal, which is scheduled to close by the end of this year, the merged company would go public, according to news accounts.

And earlier this week, Tellurian said it received a $25 million preferred equity investment from LNG technology provider GE Oil & Gas. Meg Gentle, who was named Tellurian chief executive officer in August, said in a press statement that the investment "represents another step forward in the development of Driftwood LNG, where we are working together with GE to design the lowest cost liquefaction for the global market."

Commenting on the situation, Chris Easley, Industrial Info North American Research Manager - Oil & Gas, said: "With the experience and knowledge of the LNG market possessed by Souki and Houston, Tellurian could very well be the next company behind Cheniere to push through with real LNG production and exporting in the Gulf Coast. Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.