Petrostrategies - The World Energy Weekly

Petrostrategies - The World Energy Weekly

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Tellurian’s investment in gaslines to serve Driftwood LNG increases to $7 billion

Petrostrategies, February 2nd, 2018

By launching two new gasline projects for the liquefaction plant which it is planning to build at Driftwood, Louisiana (27.6 MMt/year or 37 bcm/year), Tellurian Inc. has taken another step towards the formation of a vertically-integrated structure. On December 18, it announced that it would build two gaslines to Gillis, Louisiana, each with a capacity of 2 billion cu.ft./d (20.7 bcm/year): the Permian Global Access Pipeline (625 miles/1,000 km long, 42 inches in diameter), which is mainly intended to transport gas associated with shale oil production, and the Haynesville Global Access Pipeline (200 miles/320 km long, 42 inches in diameter). At Gillis, the two lines will rejoin the Driftwood Pipeline (DWPL: 96 miles/155 km long, 48 inches in diameter). The DWPL has a capacity of 4 billion cu.ft./d (41.4 bcm/year), and is intended to serve the future LNG plant. These three infrastructures will form the Tellurian Pipeline Network, which is estimated to cost about $7 billion. Joey Mahmoud will be President of the network.

Meg Gentle, CEO of Tellurian Inc., has said that the new gaslines “will deliver natural gas from multiple low-cost basins and de-bottleneck the existing pipeline infrastructure in south-west Louisiana”. The DWPL is scheduled to enter service in mid-2021, followed by the other two gaslines in late 2022, provided that their capacities can be successfully marketed. During the first half of 2018, Tellurian will begin to solicit third-party shipper interest, and will seek to commercialize its two new gasline projects by the end of that year.

As part of its vertical integration strategy, Tellurian is also developing a foothold in gas production. On November 16, it finalized the acquisition of reserves estimated at 1.3 TCF (37 bcm) in the Haynesville basin, where it hopes to be able to produce gas for $2.25/MMBtu. Small-scale production (4 million cu.ft./d) is already underway there. The company’s international presence is not so well known. In Australia‘s Bonaparte basin, a shallow-water zone south of the Timor Sea’s gas fields, Tellurian owns 100% of a block where it has conducted 2D and 3D seismic surveys and for which it is currently seeking a suitable farm-out partner. In England, south-west of London, the company has stakes in two onshore exploration blocks of “large tight reservoirs” which has led to the discovery of potential oil resources on the Horse Hill-1 well.

Tellurian Inc. was founded by Charif Souki (formerly of Cheniere Energy) and Martin Houston (formerly of British Gas). In December 2016, Total acquired a 23% stake in the company for $207 million. According to Tellurian’s strategy, interested companies can either reserve liquefaction capacity in its future trains at Driftwood, or buy a stake in its project for about $1,500/ton. In addition, the company has just entered the LNG trading business, having chartered an LNG carrier.