French oil and gas major Total and Tellurian have signed a series of deals for the development of the proposed Driftwood LNG project in Louisiana, US.


Image: Rendering of Tellurian's Driftwood LNG project. Photo: courtesy of Business Wire.

The Driftwood project involves the construction of a 27.6 million ton per annum (Mtpa) LNG export facility near Lake Charles, Louisiana, as well as natural gas production, gathering, processing and transportation facilities.

As part of the heads of agreement (HoA) signed by the companies, Total has agreed to invest $500m in the Driftwood project as well as purchase 1Mtpa of LNG from the project.

Total chairman and CEO Patrick Pouyanné said: “These agreements increase our commitment to Driftwood LNG, a highly cost-competitive project that benefits from the low gas production costs and prices in the US.

“In line with our strategy to become a major LNG portfolio player, this transaction will add 2.5 Mtpa of competitive US LNG to Total’s portfolio and strengthen our positions in the US.”

Under the HoA, the two firms will also enter a sales and purchase agreement for a further 1.5Mtpa of LNG from Tellurian Marketing’s LNG off-take volumes from the Driftwood LNG export terminal near Lake Charles, Louisiana.

Total said it will purchase LNG free on board (FOB) for a minimum term of 15 years, as part of the deal.

Separately, Total has signed a deal to purchase 19.87 million shares of Tellurian common stock for $200m. The deal will bring Total’s aggregate investment within the Tellurian portfolio, including its original $207m investment in 2017, to $907m.

Construction on Driftwood LNG and Driftwood Pipeline is slated to begin this year with commissioning scheduled in 2023. The project is expected to reach full operational phase in 2026.

Earlier this year, the US Federal Energy Regulatory Commission (FERC) has issued the final Environmental Impact Statement (EIS) for Driftwood LNG project.

Tellurian president and CEO Meg Gentle said: “Total is a premier global natural gas production and trading company and will manage a portfolio of 40 mtpa of LNG by 2020. Our partnership with Total began before the inception of Tellurian, when Total endorsed a new business model for U.S. LNG.

“We look forward to consistently delivering on our development plan for Driftwood LNG and the integrated network, beginning construction on the largest privately funded infrastructure project in the U.S., and producing low-cost, reliable natural gas as we dedicate LNG to reduce urban pollution and transition to a low-carbon economy.”