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DRIFTWOOD LNG

Tellurian Executive Chairman Charif Souki on LNG, going green and the nuclear option

Charif Souki was faced with taking a company whose future seemed uncertain last year and positioning it to begin building a multibillion dollar liquefied natural gas terminal.

It was a daunting, but not intimidating, task.

Souki founded and led Houston-based Cheniere Energy, which became the nation’s first LNG exporter in early 2016. Forced out by investor Carl Icahn, who’d grown weary of his greater ambitions to keep expanding, Souki regrouped.

With Martin Houston, he co-founded Tellurian Inc., another Houston-based liquefied natural gas company, only to see it flounder at the start of the pandemic. Tellurian laid off more than 40 percent of its 176 employees and slashed expenses in an attempt to save the Driftwood LNG project it was developing in Lake Charles, La. The proposed $16.8 billion facility lacked the contracts or financing to support construction, even though it held a federal permit to make and export more than 27.6 million metric tons of LNG per year.

Now, as demand rises and supplies shrink, LNG prices have rebounded to the point that the timing is good for Driftwood to get underway.

The facility would have the capacity to process and export a total of 27.6 million metric tons of LNG per year. The terminal would have 20 processing units, or trains, with a capacity of about 1.4 million metric tons per year each. The project, build over four phases, is expected to be completed in 2026. Global construction and engineering firm Bechtel has been tapped to work on Driftwood.

Souki, the company’s executive chairman, addressed its projects, climate change and electric generation with the Houston Chronicle in late June.

Q: Where does the Driftwood project stand?

A: We’re in a good position to start the planning for the next phases, which means that we need to start construction activities. We will start doing the things we need to do in order to prepare the site for Bechtel, namely, relocating a pipeline that comes through the property.

Hopefully Bechtel will mobilize in the first quarter of next year. There’s a critical need for additional natural gas on a global basis today. So I think the basic item would be mostly how fast can Bechtel build.

Q: In addition to returning to the Haynesville shale on the Texas-Louisiana border after 2 1/2 years , how else will you expand? Would it be through mergers and acquisitions?

A: We can do that by acquiring more leases and developing more acreage, and also by doing acquisitions. We’ll be doing both.

Q: As the industry looks to reduce greenhouse gas emissions, meet increased customer demand and keep up with government requirements for cleaner energy to reduce global warming, more companies are turning to carbon capture. Will Tellurian take steps in this direction?

A: Carbon sequestration of an industrial process is feasible. It’s just a matter of cost, so you have to have the incentives to do that.

A carbon tax is the best way of doing it. If you have a price on carbon, then you will have the incentive to do the carbon sequestration.

And then there’s the whole issue of what to do with the carbon. You’ve sequestered it now where you’re going to put it? We haven’t gotten to the point yet where we can take the carbon out of the methane molecule and have a product that is usable or transportable. It’s a nice aspiration, but it’s gonna take years of research to figure out how to do this.

Q: But then things can take off.

A: Once the research is done, there is still going to be a regulatory environment because hydrogen is dangerous. It’s a complex topic to talk about, and we’re looking at all this, but it is going to take years before we get to a solution.

We’re always looking at things that we can do effectively. We have filed a permit for a pipeline that will help Tellurian sequester about a million tons of emission by using electric power instead of gas power to nearly eliminate the project’s carbon dioxide emissions.

We’re doing things that we think are practical that are doable that can change things.

Q: President Joe Biden promises to crack down on oil and gas pollution and increasingly shun fossil fuels to help fight climate change. What are your thoughts on the fight against climate change?

A: We have been an advocate of doing something about climate for a long time. And if you want to deal with climate, the only way to do so is to make energy more expensive. Again, we need to put a cost on carbon.

But when you make energy more expensive, you have to deal with social justice.

Q: So you are in favor of a carbon tax paid by any company that emits carbon and not by consumers. How does this tie into social justice, or the distribution of wealth?

A: The social justice element comes in if energy is more expensive. What do we do to mitigate that for the people who need it?

It is extremely important to balance concerns about the climate with concerns about social justice and affordable energy for everybody. Social justice means making sure that everybody gets their energy everywhere in the United States, and everybody gets it at an affordable price. There’s no other way to ensure that everyone has access to energy.

It becomes even more important when you leave the U.S. and Western Europe and you go into developing countries, about 85 percent of the world’s population. To tell them that they don’t have the right to the same standards of living that we have in the U.S. and Europe is unconscionable. It is not going to be accepted.

Q: So what do you do?

A: I think the notion that you can address climate change without making energy more expensive, therefore making it more unfair, is a non-starter. Now, you have to mitigate the unfairness of the situation. You have to provide public transportation, give people subsidies, incentivize people to drive more intelligent cars.

There are things that you can do today that actually will mitigate climate and will also provide energy on a global basis. I’m 100 percent in favor of looking at those things, like nuclear energy, which will address the issue of clean energy but at a much higher cost because it is significantly more expensive than anything else we have today. We have to reduce the cost of nuclear energy.

Q: Anything else?

A: We have to increase the price of carbon to where it meets the price at which nuclear energy becomes feasible and fair. And we have to deal with the social issue of having people accept nuclear energy in their backyard. Those are two very complicated steps that are going to take a long time.

In this whole endeavor, the U.S. can play a critical role because we have a resource, LNG, that we can share with the rest of the world. Our role in this is extremely important.

Q: What other key issue is the industry facing?

A: The fact that people need more electricity on a global basis. I would argue that in a lot of places around the world are going with coal because they have no other choice. I’m sure that’s not the intent of the regulators in Europe or in the U.S., but it is the consequence of ill-conceived policies. Coal usage is already going up and it is going to continue until we do something about it.

Q: You think the way the electrical grid in the U.S. is operated is problematic — it’s not just in Texas.

A: We’re starting to have some dysfunction with grids on a global basis. Texas and California are larger states with diametrically opposed political systems and yet both of them have the same problem — they don’t know how to deliver electricity to our people on a reliable consistent basis.

That same problem is starting to appear in other industrialized countries like France and Germany and the rest of Europe. It’s very difficult to plan for all of these things on a long term basis and we’re finding ourselves short now. The net result is unintended consequences, both in Europe and the U.S.

Q: What about renewables as a way to address climate change?

A: We should do the best we can with the current renewables we have, that is wind and solar mostly, but we have to understand their limitations. It’s not going to happen on a massive scale.

At the same time, there are things that we can do to alleviate the carbon problem. For instance, planting trees and other nature-based solutions. This actually does work and it can be done on an affordable basis.

marcy.deluna@chron.com

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DRIFTWOOD LNG

AT-A-GLANCE

Driftwood LNG LLC, owned by Tellurian Inc., is developing a liquefied natural gas (LNG) production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, Louisiana. Once complete, the terminal will be able to export up to twenty-seven million, six hundred thousand tonnes of LNG per year to customers worldwide.

Driftwood has a $15.5 billion lump-sum turn key engineering, procurement and construction contract with Bechtel that guarantees cost, performance and schedule. It has received the most significant permits required for construction and operation, has progressed to ~30% engineering complete having invested approximately $150 million, and has completed the purchase and lease of approximately 1,000 acres of real estate ensuring an ideal construction site with ample laydown area for equipment and deep-water access for shipping.

  • BUSINESS DEVELOPMENTS & PROJECTS

July 22, 2020, by Mirza Duran

US LNG export player Tellurian has reportedly renewed talks with India’s Petronet regarding an investment of up to $2.5 billion in its Driftwood development in Louisiana.

Driftwood LNG (Image: Tellurian)

Tellurian’s 27.6 mtpa Driftwood project sustained a major setback in May when a preliminary deal with Petronet LNG fell through.

Following the lapse of the deal and due to the effects related to the Covid-19 pandemic, the US LNG developer also delayed a final investment decision on its Driftwood project to 2021.

Under the preliminary deal, Petronet planned to take a $2.5 billion equity stake in Driftwood.

The deal also called for the Indian company to buy up to five million tonnes per year of LNG from the project.

Hovewher, there is now a new twist to it as several media reports on Tuesday claim that the duo renewed talks to give the parties more time.

Reuters reported citing unidentified sources that the two companies now have time until the end of December to finalize the deal.

The agency says the deal was renewed last week ahead of a virtual meeting between Indian oil minister Dharmendra Pradhan and U.S. Energy Secretary Dan Brouillette. This move comes just weeks after Tellurian’s co-founder Charif Souki  said he was “re-engaging to provide additional support to the company taking up the role of executive chairman.

News of the area in Cameron next to Commonwealth and G2 at 391 Gulf Beach Hwy!

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The image to the left is an aerial view and the image to the right is a more descriptive view of our property in Cameron that is next door to Commonwealth on the South side and G2 on the North side, that we are entertaining the possibility of setting up an Industrial Plaza with a Fuel Depot on which we will be housing a number of companies that will be securing a presence to accommodate the Multi $Billion LNG clients in that area.

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