Shell Withdraws From US LNG Project

Anglo-Dutch major Shell said March 30 it was withdrawing from the Lake Charles LNG project in Louisiana, a 16.45mn metric tons (mt)/yr project it was developing in partnership with US midstream developer Energy Transfer.

Citing “current market conditions”, Shell said it will not proceed with the brownfield project, a former import terminal.

“Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest,” Maarten Wetselaar, head of Shell’s integrated gas and new energies division, said in a statement.

Shell said last week it would cut 2020 capital spending by $5bn and suspend its $25bn share repurchase program in the face of the global price collapse.

Energy Transfer said it would continue to develop the project, and is evaluating various alternatives to advance it, including the possibility of bringing in one or more equity partners and reducing the size of the project from three trains and 16.45mn mt/yr to two trains and 11mn mt/yr capacity.

“We continue to believe that Lake Charles is the most competitive and credible LNG project on the Gulf Coast,” said Tom Mason, Energy Transfer’s executive vice president and president for LNG. “Having the ability to capitalise on our existing regasification infrastructure at Lake Charles provides a cost advantage over other proposed LNG projects on the Gulf Coast. The Lake Charles project also benefits from its unparalleled connectivity to Energy Transfer’s existing nationwide interstate and intrastate pipeline system that provides direct access to multiple natural gas basins in the US.”