Magnolia LNG discussions resume

Magnolia LNG discussions resume

By admin -
Mar 13, 2016
Last Modified: Sunday, March 13, 2016 9:27 AM
By John Guidroz / American Press

Falling oil prices have forced industrial companies worldwide to delay getting commercial agreements secured with certain projects. But officials with the Magnolia LNG project said discussions have resumed as prices have increased.
“We are already seeing signs in the last few weeks … that people are coming back to talk about closing up contracts,” Maurice Brand, president of Magnolia LNG, said Friday.

The project will call for building four LNG trains that will each produce 2 million tons of LNG a year. Magnolia already has one contract signed for 2 million tons, leaving 4 million tons left. Brand said each train has a sales revenue of $4.5 billion-$4.8 billion over 20 years.

“They’re big contracts,” he said. “When you’ve got uncertainty like this at the moment, it’s a big ask, particularly if they don’t know what their final pricing is going to be.”
The good news, Brand said, is that some of these companies Magnolia is having discussions with are replacing contracts. Others, he said, are looking to reprice contracts. While there is an internal plan to close possible contracts, he said they won’t happen overnight.
“Realistically, they take time,” he said. “They have to be very carefully thought through.”

John Baguley, Magnolia LNG’s chief operating officer, said the project is moving forward and is not on hold.
Brand said Magnolia is expected to receive the Federal Energy Regulatory Commission order soon, meaning it has completed the environmental regulatory and permitting process. After that, he said it will take about 90 days before it is issued the final FERC order.

After Magnolia receives the first FERC order, Brand said it also has to get approval from the U.S. Department of Energy to conduct business with non-free-trade-agreement countries. He said Magnolia already has 8 million tons approved for FTA countries, like Australia, Canada and Mexico.
Brand said the current global demand for LNG is 250 million tons. That demand, he said, is expected to grow to 500 million tons over the next 30 years. Meanwhile, he said the traditional sources of LNG supply, like Egypt, Angola and other countries, are dwindling.

“The world needs new supply, and this is where the U.S. comes in at the moment,” he said. Brand said the Magnolia project will be “the most efficient LNG project ever built.”

“We are using around 30 percent less gas in the process than some of the traditional projects,” he said. “It’s a major step in terms of what the industry has traditionally done.”

Magnolia is a more than $4 billion midscale LNG export facility that will be built on 120 acres near the intersection of Henry Pugh Boulevard and Big Lake Road in Lake Charles.
The project is slated to generate more than 1,000 construction jobs, 70-80 permanent jobs and 175 indirect jobs.

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