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Tellurian's Driftwood LNG project takes step forward with positive final environmental review


FERC's recommended mitigation seeks protection of bird habitat

Developer remains on track for investment decision in first half 2019

  • Author
  • Harry Weber
  • Editor
  • Jasmin Melvin
  • Commodity
  • Natural Gas
  • Topic
  • LNG Market Evolution

Houston — Tellurian's proposed Driftwood LNG export terminal reached a milestone Friday as US regulators issued a positive final environmental review for the Louisiana project.

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Because liquefaction terminals take about four years to complete, many of the active developers such as Tellurian will need to reach final investment decisions this year to be able to start up in the 2023-24 timeframe during which LNG buyers are expected to have the greatest need for new supply.

The conclusions in the Federal Energy Regulatory Commission's final environmental impact statement keep Tellurian on track to reach a final investment decision and begin construction in the first half of 2019, subject to the agency issuing a permit certificate for the project. The FEIS said approval of the project, with the mitigation measures recommended, would result in a less than significant level of environmental impacts.


"We look forward to receiving the agency's order granting authorization to site, construct and operate our Driftwood project," CEO Meg Gentle said in a statement. "Tellurian will then stand ready to make a final investment decision and begin construction in the first half of 2019, with the first LNG expected in 2023."

Among other things, FERC's recommended mitigation measures state that Tellurian shall not start construction until the developer consults with the US Fish and Wildlife Service to determine whether proposed project activities could affect the eastern black rail -- a small marsh bird -- or its habitat, and files copies of all correspondence with the agency's secretary.

Meanwhile, Tellurian said recently it has narrowed to a short list the number of companies with which it expects to sign equity investment partnership agreements in the weeks ahead to help finance construction of Driftwood LNG.

Investors are eagerly awaiting proof of commercial viability for the terminal and three feedgas pipelines Tellurian also plans to build.


Commercial success will determine how many of the second wave of US LNG export projects move forward in 2019 in what will be a critical year for decision-making.

Tellurian has pitched a different business model than its peers to finance construction, asking customers to pay an up-front fee for an equity interest in Driftwood Holdings, which will consist of entities including the terminal, that will then give them the right to lift 1 million mt/year of LNG from Driftwood for the life of the terminal. The buy-in of $500/mt was originally $1,500/mt. Tellurian will retain as much as 11.6 million mt/year of capacity from Driftwood to market on its own. In December, Tellurian said it had reached a preliminary 15-year supply deal with commodity trader Vitol for 1.5 million mt/year of LNG from the facility.

-- Harry Weber,

-- Edited by Jasmin Melvin,