https://www.rigzone.com/news/shell_pulls_out_of_louisiana_lng_project-31-mar-2020-161574-article/
Shell Pulls Out of Louisiana LNG Project
by Matthew V. Veazey
|
Rigzone Staff
|
Tuesday, March 31, 2020
Citing current market conditions, Shell reported Monday that it will not
proceed with an equity interest – and thus exit – the proposed Lake
Charles LNG project.
Prior to Monday’s announcement, Shell and Energy Transfer had
anticipated developing the project via a 50/50 joint venture. The
proposal entails converting Energy Transfer’s existing import and
regasification terminal in Lake Charles, La., into an LNG export
facility with a liquefaction capacity of 16.45 million tonnes per annum
(mtpa). Energy Transfer will now take over as the project’s developer,
Shell stated.
“This decision is consistent with the initiatives we announced last week
to preserve cash and reinforce the resilience of our business,”
commented Maarten Wetselaar, Shell’s director for Integrated Gas and New
Energies, in a written statement emailed to Rigzone.
On March 23, Shell unveiled plans to cut its operating and capital
expenses by $8-9 billion.
“Whilst we continue to believe in the long-term viability and advantages
of the project, the time is not right for Shell to invest,” continued
Wetselaar. “Through the transition, we will work closely with Energy
Transfer.”
Shell stated that it will continue to support Energy Transfer with the
ongoing bidding process for the engineering, procurement and
construction (EPC) contract and then plan a phased handover of remaining
project-related activities. In a separate written statement, Energy
Transfer noted that Shell has committed to support the process through
the receipt of commercial EPC bids in the second quarter of this year.
Given Shell’s exit from Lake Charles LNG, Energy Transfer stated that it
will consider “various alternatives to advance the project.”
Possibilities include bringing in one or more equity partners and
scaling down the project’s size from three liquefaction trains (16.45
mtpa) to two (11 mtpa), Energy Transfer explained.
“We continue to believe that Lake Charles is the most competitive and
credible LNG project on the Gulf Coast,” remarked Tom Mason, Energy
Transfer’s executive vice president and president for LNG. “Having the
ability to capitalize on our existing regasification infrastructure at
Lake Charles provides a cost advantage over other proposed LNG projects
on the Gulf Coast. The Lake Charles project also benefits from its
unparalleled connectivity to Energy Transfer’s existing nationwide
interstate and intrastate pipeline system that provides direct access to
multiple natural gas basins in the U.S.”
Mason pointed out that Energy Transfer continues to discuss LNG offtake
deals and a potential equity investment with “several significant”
Europe- and Asia-based LNG buyers.
“In light of the advanced state of development of the project, we remain
focused on pursuing this project on a disciplined, cost efficient basis
and, ultimately, the decision to make a final investment decision will
be dependent on market conditions and capital expenditure
considerations,” stated Mason.
Built 38 years ago, Energy Transfer’s Lake Charles regasification
facility boast four LNG storage tanks, two deepwater docks in the
Calcasieu Channel as well as other infrastructure assets, the company
stated.
As Rigzone reported in late-2019, the Lake Charles LNG project has
already secured necessary permits from the U.S. Federal Energy
Regulatory Commission and the U.S. Department of Energy.
=====================================
To subscribe, unsubscribe, turn vacation mode on or off,
or carry out other user-actions for this list, visit
https://www.freelists.org/list/keiths-list
Note: new climate change website is now in pre-launch
Visit https://www.10n10.ca/e/index.shtml