Tellurian Advances Development of Louisiana LNG Terminal

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Researched by Industrial Info Resources (Sugar Land, Texas)--Tellurian Incorporated (NASDAQ: TELL) (Houston, Texas) is advancing its natural gas business. This week, the company announced it will buy natural gas-producing assets in northern Louisiana, and last month, said its 26 million-ton-per-year liquefied natural gas (LNG) export project had reached an engineering study milestone. Industrial Info is tracking nearly $26 billion in active Tellurian projects.

In early 2016, former Cheniere Energy Incorporated (NYSE: LNG) (Houston, Texas) Chief Executive Officer Charif Souki announced that he would start Tellurian. The company would offer mid-scale natural gas liquefaction and export projects along the U.S. Gulf Coast.

Tellurian announced Wednesday that a wholly-owned subsidiary will buy natural gas producing assets and undeveloped acreage in northern Louisiana for $85.1 million from a private seller. The purchase includes 9,200 net acres with up to 138 operated Haynesville shale and Bossier drilling locations, about 1.3 trillion cubic feet (Tcf) of total natural gas resource potential and 19 producing operated wells with net current production of four million cubic feet per day (MMcfd). The transaction is scheduled to close by the end of November.

Chief Executive Officer Meg Gentle said in a press statement that acquisition of natural gas producing assets is integral to its business. "We expect our full cycle cost of production and transport to markets will be approximately $2.25 per MMBtu [million British thermal units], which represents a significant savings to natural gas we will purchase at Henry Hub and other regional liquidity points."

The company is developing the Driftwood LNG terminal near Lake Charles, Louisiana, and an associated pipeline. Bechtel Group Incorporated (San Francisco, California) has completed the front-end engineering and design (FEED) study and submitted a lump sum turnkey (LSTK) engineering, procurement and construction (EPC) proposal for the LNG terminal, Tellurian said in August.

"The EPC proposal differentiates the Driftwood Project from others by enhancing cost certainty, which will support commercial and financing discussions," Gentle said, adding she expects Tellurian to execute a binding EPC agreement with Bechtel this fall.

Tellurian plans to begin construction of the initial 5.2 million ton-per-year phase of the LNG terminal in mid-2018 and begin operations in 2022. The facility will be expanded by up to four additional 5.2 million-ton-per-year production trains, which would be built in subsequent years. Each production train has an estimated total investment value of $5 billion. See Industrial Info's project reports for the LNG liquefaction production and export terminal, the Train 2 addition, the Train 3 addition, the Train 4 addition and the Train 5 addition. For related information, see May 22, 2017, article - Tellurian Driftwood LNG Project Progresses Despite Withdrawal of Public Offering.

A $1 billion natural gas pipeline project is being planned to feed the LNG terminal. It will carry up to 4 billion cubic feet per day of natural gas to the facility. The planned pipelines will tie into the Tennessee Gas Pipeline, the Texas Eastern Transmission mainline system and the Columbia Gulf Transmission system. For more information, see Industrial Info's project reports.

Tellurian reported a net loss of $33 million for the fiscal quarter ended June 30.

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