Tellurian to acquire 15 tcf of gas for Driftwood LNG project

The Houston-based LNG export project developer, Tellurian plans to acquire 15 trillion cubic feet of natural gas over the life of its Driftwood LNG project.

The company’s president and CEO Meg Gentle said the decision is a part of the overall strategy for the development of Driftwood Holdings, a Tellurian unit.

“We are looking primarily in the Haynesville shale and are speaking with many producers, but we have no transaction close to completion at this point,” Gentle said.

She also added that any asset acquisition would occur at the Driftwood Holdings level and would be funded by the third-party investments. The company is making progress in its discussions with third-party investors and is expecting to execute agreements over the next few months.

The company expects to “be in a position to close funding of phase one for 11 million tonnes between the third and fourth quarters of 2018,” Gentle said.

Driftwood Holdings has been formed by Tellurian to own and operate Tellurian’s gas producing assets, pipeline assets, and the 27.6 mtpa Driftwood LNG export facility.

It has engaged Goldman Sachs and SG Americas Securities (Societe Generale), to serve as financial advisors for Driftwood on the project.

Tellurian added in its statement it is offering equity interests in Driftwood Holdings at a cost of $1,500 per tonne in exchange for liquefied natural gas at cost.

The company expects its variable and operating costs to be around $3/mmBtu free on board (FOB), however, it also plans to retain 7 to 12 mtpa of the project’s capacity.