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Expecting growing demand, LNG investors pour money into new infrastructure

Oct 26, 2017

The shale drilling boom over the last decade has propelled the U.S. into a dominant position in the natural gas export market, and Louisiana is at the forefront of that change, industry representatives said at Thursday's closing presentation of the Louisiana Gulf Coast Oil Exposition.

"It really dwarfs what's happening in other parts of the world when you look at what's happening here," said Jason French, vice president of government and public affairs for Tellurian, Inc.

Natural gas today remains cheap and abundant, but investors are pouring money into massive infrastructure projects in Louisiana.

More than $90 billion in LNG projects are either under construction or proposed to begin construction over the next decade, French said. Investors include the Houston-based Tellurian, which is developing the Driftwood LNG terminal that would handle 4 billion cubic feet per day of natural gas for export.

The facilities would compete with Cheniere Energy's Sabine Pass LNG facility — currently the only liquefied natural gas export facility in the continental U.S. since exports began last year — and other facilities under development around the country.

At Thursday's event, French and other industry representatives said they're preparing that infrastructure as forecasts show prices will rice as global demand is expected to outpace supply by 2022.

"We believe there's a significant opportunity for the U.S. to meet that demand," French said.

'A very attractive opportunity'

Tellurian's proposed Driftwood LNG terminal is going through the permitting process with the Federal Energy Regulatory Commission, with construction expected to begin in 2018. The facility is planned for completion by 2024, French said.

Further ahead in the development process is LNG Limited's Magnolia LNG project. The Australian company's project is also planned for Calcasieu Parish.

Greg Vesey, LNG Limited's CEO and managing director, said the $4.35 billion facility has received permits from FERC and the U.S. Department of Energy to handle about 1.4 billion cubic feet per day.

Vesey said U.S. natural gas is plentiful, LNG prices are not affected by upturns or downturns like the crude oil market and there's optimism about the new political environment in Washington — and that makes American LNG attractive to global markets.

"So as a buyer from anywhere in the world looks for a good place to buy gas, or LNG, this is a very attractive opportunity for that. Now, that's great for south Louisiana, because southwest Louisiana's a wonderful place to do business in the energy industry. It's got great infrastructure for an LNG facility like ours," Vesey said.

Vesey said construction is expected to begin on the Magnolia facility by early 2019 at the latest.