Energy Transfer LP and Shell US LNG, LLC have signed a Project Framework Agreement (PFA) that provides the framework to further develop a large-scale LNG export facility in Lake Charles, Louisiana toward a potential investment decision. In December 2019, the parties issued a comprehensive commercial tender package to engineering, procurement and construction (EPC) contractors to submit final commercial bids.
The PFA defines the commercial terms by which the two companies will work to progress an LNG export facility on the U.S. Gulf Coast. Shell will act as the Project Lead prior to the companies reaching a Final Investment Decision (FID), and if sanctioned, as construction manager and operator of the facility. Energy Transfer will act as Site Manager and Project Coordinator prior to FID. The two companies will determine the timing of the FID as the project develops based on the outcome of the EPC bidding process, an ongoing assessment of market conditions and overall project competitiveness.
The project brings together two leading entities – Shell as a worldwide leader in gas and LNG, and Energy Transfer as one of the largest pipeline operators in the U.S. – to develop what is expected to be a promising future investment option to monetize abundant, low-cost U.S. gas for export to global customers.
The Lake Charles project is a 50/50 venture between Energy Transfer and Shell. The project, if sanctioned, would convert Energy Transfer’s existing Lake Charles LNG import and regasification terminal to an LNG export facility with a liquefaction capacity of 16.45 million tonnes per annum to export U. S. natural gas to global customers. The project is fully permitted, uses existing infrastructure and benefits from abundant natural gas supply and proximity to major pipeline infrastructure, including Energy Transfer’s vast pipeline network. If built, the project is estimated to create up to 5,000 jobs during construction and 200 full-time positions when fully operational.