Energy Transfer proceeds with Lake Charles LNG project as Shell exits

Energy Transfer will take over project development of the proposed Lake Charles liquefied natural gas (LNG) export terminal after Royal Dutch Shell decided to exit the project.

The proposed large-scale LNG export facility is located in Lake Charles, Louisiana, US.

It is expected to have three LNG trains with a total liquefaction capacity of 16.45Mtpa to export US natural gas to customers in Asia, Europe and the Americas.

Shell said that it would not be able to proceed with an equity interest in the proposed project due to the oil price crash and Covid-19 pandemic.

Shell Integrated Gas and New Energies director Maarten Wetselaar said: “This decision is consistent with the initiatives we announced last week to preserve cash and reinforce the resilience of our business.

“Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest. Through the transition, we will work closely with Energy Transfer.”

Lake Charles LNG is a 50:50 joint venture (JV) between Shell and Energy Transfer.

The facility comprises four LNG storage tanks, two deep water docks in the Calcasieu Channel, as well as other associated infrastructure.

Energy Transfer executive vice-president and president Tom Mason said: “We continue to believe that Lake Charles is the most competitive and credible LNG project on the Gulf Coast.

“Having the ability to capitalise on our existing regasification infrastructure at Lake Charles provides a cost advantage over other proposed LNG projects on the Gulf Coast. The Lake Charles project also benefits from its unparalleled connectivity to Energy Transfer’s existing nationwide interstate and intrastate pipeline system that provides direct access to multiple natural gas basins in the US”

Last week, Shell announced that it would reduce its 2020 capital expenditure (capex) to $20bn or below from an initially proposed $25bn capex this year.

In March last year, Energy Transfer signed a project framework agreement (PFA) with Shell US LNG to accelerate the development of the LNG export facility.

The US Federal Energy Regulatory Commission (FERC) approved the $12.3bn Lake Charles LNG natural gas export project in December 2015.