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Tellurian Scraps Two LNG Pipelines To Cut Costs

Tellurian is deferring all but one pipelines associated with the first phase of its proposed Driftwood liquefied natural gas (LNG) export project, the LNG producer said in an investor presentation.

Tellurian has been trying to cut costs for its Driftwood LNG production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, Louisiana, in view of the depressed market conditions for natural gas amid the pandemic.  

Tellurian has achieved cost reductions of 30 percent in its phase 1 planning for the project, including deferring the proposed Permian Global Access Pipeline, the Haynesville Global Access Pipeline, and the Delhi Connector Pipeline, which leaves just one pipeline to feed natural gas to the facility during phase 1.

The company will also focus on sourcing cheap natural gas for the project, which has secured all permits and is shovel ready, if Tellurian decides to move ahead with the final investment decision (FID).

At the Q2 results release last week, Tellurian’s President and CEO Meg Gentle said:

“Tellurian has used the last few months to streamline Driftwood LNG, which is one of the lowest cost projects available globally at approximately $1,000 per tonne.”

“Tellurian continues working to secure equity partners from around the globe and looks forward to delivering reliable energy in 2024,” Gentle added.

Last month, Tellurian sold $35 million worth of new stock to a group of institutional investors to prop up its finances as the outlook for LNG remains pessimistic.

Depressed global LNG demand continues to drive buyers of U.S. LNG to cancel cargoes for loadings in September.

Earlier this year, when demand for natural gas across the world plunged due to the pandemic, buyers began to scrap loadings of U.S. LNG, as gas in storage from Europe to Asia was abundant after a milder winter and the coronavirus that wiped out a lot of previously expected demand.

By Charles Kennedy for Oilprice.com

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