Energy Transfer LP signed a project framework agreement with a unit of joint venture partner Royal Dutch Shell PLC that is set to further develop the Lake Charles LNG project in Louisiana and expected to push the project closer to a final investment decision.
The agreement includes commercial terms for developing the LNG export facility. Shell would serve as the project lead and, if the project is sanctioned, as construction manager and operator of the facility. Energy Transfer will be the site manager and project coordinator prior to the final investment decision, or FID.
Energy Transfer and Shell US LNG LLC also said they have started talks with LNG engineering, procurement and contracting companies and intends to call for contract bids sometime in the following weeks, according to a March 25 news release. An FID for the project, which has all major regulatory permits in hand, would still rely on the results of the contract bidding process, the project's competitiveness and global LNG market conditions at the time of the decision.
The 50/50 joint project, which would convert Energy Transfer's existing Lake Charles LNG import and regasification terminal to an export facility, is designed to have a liquefaction capacity of 16.45 million tonnes per year for U.S. natural gas export to international customers.
"Lake Charles presents a material, competitive liquefaction project with the potential to provide Shell with an operated LNG export position on the U.S. Gulf Coast by the time global supply is expected to tighten in the mid-2020's," Shell Vice President for Lake Charles LNG Frederic Phipps said.
Energy Transfer recently said that the viability of the project will depend on U.S.-Chinese trade dynamic and looks to reach a potential resolution to the trade rift between the two countries to accelerate its projects.