Magnolia LNG takes major step forward
A liquefied natural gas supply deal between the proposed Magnolia LNG export terminal in Louisiana and the Vietnamese government took a major step forward.
In a recent decision, the Vietnamese government added the Bac Lieu LNG-to-Power project to its National Power Development Plan. Under the plan, a Singapore company, Delta Offshore Energy, will build a natural gas-fired power plant in Bac Lieu province and a supporting offshore LNG import terminal.
LNG Ltd., which is developing the Magnolia LNG export terminal in Lake Charles, La., landed a 20-year deal in September to supply 2 million metric tons of liquefied natural gas per year to Delta’s 3,200-megawatt power plant. LNG Ltd., an Australian company, is moving its headquarters in Houston.
The addition of the project to Vietnam’s National Power Development Plan clears the path for Delta to negotiate and finalize the power purchase agreement for the natural gas-fired power plant, which had originally been planned as a coal-fired facility.
Big year
The decision in Vietnam was one of several positive developments over the past year for the region’s burgeoning LNG export industry. The Federal Energy Regulatory Commission issued permits to develop three LNG export terminals at the Port of Brownsville, although environmentalists and other opponents have asked FERC to reconsider its decisions, the first step in a legal challenge to those permits.
FERC also gave Houston liquefied natural gas company Tellurian the green light to begin groundwork on its Driftwood LNG export terminal project in Louisiana. In the fall, Tellurian signed a deal with Petronet LNG in which the Indian company would invest some $2.5 billion in Driftwood to receive 5 million metric tons of LNG per year.
San Diego utility company Sempra Energy recently began processing liquefied natural gas from the second of three production units at its Cameron LNG export terminal in Louisiana. The Houston pipeline company Kinder Morgan began exporting LNG from its Elba Island terminal in Savannah, Ga.
Kinder Morgan’s Gulf LNG project in Mississippi also took a step forward when the Energy Department issued an order authorizing exports from the LNG terminal.
Magnolia LNG has yet to be built, but the company holds a federal permit to build a plant that will produce 8 million metric tons of LNG per year. LNG Ltd. is seeking permission to boost that production by another 800,000 metric tons per year; the Vietnamese supply represents one-fourth of the proposed plant’s permitted production.
Delta Offshore Energy plans to build a natural gas power plant in Bac Lieu province as well as an offshore LNG import terminal, known in the industry as a floating storage regasification unit.
More production planned
Tankers from Magnolia LNG will arrive at the planned regasification unit, where the supercooled liquid will be converted back into gas and fed into an underwater pipeline to move the natural gas to the onshore power plant.
FERC in April 2016 permitted the company’s Magnolia LNG project to produce 8 million metric tons of liquefied natural gas per year. LNG Ltd.’s request to boost production by 800,000 metric tons of liquefied natural gas per year remains pending.
Houston service company KBR and South Korean construction firm SK E&C Co. Ltd will serve as the engineering, procurement and construction firms for the LNG export terminal project.