Energy Transfer, MidOcean to jointly develop Lake Charles LNG project

Energy Transfer has signed a Heads of Agreement (HOA) with MidOcean Energy to jointly develop the Lake Charles LNG project in Louisiana, the companies announced this week.

Under terms of the non-binding agreement, MidOcean would commit to fund 30% of the construction costs and be entitled to receive 30% of the LNG production (approximately 5.0 million tonnes per annum (MMtpa)). MidOcean will also have the option to arrange for gas supply for its share of LNG production and commit to long-term gas transportation on Energy Transfer pipelines. The terms are pending both companies’ final investment decision (FID).

“We are pleased to have MidOcean partner with us on our Lake Charles LNG project and we believe its participation will provide a significant catalyst towards reaching positive FID,” said Tom Mason, President of Energy Transfer LNG. “MidOcean’s management team brings a wealth of LNG experience to the project. In addition, Energy Transfer and EIG already have an established relationship that will only be strengthened through this transaction.”

“This agreement has the potential to transform MidOcean’s portfolio, providing a material volume of advantaged Atlantic Basin supply,” added De la Rey Venter, CEO of MidOcean. “This complements our current assets, which are all located in the Asia-Pacific Basin. Geographical diversity is a key enabler for value delivery from an LNG portfolio. MidOcean considers Lake Charles LNG to be one of the most advantaged US LNG projects under development. We look forward to a deep and fruitful multi-decade partnership with Energy Transfer.”

If Energy Transfer LNG reaches a positive FID, the LNG export facility would be constructed on the existing brownfield regasification facility site and would capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure. Lake Charles LNG would also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines. These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale. Energy Transfer is one of the largest and most diversified midstream energy companies in North America, with a strategic footprint in all of the major U.S. production basins.