Next U.S. LNG Exporter Says Project Ahead of Schedule
(Bloomberg) -- Construction on the next major liquefied natural gas export terminal in the U.S. is ahead of schedule and cargoes for a second project will be fully contracted by the middle of 2021, according to the developer’s top executive.
Venture Global LNG Inc. plans to have six of 18 production units at the Calcasieu Pass plant in Louisiana installed by mid-February, Chief Executive Officer Mike Sabel said in an interview with Bloomberg TV. Commercial operations are expected in 2022. The first phase of Plaquemines LNG, the company’s second project in the state, will be fully contracted by the end of June, Sabel said.
Venture Global’s momentum comes during what has been a difficult year for most U.S. LNG developers. The coronavirus pandemic sapped demand for the heating and power-plant fuel, hindering investment and adding to a global glut. Growing concern about climate change, meanwhile, has led to heightened scrutiny of gas projects.
Tellurian Inc., which is also seeking to build a terminal in Louisiana, failed to finalize a deal with a key backer. France’s Engie SA, under pressure from an environmental group, decided against buying LNG from a Texas project planned by NextDecade Corp.
Venture Global’s modular approach to construction has allowed Calcasieu Pass to proceed ahead of schedule despite the pandemic and a hyperactive hurricane season, Sabel said. The plant’s production units, called trains, are made at a Baker Hughes facility in Italy and shipped to Louisiana for installation.
Two of the pre-built trains have already been installed at the site and two more are on the way. The modular method lowered construction costs by 40% and proved to be a “massive mitigation to construction risk” during hurricane season, Sabel said.
“If we had not pushed that fabrication into the factory, those raw materials would have been spread around our site,” Sabel said.
The company plans to use the same approach for its proposed Plaquemines LNG export terminal. With a planned capacity of 20 million metric tons of LNG, the project will be twice the size of Calcasieu Pass and will be split into two phases. Electricite de France SA and Poland’s PGNiG and have long-term agreements to buy a combined 30% of the Plaquemines project’s first phase.
But the company is not without competition, even as some rival projects remain stalled. A terminal backed by Exxon Mobil Corp. and Qatar Petroleum is under construction in Texas. About a dozen projects hold permits for LNG export terminals along the U.S. Gulf Coast and are vying for contracts with the same pool of overseas buyers. Venture Global has said it will make a final investment decision on Plaquemines in 2021, pushed back from a previous estimate of late 2020.
Still, Sabel says global LNG demand is already bouncing back and will surge after the pandemic ends. Buyers, he said, will choose Venture Global’s low-cost projects over competitors.
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