US Delfin LNG Gets Preliminary Go-Ahead

Delfin Midstream and Golar LNG have signed a joint development agreement for the Delfin LNG project off the coast of Cameron Parish, Lousiana, using Golar's floating liquefaction technology, they said June 21. The joint development agreement will facilitate the financing, marketing, construction, development and operation of Delfin LNG.  

Delfin LNG is the first and only permitted floating LNG export project in the US. Delfin LNG is a brownfield deepwater port requiring minimal additional infrastructure investment to support up to four FLNG vessels producing up to 13mn metric tons/yr.  

Delfin purchased the UTOS pipeline, the largest natural gas pipeline in the Gulf of Mexico, in 2014 and submitted its deepwater port licence application in 2015. Delfin LNG received a positive record of decision from the offshore regulator Marad March 13. Delfin received approval from the Department of Energy for long-term exports of LNG to countries that do not have a Free Trade Agreement with the US June 1.

Golar has successfully designed, financed, contracted, and built its first FLNG vessel, the FLNG Hilli Episeyo, which is scheduled to sail away from Singapore's Keppel shipyard sometime before October.

A second vessel of the same design, Gandria, is soon to be converted subject to a final investment decision ("FID") by the Fortuna project partners, operating off Equatorial Guinea, west Africa, of which the capacity of the first train is expected to be around 2.5mn mt/yr.

Golar is now developing the Mark II next-generation floating liquefaction solution that is based on its industry leading Hilli and Gandria designs. The Mark II solution, as used at the Delfin LNG project, will have over 3.0mn mt/yr of liquefaction capacity and will be the lowest cost liquefaction solution in North America, it said.

It is expected that FID on the Delfin project will take place in 2018 with first LNG to be delivered in 2021/22.  Delfin LNG is uniquely positioned in the North American LNG market as a proven low cost solution, modular, scalable, requiring limited additional investments in fixed infrastructure, and having already completed its environmental permitting and received Non-FTA export authorizations.

Golar CEO Oscar Spieler said the three-yr construction time and low cost modular floating technology will allow Delfin to make final investment decisions in 3.0mn mt/yr increments at a lower unit cost than large land-based projects."

Delfin CEO Frederick Jones said it looked forward to leading the "second wave of US LNG projects. Golar's flexible, floating liquefaction model has proven to be the world's lowest cost liquefaction solution allowing Delfin to offer innovative commercial solutions with reduced credit requirements, mid-term offtake contracts (approximately 10 years) and FOB and DES LNG pricing based on fixed price, S curves or tied to a variety of energy indexes."

First-generation US liquefaction projects are the major land-based projects such as the existing Sabine Pass and under-construction Corpus Christi plants in Louisiana, owned and operated by Cheniere Energy. Owing to the perceived over-supply of LNG for the coming five years at least, companies are reluctant to commit to more similar-sized export projects from the US.

William Powell