(Reuters) – The co-founder of U.S. LNG developer Tellurian said Thursday that the company is targeting this summer to begin construction of its $16.8 billion Driftwood LNG export project in Louisiana as demand for the super-cooled fuel surges worldwide.
“I hope that we will be in construction this summer,” said Charif Souki, co-founder and executive chairman of Tellurian. “There is a strong need for additional liquefaction capacity and we’re probably the project that is the closest to starting construction.”
Demand for liquefied natural gas has soared in recent years as countries like China and India shift power generation away from dirtier coal-fired plants. In recent weeks, both prices for the fuel and shipping fees have soared due to cold weather in Asia and bottlenecked shipments at the Panama Canal.
“The level of (customer) interest has increased pretty dramatically over the past month,” Souki said.
Over the past two years, numerous projects slated for groundbreaking in North America, including Driftwood, were delayed because customers were unwilling to sign long-term deals needed to finance the projects as natural gas prices slumped.
Coronavirus demand destruction caused gas prices in Europe and Asia to plunge to record lows below $2 per million British thermal units (mmBtu), while U.S. gas prices fell to their lowest in 24 years last year.
“The system is stressed,” Souki said, adding that global LNG demand is on track to increase by around 200 million tonnes over the next seven years. In 2020, global LNG demand hit a record high of 360 million tonnes.
The first phase of Driftwood is slated for operation in 2025, and will produce about 16.5 million tonnes per annum of LNG, equivalent to about 2.2 billion cubic feet per day of natural gas. One billion cubic feet of gas is enough to supply about five million homes for a day.
(Reporting by Scott DiSavino; Editing by Christopher Cushing)