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Freeport LNG Closes on $11 Billion in Financing for new Facility

Freeport LNG Expansion, L.P. announced last week that it successfully closed on debt and equity financing commitments of approximately $11 billion in capital required for the development of the initial two trains of Freeport LNG’s natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas. Commitments in excess of the anticipated $9.64 billion in project costs, inclusive of financing costs, will provide significant buffer for contingencies and cost overruns to ensure successful completion.

In November 2014, Freeport LNG received final approvals for its proposed three-train LNG facility from the U.S. Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy. With these approvals, Freeport LNG has received all authorizations required for construction of the new facility and the export of the entire contracted LNG production volume of the initial three trains. The project will expand an existing terminal.

Freeport LNG

Source: Freeport LNG

The first train is expected to start operations in third quarter 2018, with the second train expected to start five months later, and the third train to start six months after that. Each liquefaction train has a nameplate design capacity of 4.64 million tons per year, for a total of approximately 13.9 billion tons per annum. Nearly 95%, or 13.2 million tons per year, of the production capacity of the three trains has already been contracted under use-or-pay liquefaction tolling agreements with Osaka Gas (ticker: TYO: 9532), Chubu Electric (ticker: TYO: 9502), BP Energy Company (ticker: BP), Toshiba Corp (ticker: TYO:6502), and SK E&S LNG, LLC.

Michael Smith, Chief Executive Officer of Freeport LNG said in the company’s release: “The project will drive substantial economic growth in Texas and across the United States, requiring a peak construction workforce of over 4,000 workers and 300 new full-time workers at the facility once in operation. In addition, an estimated 25-30,000 permanent new jobs will be generated upstream of the project to support the increased natural gas exploration, production and infrastructure development required to meet the project’s supply demands. Exports from the Freeport LNG project offer substantial geopolitical benefits as well, providing secure energy supplies to our key allies around the world and resulting in more than a 1% reduction in the U.S. trade deficit.”

LNG Expanding in Australia

Australia’s BOC announced today that its $200 million LNG plant in Queensland is now open. The plant, located outside Chinchilla on the state’s southern inland, will produce up to 50 tons of LNG per day to be used for manufacturing, mining and trucking purposes. The plant’s output will be equivalent of 70,000 liters of conventional diesel per day, reports Australia’s ABC.

BOC South Pacific managing director Colin Isaac said, “This plant marks the start of a new industry for Queensland giving local and interstate manufacturing off-grid electricity generation and heavy transport users the opportunity to switch to LNG.”

The plant will use natural gas fed into the Roma-Brisbane pipeline by Australian coalbed methane developer, QGC.

British Columbia Courting Petronas

Petronas (ticker: PTG) CEO Shamsul Azhar Abbas was in B.C. yesterday for high-level meetings regarding his company’s proposed Pacific Northwest LNG export facility near Prince Rupert, according to the Vancouver Sun. Premier Christy Clark said her government has done all it can to encourage LNG proponents by passing legislation last week that outlines the province’s taxes and environmental reporting expectations for LNG projects.

Clark would not publicly disclose the substance of negotiations, saying negotiations need to happen “in confidence,” but she did feel that B.C. is in “good shape” to entice Malaysia’s state-owned energy company into a final investment decision for a proposed $10 billion LNG plant.

“We’ve gotten a tax structure that works, we’ve got an environmental compliance structure that works, so we’re getting close I think,” Clark said when asked about the Petronas meeting.

Petronas threatened to call off the project in October, amid what it described as Canada’s regulatory delays, and a lack of incentives and stability.

The company holds a 62% stake in the project, with other partners including China’s Sinopec (ticker: SNP) with a 15% stake, Japex Montney (ticker: TYO:1662) with 10%, Indian Oil Corp. (ticker: IOC) with 10% and Petroleum-Brunei with 3%.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.