Developers of the Driftwood liquefied natural gas (LNG) export facility stand to benefit from a property tax break approved by Louisiana regulators deemed “crucial” to development.
Louisiana’s Board of Commerce and Industry voted in mid-December to approve the five-year property tax break for Tellurian Inc. subsidiary Driftwood LNG LLC under the Industrial Tax Exemption program. The program grants manufacturers an 80% property tax abatement for an initial term of five years and the option to renew for another five years. In exchange, manufacturers make a commitment to jobs and payroll in the state. ExxonMobil Corp. and Marathon Petroleum Co. LP have received similar tax breaks.
“LNG is rapidly becoming a global commodity and to be competitive in commodities, businesses must be low cost,” Tellurian spokeswoman Joi Lecznar told NGI. “We encounter fierce competition from around the world as potential suppliers of LNG.”
On the Gulf Coast alone, three LNG export projects are expected to reach final investment decisions (FID) by June, according to Wood Mackenzie.
“This abatement is crucial to the development of our $15 billion Driftwood project and to the development of our other assets across Louisiana, including upstream natural gas production in the Haynesville and proposed pipelines, representing” a nearly $30 billion investment, Lecznar said.
Under the program, Driftwood LNG would bring 350 permanent jobs to Louisiana at an estimated total salary of $33.2 million, as well as provide 6,400 jobs with an estimated total salary of $531 million during the construction phase, according to board documents.
Louisiana has risen to become an international hub of commerce for petrochemical investments and increasingly LNG exports, with the start-up two years ago of Cheniere Energy Inc.’s Sabine Pass LNG project in Cameron Parish. Besides Sabine Pass, Venture Global LNG Inc. has two projects under development in Louisiana.
The state “has set itself up for economic growth and success using incentives to attract business investments like ours, that bring jobs and other revenue to the state for the next 40-50 years,” Lecznar said.
The Driftwood LNG facility is awaiting final permits, with its final Environmental Impact Statement expected from federal regulators in January. “We are commercializing the project and hope to take final investment decision and begin construction the first half of 2019,” the Tellurian spokeswoman said.
Driftwood is expected to begin operations in 2023, exporting up to 27.6 million metric tons/year (mmty) globally from the Calcasieu Parish using Lower 48 production. Earlier this month, the company secured a memorandum of understanding with Vitol Inc. to supply 1.5 mmty for at least 15 years from the planned facility.