Tellurian Set to Boost Louisiana Gas Holdings Tenfold



(Bloomberg) -- Tellurian Inc.plans to boost natural gas reserves tenfold at a northern Louisiana deposit as it seeks partners to build a fuel supply chain from the wellhead to global buyers.

The developer of liquefied natural gas projects is targeting reserves of about 15 trillion cubic feet at the Haynesville shale block in Louisiana, Chief Executive Officer Meg Gentle said in an interview in Abu Dhabi on Friday. The Houston-based company has reached 10 percent of its reserve goal since buying access to the acreage in September to feed its own LNG facilities.

Seemingly unstoppable shale deposits are contributing to record oil and gas output in the U.S. That's pushing producers to find buyers abroad and turning decades of energy market dynamics on their head. At the same time, increasing global supply is helping cut LNG prices, spurring demand abroad for U.S. assets and giving Tellurian and other shale players a potential source of funding.

"We are seeking partners in our project," Gentle said. "Partners who will have a stake in the company, will own their share of the producing assets, the pipeline network and liquefaction plant. So they're essentially investing in U.S. shale."

Tellurian plans to start building its Driftwood LNG export terminal in Louisiana next year. Gentle said it will reach a final investment decision on the terminal in the first half of 2019, a push back from the mid-2018 target the company initially set. The change is due to the review schedule from the Federal Energy Regulatory Commission, she said.

"They are going to take until the end of 2018 to finish all of their environmental work," Gentle said. "So, that change in schedule is based on the U.S. government."

Meanwhile, it's working to secure gas supplies from the Permian basin in Texas and will consider buying drilling rights in other areas after completing its planned Haynesville acquisitions, Gentle said.

Shares of the company were up 1.7 percent to $11.39 at 12:20 p.m. in New York. It has gained 17 percent this year.

International Market

The U.S. and Australia, also developing an LNG export market, could rival Qatar as the world's biggest supplier if they complete all their projects. Gentle says the U.S. could be the largest LNG exporter between 2025 and 2030.

Saudi Arabian Oil Co., the world's biggest crude exporter, is one of Tellurian's potential partners as it seeks gas to drive economic growth. Saudi Aramco, as the company is known, is among more than 100 companies that may be interested in taking a stake in Tellurian's assets and output, Gentle said, without commenting further on any discussions. Saudi Aramco didn't immediately respond to an emailed request for comment.

Tellurian's output will be among the cheapest supply available when exports begin in 2023, she said. That will also make sales attractive to oil-rich countries in the Middle East.

"We know that we can deliver LNG to beach on the Gulf Coast for $3 per million British thermal unit," Gentle said. "After shipping, that's $4 in the Middle East and $4.5 in Asia."

LNG prices will be "tight" in 2018, with the commodity trading at about $11.50 per mmbtu in Asia through winter, she said. New supply may cut prices to about $7 where they will stay through the rest of 2018.
 
Because supply is so abundant in the country, exporting gas from the U.S. won't raise domestic prices there, Gentle said.

--With assistance from Ryan Collins and Naureen S. Malik


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