Tellurian Inc. produces natural gas that it intends to export as liquefied natural gas. This fuel can displace coal usage internationally, just as it has done in the United States. The world is thirsty for U.S.-produced natural gas to feed growing economies worldwide and defray Europe’s dependence on Russian natural gas.
But Tellurian wants three more years to get its Louisiana-based Driftwood LNG plant online and its associated natural gas pipeline. It said it has to line up corporate contracts worldwide.
Manufacturers, for example, use natural gas as a feedstock for refining and making chemicals and metals. They are using both “dry” natural gas and the “wet gas” that is separated from it. Those so-called natural gas liquids comprise chemicals such as butane, ethane, methane, and propane — all of which can serve as the foundation for finished goods consumed domestically and exported around the globe. Steel, chemical, and fertilizer industries are among the beneficiaries.
“I am a businessman trying to maximize profits,” Chief Executive Charif Souki previously told this writer in an interview. “As a business person, I’m trying to do the right thing” — a reference to the fact that while he produces and sells hydrocarbons, he supports a carbon tax to mitigate the effects of climate change. “Technically, it flies in the face of our shareholders. But it is the right thing to do. We have arbitrage opportunities” to take advantage of the price differentials between the United States and Europe.
The Federal Energy Regulatory Commission approved the Driftwood plant and pipeline in 2019. It will produce and deliver 28 million tons annually. The company intended to finish the project in 2026 and now says it will be in 2029, and FERC is certain to allow the delay. Bechtel is constructing the plant.
I’ve covered energy since the late 1990s. Coal was the dominant fuel at that time, and natural gas was a distant second. But in 2009, the shale gas revolution hit, allowing the United States to export the fuel. If natural gas replaces all the coal plants in the world, he says it would displace 6 billion tons of CO2.
Can the United States Take Market Share From Russia?
Souki founded Cheniere Energy, which started as an offshore exploration enterprise. It’s now one of the largest LNG exporters — second to Shell but ahead of ExxonMobil and Chevron. Indeed, the United States competes with Qatar and Australia on global markets to sell its LNG.
He left Cheniere and founded Tellurian in 2016. It currently delivers natural gas domestically in the United States. French oil giant Total has invested $200 million, while General Electric has plowed $25 million into the company.
Souki points to supply shortages in Europe leading to painfully high natural gas prices. The continent can blame the Russians. And it can't point fingers at Covid. The responsibility lies with the European leadership, he says, because it has “failed to plan” and it has “gotten enamored with renewables” — at the cost of preceding natural gas development and even decommissioning nuclear plants.
Chenier, ExxonMobil, and Dominion Energy are among this country’s leading LNG exporters. Chenier was the first to receive such approval from the Obama administration in 2016.
“Over the past year, the United States and Europe have thrown our energy security cooperation into even higher gear,” said U.S. Secretary of State Antony Blinken. “In 2022, the United States exported 56 billion cubic meters of liquefied natural gas to Europe. That is 40% of Europe's total imports. It's 140% increase over our LNG exports to Europe the previous year.”
Russia’s European market share has fallen from 40% to 10%. And this makes room for Tellurian once it gets it Driftwood facility online.
