Energy Transfer subsidiary Energy Transfer LNG Export LLC has entered into a Heads of Agreement (HOA) related to its Lake Charles LNG project with MidOcean Energy (MidOcean), a liquified natural gas (LNG) company. The HOA provides a non-binding framework of the major terms for the joint development of the Lake Charles LNG project. Pursuant to the HOA, MidOcean would commit to fund 30% of the construction costs and be entitled to receive 30% of the LNG production (approximately 5.0 MMTPA). The HOA also provides that MidOcean will have the option to arrange for gas supply for its share of LNG production and that MidOcean will commit to long-term gas transportation on Energy Transfer pipelines. The obligations of Energy Transfer LNG and MidOcean under the HOA will be subject to both parties’ determination to take a positive final investment decision (FID) as well as the satisfaction of other conditions precedent.
“We are pleased to have MidOcean partner with us on our Lake Charles LNG project and we believe its participation will provide a significant catalyst towards reaching positive FID,” said Tom Mason, president of Energy Transfer LNG. “MidOcean’s management team brings a wealth of LNG experience to the project.”
If Energy Transfer LNG reaches a positive FID, the LNG export facility would be constructed on the existing brownfield regasification facility site and would capitalize on four existing LNG storage tanks, two deep water berths, and other LNG infrastructure. Lake Charles LNG would also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines. These pipelines allow access to multiple natural gas producing basins, including Haynesville, Permian and Marcellus.
“This agreement has the potential to transform MidOcean’s portfolio, providing a material volume of advantaged Atlantic Basin supply,” said De la Rey Venter, CEO of MidOcean. “This complements our current assets, which are all located in the Asia-Pacific Basin. Geographical diversity is a key enabler for value delivery from an LNG portfolio. MidOcean considers Lake Charles LNG to be one of the most advantaged US LNG projects under development. We look forward to a deep and fruitful multi-decade partnership with Energy Transfer.”
Energy Transfer is developing a large-scale LNG export facility in Lake Charles, Louisiana, located on the Calcasieu ship channel. The project will convert Energy Transfer’s existing Lake Charles LNG import and regasification terminal to an LNG export facility.
The project is fully permitted for three 5.5 MTPA liquefaction trains which will utilize existing infrastructure. It will also benefit from abundant natural gas supply and proximity to major pipeline infrastructure, including Energy Transfer’s vast pipeline network. The project is estimated to create up to 4000 jobs during construction and 200 full-time positions when fully operational.
This fully permitted project will add 240 acres to Lake Charles LNG’s overall footprint which will allow for the development of a liquefaction and export facility. It is the only brownfield project among those in the pre-FID process.
The ability to recapitalize existing assets provides a cost advantage over other proposed LNG projects on the Gulf Coast, with ready access to US gas supply through existing connections to Henry Hub, and connectivity to Energy Transfer’s vast network of natural gas pipelines.
The Federal Energy Regulatory Commission granted its approval in 2015, with authorization from the US Department of Energy to export up to 16.45 MMTPA. It is one of the few proposed LNG export projects along the Gulf Coast that is fully permitted.
