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Noisy Neighbors: A Commonwealth LNG Deep Dive & Venture Global’s Engineering Update

Energy EPC: Venture Global’s Engineering Update & A Detailed Look At Their Commonwealth LNG

Note 1: As expected (and highlighted in our Commonwealth LNG Report below – initially published nearly two weeks ago), Venture Global has filed motion to intervene in Commonwealth’s project development due to its planned activity and dredging in the Calcasieu Ship Channel. We’ll continue to monitor.

Note 2: Over the next few weeks we’ll be rolling out a new line of Energy EPC research, centered around the unique and insightful analysis of EPC Risks. Please let us know if you have any questions, and we’re excited to share more details soon!***

Commonwealth LNG (CWLNG) is a proposed 8.4 MTPA LNG export facility located on a 393-acre site in Cameron Parish, Louisiana. The Project is on the west side of the Calcasieu Ship Channel (“the Channel”) near the entrance of where the Channel spills into the US Gulf of Mexico. The Project is also located directly across the river from Venture Global LNG’s (“VGLNG”) 10.0 MTPA Calcasieu Pass LNG (CPLNG) export facility (Figure 1).

In the 20-pages that follow, we’ve analyzed the CWLNG project and how the Project’s boundaries and shipping operations may be an issue for CPLNG, the State of Louisiana, and the U.S. Coast Guard. (Webber note: again – VG filed a motion to intervene after this piece originally went to clients in late February)

CWLNG’s execution plan is based upon modularizing the LNG process and pre-treatment units as well as the LNG storage tanks. Typically, a full containment 160,000 m3 LNG storage tank takes 36 to 42 months to construct and commission. CWLNG has proposed modularizing six (6) 40,000 m3 single containment LNG tanks…(continued pages 2-22)

Venture Global LNG: Calcasieu Pass Engineering Update – Details, Background, & Key Questions

Key Points:

CPLNG’s engineering, procurement, and construction workflow/ sequencing is not following “traditional” EPC industry standards. (Pages 2-3)
It’s too early to tell if that differentiated sequencing has helped expedite the project or if procurement and construction activities will be impacted in later stages. (Page 3-4)
CPLNG’s recent engineering filings point to significant, relatively late-stage engineering changes (at least by historical standards) that warrant monitoring from a cost and timeline perspective. (analysis on Pages 4-6)

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LNG Update: Frozen 3? Funding Hot Potato For Novatek’s Arctic 2

Keeping An Eye On Budgeting Process For Arctic 2

Who Picks Up The Check For Arctic 2? The timeline for Novatek’s high-profile Arctic LNG 2 (19.8mpta) may have hit a modest speedbump, as the ~$1.9BN request to help finance critical aspects of Arctic 2 [the Utrenneye LNG terminal on Gydan peninsula (page 4), and reloading terminals in Murmansk (for European cargoes) and Kamchatka (for Asia cargoes)] are absent from Russia’s 2020 draft budget. While the project has already reached a positive FID, and is clearly a national priority – we think it’s worth watching whether any squabble over the ultimate funding source ends up delaying its operational timeline (which is already ambitious). The primary options appeared to be (1) the state budget (now absent), or (2) funding from the ~$124B National Wealth Fund, which appears to be a more complicated….

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