LNG projects in the Gulf of Mexico are boosted as an alternative to Russian gas

Houston (AFP) – Two years ago, US liquefied natural gas (LNG) company Tellurian was in freefall: its stock price crashed, it laid off 40% of its staff and suspended a key project in Louisiana.

Now, executive chairman Charif Souki says investors are “lining up at the door asking me, ‘Can we fund your project?'”

At the annual CERAWeek energy conference in Houston, Souki told AFP that LNG projects have been boosted by the renewed emphasis on energy independence following Russia’s invasion of Ukraine.

“Global market demand and Europeans’ desire to shed their dependence on Russian gas…these are all positive signals from the market, which will obviously help drive these projects forward and move them towards investment decisions. finals,” said Charlie Riedl, vice president of the natural gas industry advocacy group.

On March 8, the United States banned all imports of LNG, oil and coal from Russia, and has for years encouraged its European allies to reduce their dependence on its eastern neighbor.

The White House, in a statement, also argued that “federal policies do not limit oil and gas production.”

“On the contrary, the Biden administration has been clear that in the short term, supply must follow demand,” he added.

Eight LNG terminals are operating in the United States, pumping 14 billion cubic feet (400 million cubic meters) per day, and fourteen other terminals have already been approved by the Federal Energy Regulatory Commission (FERC).

This is the case of Driftwood LNG, the future liquefaction plant and export terminal of Tellurian, south of Lake Charles, in Louisiana.

Stalled for a year and a half, the company will finally launch the massive project next month. When completed, the site will be able to export 3.6 billion cubic feet per day.

Charif said that “in principle we should be able to supply LNG in 2026” to oil companies Shell, Vitol and Gunvor.

The Gulf Coast will see plant construction ramp up in the coming months: five projects have already been approved by the FERC in Louisiana, and seven more in Texas and Mississippi.

Faster regulatory approvals

Since its first exports in 2016, the Gulf Coast has become a key hub for global LNG shipments.

A network of pipelines connects state ports to gas fields across the country, from the Permian and Haynesville basins in the south to the Marcellus, the nation’s largest land reserve, in the northeast.

Experts say liquefied natural gas projects have been boosted by renewed focus on energy independence after Russia invaded Ukraine Jean-Christophe VERHAEGENAFP/Dossier

Once the gas arrives on the coast, it is liquefied and transferred to LNG carriers, most of which leave for Europe.

At the beginning of the month, not far from the future tellurian site, Venture Global LNG saw its first tanker depart from its brand new Calcasieu Pass terminal.

The export terminal and accompanying liquefaction plant were built off the coast of Louisiana in just 29 months, a record time for such a project, according to company CEO Mike Sabel.

He added that, in his estimation, government regulatory approvals for Calcasieu and another project near New Orleans have been “faster than they were before” the war in Ukraine.

“They’re very supportive, so I’m very optimistic that they’ll approve projects faster,” he said.

“A lose-lose-lose proposition”

In a room reserved for him at the CERAWeek convention, Sabel shows some reporters a video of tugs, which he says are named after his children, maneuvering near the new factory.

He notes another reason for the sector to rejoice: in early February, the European Commission ruled that gas could, under certain conditions, contribute to the fight against climate change.

“It’s a big problem for banks that are susceptible to political pressure and public pressure to support infrastructure investment,” he said.

According to the Natural Gas Supply Association, each liquefaction plant requires an investment of $10 billion to $20 billion. Only nuclear power plants require more initial capital.

However, not everyone is so happy about the bright future of the gas sector.

“The expansion of gas production in the United States is a lose-lose-lose proposition for the communities of the Gulf (of Mexico), Europe and the climate,” Nikki Reisch of the Center for international environmental law (CIEL).

“LNG has all of the climate impacts of fracking gas plus the additional emissions of energy-intensive liquefaction, cooling and transportation. Plus, it endangers the health and livelihoods of people on the edge mining and exporting,” she added.

“War should be a push to increase investment in renewables, electrification and efficiency, not double down on dirty energy sources,” she said.

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