Texas LNG Submits Export Application to DOE

Texas LNG LLC announced that on December 31 it has filed an application to the United States Department of Energy (DOE) seeking authorization to export up to 2 MTA (million tonnes per annum) of LNG to FTA (Free Trade Agreement) and non-FTA markets.

This key achievement follows Texas LNG’s execution of an exclusive lease option agreement in December 2013 with the Port of Brownsville in South Texas, USA to secure a prime location to develop its innovative export project.

“Our DOE application to export LNG to FTA and non-FTA countries is an important milestone in realizing Texas LNG’s strategic objective to provide maximum flexibility to our offtake customers,” remarked Vivek Chandra, CEO of Texas LNG. “We expect to receive FTA export approval by the end of Q1 or beginning of Q2 2014, and non-FTA later in the year.  In the meantime, we are progressing our engineering efforts and discussions with investors and LNG buyers.”

Texas LNG will employ a toll processing business model whereby the LNG customer will pay Texas LNG a fee for converting natural gas into LNG. A tolling arrangement provides 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. Texas LNG’s smaller size, innovative technical strategy, experienced team, physical presence in Asia-Pacific and Middle East, commercial acumen, and flexible model will differentiate its project from larger and more complex projects being promoted by companies such as Cheniere Energy, as well as projects promoted by other independents.

Texas LNG’s 51 acre site located along the Port of Brownsville’s deepwater channel provides an optimal location to develop an LNG export facility. “The Port of Brownsville is pleased that Texas LNG has selected our Port to develop its innovative LNG export project,” stated Port Director and CEO Eduardo A. Campirano. “Texas LNG’s project highlights the Port of Brownsville’s strategic position, given its close proximity to the massive shale and conventional gas resources in South Texas and its deepwater ship channel which can accommodate most LNG export ships.”

“Texas LNG is delighted to develop its LNG export project at the Port of Brownsville, ranked number 1 of the Top 25 Foreign Trade Zone Exports in the United States,” said Chandra. “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.“

Texas LNG’s pioneering export facility concept involves a liquefaction barge to be fabricated offsite by an experienced and qualified shipyard. At the Texas LNG site, the barge will be permanently “grounded” 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. “We are in discussions with shipyards and EPC contractors to design and construct the liquefaction barge and associated onshore facilities. We have also received favorable indications from both potential natural gas buyers and producers interested in committing supply.”

Texas LNG anticipates that LNG export could commence in early 2018 given its smaller scale and footprint, lower Capex requirements, and speed to market strategy. The company plans to make a request to the Federal Energy Regulatory Commission (FERC) to begin the pre-filing process by the end of 2014. Commencement of construction is subject to regulatory approvals and a final investment decision (FID) contingent upon Texas LNG obtaining satisfactory construction contracts and long-term customer contracts sufficient to underpin financing of the project.

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LNG World News Staff, January 08, 2014; Image: Texas LNG