The developer of a Gulf Coast liquefied natural gas (LNG) project that would be part of the so-called second wave buildout is seeking more time from FERC to build the export facility, citing difficulty in securing long-term offtake agreements with international customers.
New York City-based Glenfarne Group LLC told the Federal Energy Regulatory Commission on Friday that despite “diligent” efforts to develop the Magnolia LNG project, global market conditions have impacted its ability to secure long-term offtake contracts and achieve a final investment decision (FID).
“A short-term over-supply across the global LNG market, coupled with disruptions in the China-United States LNG trade and the ongoing Covid-19 pandemic, have delayed these offtake contracts and further delayed FID for the project,” Glenfarne said in the FERC filing.
The company is now targeting 2021 for sanctioning the project, with in-service in April 2026.
Magnolia, planned for a 115-acre site near the Calcasieu Ship Channel, was approved by FERC in 2016. The project, acquired from LNG Ltd. in June, would include four production trains, each able to produce 2 million metric tons/year (mmty). It was ordered to be placed in service by April 15, 2021.
FERC authorized Magnolia LNG to begin site preparation in May 2017, and the project’s design has been refined to more efficiently increase LNG output without increasing the terminal’s footprint. It now has a total capacity of 8.8 mmty.
The FERC filing was made jointly with the Kinder Morgan Inc. affiliate building the Lake Charles Expansion Project, which would deliver 1.4 Bcf/d to Magnolia LNG for 20 years. Construction of the Lake Charles Expansion Project is dependent upon Magnolia LNG achieving FID.
Glenfarne reiterated that “as the short-term oversupply eases, Magnolia LNG will be a competitive, low-cost LNG provider due to its direct access to consistently low-priced feed gas” via the Kinder Morgan Louisiana Pipeline, coupled with the utilization of “efficient liquefaction technology and cost-effective modular construction methodologies.”
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