The Magnolia LNG Export project involves the construction of an eight million tonnes per annum (mtpa) liquefaction and LNG export facility within the Port of Lake Charles, Louisiana, US.
The final investment decision (FID) for the project is expected to be made in mid-2015.
Magnolia LNG, a wholly-owned subsidiary of Liquefied Natural Gas (LNGL), is implementing the project. The new facility is expected to start operations in mid-2018.
The LNG project is expected to generate up to 70 direct jobs and 175 indirect jobs when it comes online and approximately 1,000 jobs during the construction phase.
Initial approval for the export of 4Mtpa of LNG from the project to free trade agreement (FTA) countries was granted by the Department of Energy (DOE) in February 2013 and approval for an additional 4Mtpa of LNG exports to FTA countries was approved by the DOE in March 2014.
Financing the LNG project
"The project site covers an area of 115 acres (46.5ha) located opposite to the existing Trunkline LNG Import Terminal near the intersection of Henry Pugh Boulevard and Big Lake Road in Lake Charles."
The overall investment for the LNG project is estimated to be $3.5bn. Up to 70% of the investment for the project will be met through debt financing, while the remaining 30% will be met through equity financing.
Stonepeak Partners agreed to provide 100% of the equity financing for the project and has an option to claim a 50% interest in the project. BNP Paribas is the financial advisor and debt arranger for the project.
Magnolia LNG project details
The project site covers an area of 115 acres (46.5ha) located opposite to the existing Trunkline LNG Import Terminal near the intersection of Henry Pugh Boulevard and Big Lake Road in Lake Charles.
Magnolia LNG has leased the site for a period of 70 years from the Lake Charles Harbor and Terminal District.
The project will involve the construction of four 2Mtpa liquefaction trains, installation of two 180,000m3 cryogenic tanks and construction of a berth jetty for LNG export vessels with capacity of up to 170,000m3.
Gas connection facility
Trunkline LNG Lake Charles Terminal, Louisiana, US
Southern Union, a Houston-based natural gas company, completed the Infrastructure Enhancement Project (IEP) of its Trunkline LNG terminal in March 2010.
Magnolia LNG will make use of the existing under-used Kinder Morgan Louisiana Pipeline (KMLP), which passes through the project site, for delivering the feed gas.
The Gas Pipeline Interconnect Agreement (PIA) to access 1.4 billion cubic feet per day of gas for a period of 20 years was signed between Magnolia LNG and KMLP in January 2015.
LNG Technology's patented OSMR liquefaction technology
Magnolia LNG will implement LNG Technology's patented optimised single mixed refrigerant (OSMR) LNG liquefaction process.
The technology makes use of aero-derivative gas turbines and efficient compressors together with a conventional combined heat and power (CHP) plant and steam-driven ammonia refrigeration plant to enhance the plant performance.
It reduces the plant's construction cost by approximately 50%, improves plant efficiency by 30%, consumes 25% shorter development and construction time and generates approximately 30% lesser carbon emissions compared to other technologies.
Gas tolling agreements for the Magnolia LNG Export project
In August 2013, Magnolia LNG signed a heads of agreement (HoA) for a proposed tooling agreement with Brightshore Overseas (Brightshore), an affiliate of Gunvor Group, for an LNG production capacity of 1.7mtpa and 0.3mtpa of interruptible capacity for a term of 20 years, extendable by five more years.
Another HoA was signed with Gas Natural Fenosa (GNF) for a capacity of up to 1.7mtpa in August 2013.
A tolling term sheet agreement was signed with LNG Holdings, a wholly-owned subsidiary of West Face Capital Group, in November 2013 for a guaranteed capacity of 1.7Mtpa and an estimated nameplate capacity of 2Mtpa.
Another tolling term sheet agreement was signed with AES Latin American Development (AES), a wholly-owned subsidiary of AES Corporation Group, in March 2014 for a capacity ranging between 800,000tpa and 1Mtpa.
The engineering, procurement and construction (EPC) contractor for the project is the joint venture of KBR (70%) and SK E&C USA (30%).