Texas LNG LLC is seeking export authorization from the U.S. Department of Energy for a project that would send up to 2 million tonnes per annum (mtpa) of liquefied natural gas (LNG) worldwide under tolling agreements.

“We expect to receive FTA [free trade agreement] export approval by the end of Q1 or beginning of Q2 2014, and non-FTA later in the year,” said Texas LNG CEO Vivek Chandra. “In the meantime, we are progressing our engineering efforts and discussions with investors and LNG buyers.”

The Houston-based company recently struck a lease option agreement for the project with the Port of Brownsville in South Texas.

Texas LNG has a 51-acre site along the Port of Brownsville’s deepwater channel. “The Port of Brownsville’s strategic geographic location as one of the closest ports to the Panama Canal will facilitate our efforts to source feed gas from South Texas gas fields such as the Eagle Ford, where large volumes of gas are currently flared and vented, thereby providing both a positive environmental and economic benefit to the region,” Chandra said.

The project would entail a liquefaction barge to be fabricated offsite and then permanently grounded in Brownsville so that it will no longer be a floating vessel. “Our unique barge-based liquefaction solution enables Texas LNG to minimize complex onshore civil construction works, reduce the need to construct large LNG tanks onsite, reduce the overall local environmental and labor impact, and expedite speed to market,” said Chandra. Discussions with shipyards and contractors are ongoing.

“We have also received favorable indications from both potential natural gas buyers and producers interested in committing supply,” Chandra said.

The project’s tolling arrangement will provide offtakers with enhanced flexibility through manageable volumes, low processing costs, maximum arbitrage between global gas markets, and freedom to determine its preferred source and pricing index for feed gas, said the company. Texas LNG said its physical presence in Australia and China as well as in Dubai also will benefit the project.

Numerous tolling agreements have been struck by LNG offtakers such as BG Group, Gas Natural Fenosa, Korea’s KOGAS, India’s GAIL, Osaka Gas, Chubu Electric, BP Energy, GDF Suez, Mitsubishi, Mitsui and others with export projects such as Cheniere Energy Inc.’s Sabine Pass; Freeport LNG, Cameron LNG and Cove Point LNG. Agreements typically run for 20 years. Contracts at Sabine Pass and Cove Point are based off of Henry Hub prices.

Exports from the Texas LNG facility could begin in early 2018 given its smaller scale and footprint, lower capital costs, and speed to market strategy, Chandra said.

Others have announced plans for smaller-scale LNG export from Texas using floating facilities. In 2012 Pangea LNG (North America) Holdings LLC began touting such a project. Pangea is seeking authority to export up to 8 mtpa using trains of 3-4 mtpa each (see Daily GPI, Dec. 20, 2012).

Texas LNG plans to file with the Federal Energy Regulatory Commission to begin the Commission’s pre-filing process by the end of 2014. Commencement of construction is subject to regulatory approvals and a final investment decision contingent upon Texas LNG obtaining satisfactory construction contracts and long-term customer contracts sufficient to underpin project financing.