Shell, Energy Transfer Sign U.S. LNG Project Agreement

Texas-based Energy Transfer LP (Dallas) and Shell U.S. LNG LLC (Houston) have signed an agreement that provides the framework to further develop a large-scale LNG export facility in Lake Charles, La. The move advances the initiative to a potential final investment decision and the companies have initiated contacts with LNG engineering, procurement, and contracting companies aimed at issuing an invitation for project tenders within coming weeks.

Noted is that the Lake Charles LNG project brings together two leading entities—Shell as a worldwide leader in gas and LNG, and Energy Transfer as one of the largest pipeline operators in the U.S.—to advance a project to monetize abundant, low-cost U.S. natural gas for export to global customers.

“We are pleased to be moving forward with Shell in progressing this major LNG export project,” said Tom Mason, president of Lake Charles LNG, an Energy Transfer subsidiary. “We believe the combination of our assets and Shell’s LNG experience will create a platform for exporting natural gas from the U.S. Gulf Coast to the global marketplace that is unmatched.”

“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-2020s,” said Frederic Phipps, Shell vice president of Lake Charles LNG. “Our partnership with Energy Transfer plays to our respective strengths. Together we are expertly positioned to advance a project that could provide customers in Asia, Europe, and the Americas with cleaner, reliable energy for decades to come.”

The project framework agreement defines the commercial terms by which the two companies will work toward delivering an LNG export facility on the Gulf Coast. Shell will act as the project lead prior to the companies reaching a final investment decision and, if sanctioned, as construction manager and operator of the facility. Energy Transfer will act as site manager and project coordinator prior to the final investment decision. The determination whether to proceed with construction will be subject to both companies’ assessment of the outcome of the engineering, procurement, and contracting bidding process, overall project competitiveness, and global LNG market conditions.

The Lake Charles project is a 50/50 venture between Energy Transfer and Shell. If it proceeds, it would convert Energy Transfer’s existing Lake Charles LNG import and regasification terminal to an LNG export facility with a liquefaction capacity of 16.45 million (metric) tonnes a year to export U.S. natural gas to global customers. The project is fully permitted, uses existing infrastructure, and benefits from abundant natural gas supply and proximity to major pipeline infrastructure, including Energy Transfer’s extensive network. If built, the project is estimated to create up to 5000 local jobs during construction and 200 full-time positions when fully operational.

(SOURCE: The Weekly Propane Newsletter, April 22, 2019)