September 17, 2024 [Reuters]- Woodside Energy is in discussions with onshore U.S. gas producers, pipeline companies and companies that share its outlook and view of liquefied natural gas to partner with its Driftwood LNG project, company CEO Meg O’Neill said on Monday.
Speaking at an investor conference in New York, O’Neill said there was a lot of frustration by U.S. gas producers earning lower Henry Hub prices for gas that is then turned into LNG and sold at higher global prices. Partnering with gas producers would increase their revenue and allow Woodside access to a gas supply, O’Neill said.
Woodside wants to have clarity on the partnering approach before it takes a final investment decision, although it is unlikely to have signed all the agreements by the first quarter of 2025, she said.
Woodside agreed in July to buy U.S. liquefied natural gas developer Tellurian, including its U.S. Gulf Coast Driftwood LNG export project, for $1.2 billion including debt.
The agreement could strengthen the position of the U.S. as the world’s largest producer of the superchilled gas by securing the completion of Tellurian’s 27.6 million metric ton per annum facility in Lake Charles, Louisiana.
The sale is expected to be completed by the end of the year after which Woodside said it will be able to give contractor Bechtel a notice to proceed.
Woodside said the interest in Driftwood included infrastructure developers and strong counterparties in Asia and other places.
One of the most attractive features is that the Driftwood project was not impacted by the Biden administration’s decision to pause the approval of applications to export LNG and it gives Woodside a year’s advantage over other projects, O’Neill said.
Increased global LNG supplies toward the end of the decade are unlikely to impact LNG demand or prices, she said, adding that higher global production will be offset by growing demand and a projected glut is unlikely to happen.
The present economic challenge in China is short term and Woodside thinks the long-term trajectory would see strength in demand for LNG especially due to the switch from coal to gas, said Woodside’s chief commercial officer, Mark Abbotsford.
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