$16.8 billion LNG project to get started this summer in Lake Charles

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Tellurian likely to start construction on Driftwood project this summer

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Tellurian could begin building its $16.8 billion liquefied natural gas terminal in Lake Charles, La., within the next few months as the Houston LNG company rebounds from the lows of the pandemic.

Co-founder and executive chairman, Charif Souki, said in a podcast posted on Tellurian’s website Tuesday that he was “highly confident” construction would get underway this summer, an important milestone for the company. Driftwood, Tellurian’s first project, would process and export a total of 27.6 million metric tons of LNG per year upon its expected completion in 2026.

“I can't describe the high that we feel at Tellurian today because we have caught the wave and we're getting ready for the ride of a lifetime,” Souki said in the podcast.

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Tellurian, founded in 2016 by Souki and Vice Chairman Martin Houston, was hurt by the pandemic as energy demand plummeted and investors balked at financing LNG projects proposed along the Gulf Coast. Tellurian slashed costs and laid off more than 40 percent of its 176 employees in March 2020 as it struggled to win long-term contracts that would allow it to finance the massive Driftwood LNG project.

The company also changed leadership. Meg Gentle, who had served as CEO since the year the company was founded, stepped down near the end of last year, succeeded by Octavio Simoes, previously the CEO of Sempra LNG & Midstream, a unit of the California energy company Sempra.

The LNG market began to rebound in September as demand grew in Asia, where countries such as China and South Korea brought COVID-19 under control and economic activity increased. Frigid weather in North Asia boosted demand for natural gas.

The outlook for Tellurian improved, too. The company trimmed its losses in the first quarter of 2021 to $27 million from $41 million in the first three months of 2020. In April, the company, which had made debt reduction its focus, made a voluntary $17 million repayment to pay off its loans. That same month, the company resumed gas drilling at Louisiana's Haynesville Shale after a two-and-a-half-year hiatus.

Driftwood held permits but lacked contracts and financing to begin construction. At the Citi Global Energy & Utilities Virtual Conference in April, Souki said the company was “just weeks” from finishing commercialization for phase one of the plant. During the commercialization process, a company secures LNG sales and purchase agreements, or sales contracts, to gain financing for construction.

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