Woodside Energy Group Ltd. has signed a revised turnkey engineering, procurement and construction (EPC) contract with Bechtel Corp. for a recently acquired liquefied natural gas (LNG) project on the United States Gulf Coast.
“In a short period of time, we have completed the acquisition, secured competitive revised EPC pricing that covers all three trains, and opened the data room with strong interest from potential project partners”, Woodside chief executive Meg O’Neill said in a company statement Thursday announcing the new lump-sum agreement.
The Australian oil and gas exploration and production company took over Driftwood LNG, located near Lake Charles, Lousiana, when it acquired Tellurian Inc. for about $1.2 billion. Woodside has renamed the project Louisiana LNG.
The under-construction project, which has yet to reach a final investment decision, is planned to have a capacity of 27.6 million metric tons per annum (MMtpa). The project secured all permits.
“Bechtel has worked on site since the acquisition and will continue work under a limited notice to proceed (LNTP) executed under the revised EPC contract”, said the statement on Woodside’s website. “The LNTP provides for continued site construction and commitment to certain key materials and services required for the foundation project”.
O’Neill said, “The competitive pricing and schedule certainty we have now secured compounds this advantage in the current uncertain market environment for competing projects”.
“Total Louisiana LNG expenditure from December to end of the first quarter of 2025 is forecast to be up to $1.3 billion, which is included in the overall estimated cost for the foundation development”, the company stated.
“The estimated forward cost for the foundation development is $900-960/tonne, unchanged from the range at the time of acquisition”, it added.
In November 2017, Bechtel and Tellurian signed fixed-price, lump-sum turnkey agreements worth a total of $15.2 billion for the Driftwood EPC, according to a Bechtel press release March 21, 2018.
Woodside expects to make a final investment decision in the first quarter of next year.
In a company statement October 9, 2024, announcing the completion of the Tellurian purchase, O’Neill said Woodside had received interest “from multiple parties looking to enter the opportunity as a strategic partner”.
Woodside paid the Tellurian acquisition, announced July 22, 2024, with around $900 million in cash, or $1 per common share, for the stock portion. The enterprise value of about $1.2 billion “includes $50 million for Tellurian’s Series C Convertible Preferred equity shares, ~$65 million of net debt, ~$20 million net working capital adjustment, ~$50 million for management and debt change of control costs and ~$135m of interim funding from signing to close”, Woodside said announcing closure.
Tellurian also had upstream assets but sold these just before the transaction with Woodside. The assets in the Louisiana Haynesville and Bossier shale basins, as well as gathering and treating systems that have an aggregate capacity of 100 million cubic feet a day, went to Aethon Energy Management LLC for $260 million.
The upstream properties are nonetheless expected to supply the LNG project under Woodside. Alongside their sale agreement, Aethon and Tellurian signed a heads of agreement to support the development of the liquefaction facility.
“The Heads of Agreement contemplates the parties negotiating a 20-year offtake agreement which would be indexed to Henry Hub plus a liquefaction fee, with appropriate credit support, to provide the basis for project financing of Driftwood LNG”, Tellurian said in a press release May 29.
“Aethon will continue to explore additional opportunities to bring value to Driftwood LNG following the [upstream sale] transaction”.
