Shell Exits Lake Charles LNG Project, Energy Transfer to Take Over
(P&GJ) — Given current market conditions, Shell has announced it will not proceed with an equity interest in the proposed Lake Charles LNG project.
Accordingly, Energy Transfer will take over as the project developer.
Shell will continue to support Energy Transfer with the ongoing bidding process for the engineering, procurement, and construction contract and then plan a phased handover of the project's remaining activities.
"This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business," said Maarten Wetselaar, Director, Integrated Gas and New Energies, Shell.
Lake Charles LNG is a proposed 50/50 project between Shell and Energy Transfer that seeks to convert Energy Transfer's existing import terminal to an LNG export facility in Lake Charles, Louisiana.
The project has a proposed liquefaction capacity of 16.45 mtpa for US natural gas export to global customers.
Energy Transfer said in a separate statement that it is committed to advancing the project and will “evaluate various alternatives” including potentially bringing in another equity partner or reducing the size of the project from three trains (16.45 mtpa of LNG capacity) to two trains (11.0 mtpa).
In addition to its brownfield advantages and permits, the project has an existing pipeline infrastructure. Shell entered the project in its 2016 combination with BG Group plc.
“We remain in discussions with several significant LNG buyers from Europe and Asia regarding LNG offtake arrangements as well as, in some cases, a potential equity investment in the project," said Tom Mason, Executive Vice President and President – LNG for Energy Transfer. "In light of the advanced state of the development of the project, we remain focused on pursuing this project and, ultimately, the decision to make a final investment decision will be dependent on market conditions and capital expenditure considerations."
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