The U.S. Federal Energy Regulatory Commission (FERC) on Oct. 7 approved the request of a unit of Glenfarne Group LLC to give it five more years, until April 2026, to complete the Magnolia LNG export plant in Louisiana.
FERC approved construction of Magnolia and related pipeline expansions by a unit of Kinder Morgan Inc. in April 2016.
That approval required the companies to complete the project within five years, by April 2021.
Glenfarne, which acquired Magnolia from LNG Ltd of Australia in May 2020, said “unforeseeable developments in the global LNG market have affected Magnolia’s ability to enter into long-term LNG offtake contracts ... critical to securing project financing and achieving (final investment decision),” referring to purchase agreements for gas.
Those “unforeseeable developments” included global energy demand destruction from government lockdowns to stop the spread of the coronavirus and disruptions caused by the U.S.-China trade war.
Glenfarne has said it expects to decide late next year whether to build the Magnolia plant and the Texas LNG facility it is developing in that state. If the company decides to build the projects, they could enter service around 2025.
Several developers have put off decisions to build LNG projects in North America over the past year due to uncertainty about demand as the pandemic and other factors have cut energy consumption.
Even before the pandemic, gas prices were already trading at their lowest levels in years, making customers hesitant to sign long-term deals needed to finance multi-billion-dollar LNG projects because the world was already awash in gas after a record number of export plants entered service in 2019.
Magnolia is designed to produce 8.8 million tonnes per annum of LNG, or 1.2 billion cubic feet per day of natural gas. One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.
Recommended Reading
CEO: Coterra ‘Deeply Curious’ on M&A Amid E&P Consolidation Wave
2024-02-26 - Coterra Energy has yet to get in on the large-scale M&A wave sweeping across the Lower 48—but CEO Tom Jorden said Coterra is keeping an eye on acquisition opportunities.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.
U.S. Shale-catters to IPO Australian Shale Explorer on NYSE
2024-05-04 - Tamboran Resources Corp. is majority owned by Permian wildcatter Bryan Sheffield and chaired by Haynesville and Eagle Ford discovery co-leader Dick Stoneburner.
PrairieSky Adds $6.4MM in Mannville Royalty Interests, Reduces Debt
2024-04-23 - PrairieSky Royalty said the acquisition was funded with excess earnings from the CA$83 million (US$60.75 million) generated from operations.
Diamondback Stockholders All in for $26B Endeavor Deal
2024-04-29 - Diamondback Energy shareholders have approved the $26 billion merger with Endeavor Energy Resources.