Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
LNG | Natural Gas

Tellurian drops three gas pipelines from first phase of US LNG export project

Natural Gas | Natural Gas (North American)

US Northeast gas storage faces questions following volatile injection season

LNG | Natural Gas | NGL

Platts LNG Alert

Capital Markets | Commodities | Energy | Electric Power | Electric Power Risk | Natural Gas | Banking | Infrastructure | Structured Finance

Global Power Markets Conference, 35th Annual

Bunker Fuel | Oil | Refined Products | Fuel Oil | Gasoline | Shipping | Marine Fuels

Security incident occurs on oil tanker off UK: sources

Tellurian drops three gas pipelines from first phase of US LNG export project

Highlights

Driftwood Pipeline is only one to be built initially

30% reduction in startup capital costs expected

Houston — Tellurian will build only one of four proposed pipelines during the first phase of its Driftwood LNG export project if it decides to sanction the US facility, according to an investor presentation the company issued Aug. 12.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The sharply scaled back midstream ambitions, combined with a focus on lower cost feedgas supplies, will allow Tellurian to reduce total initial project capital costs by 30%. The moves come amid global market conditions that have led to widespread cargo cancellations at existing US liquefaction terminals this summer and prompted multiple developers of new terminal projects, including Tellurian, to delay final investment decisions until 2021. Also, production cuts in some basins have impacted near-term demand for some proposed natural gas pipelines.

Tellurian had long positioned itself as an integrated gas infrastructure company, with plans to produce its own feedgas in the Haynesville Shale and build a network of pipelines to connect those supplies and supplies from the Permian Basin and other plays to its Louisiana export terminal and to serve other customers.

While the broader pipeline plans are not dead and can be revisited as market conditions warrant, for now the developer is deferring its 2 Bcf/d Permian Global Access Pipeline and 2 Bcf/d Haynesville Global Access Pipeline, according to the presentation. The company did not mention its proposed 2 Bcf/d Delhi Connector Pipeline in the presentation, but implied that project also has been deferred when it said the first phase of construction will include only the Driftwood terminal and the already permitted 4 Bcf/d Driftwood Pipeline.

A spokeswoman declined to comment beyond what was in the presentation, which was posted to the company's website and filed with the US Securities and Exchange Commission.

After the project adjustments, total upstream, Driftwood pipeline, liquefaction and owner's capital costs, based on a Phase 1 contractor guaranteed capacity of 14.4 million mt/year, translate to $1,042/mt, versus $1,473/mt estimated in January, Tellurian said.

At full development, about half of the liquefaction terminal's approved 27.6 million mt/year capacity is expected to be used by equity investment partners that Tellurian has been soliciting. The rest would be held by Tellurian to market on its own gas.

The equity arrangements would require the partners to make a minimum upfront $500 million equity investment in the holding company that controls the Driftwood terminal and the pipelines that Tellurian builds, in exchange for the right to lift 1 million mt/year of LNG from the export terminal for the life of the facility.

To date, only France's Total has signed a firm partnership deal tied to Driftwood, a $500 million investment agreed to in 2019. For the last several months, Total has been shedding some of its holdings in Tellurian shares, and one of the energy major's executives recently stepped down from Tellurian's board, with no immediate plans by Total to name a replacement.

Low international prices and demand destruction due to the coronavirus pandemic have spurred US cargo cancellations at existing terminals that began in April and now total at least 157 through September, according to S&P Global Platts calculations.

Long-term contracts provide the operators with fixed fees when customers cancel, but mirroring that framework is expected to be more challenging for developers of additional US projects because of market conditions.