Woodside Energy has made a final investment decision to build a $17.5 billion liquefied natural gas production and export facility in Calcasieu Parish, which state officials said is the largest foreign investment in Louisiana history.
Construction of the Louisiana LNG facility has been underway for three years. It will be located on a 1,200-acre site on the west bank of the Calcasieu River south of Lake Charles and is slated to produce 16.5 million tons per year of LNG. It is expected to create 500 to 1,000 permanent jobs and 8,000 construction jobs.
Gov. Jeff Landry referred to the “long and winding road” that it took to make the export facility a reality during a news conference Tuesday announcing the project.
“We’ve addressed obstacles and moved things out of the way and we’ll continue to do it, as long as you keep investing in Louisiana,” he told Woodside officials during the event in the courtyard of the Pentagon Barracks in Baton Rouge.
The development has expansion capacity that will allow it to produce 27.6 million tons of LNG annually.
Four LNG terminals are currently operating in Louisiana, and Venture Global is nearing a final investment decision on Calcasieu Pass 2, its second Cameron Parish facility.
Louisiana LNG has had a long history. Houston-based Tellurian first discussed building the facility, which was then called Driftwood LNG, in 2016. In 2018, it won a controversial tax concession worth up to $2 billion over its first decade, which was then largest industrial tax break in Louisiana’s history.
The project was approved by federal regulators during the first Trump Administration and received a long-term export license. But disruptions caused by the COVID pandemic, a lack of financing and lengthy equipment delivery timelines delayed construction.
Woodside is an Australian company with operations across North and South America, Africa and Australia. The company shipped its first cargo of LNG from Australia to Japan in 1989.
It acquired Driftwood LNG last year, when it purchased Tellurian for $900 million. Earlier this month, it sold a 40% stake in Louisiana LNG to the infrastructure investment firm Stonespeak for $5.7 billion, a move than reduced the amount of capital it would have to come up with to complete the plant and made a “material step” toward the final investment decision. Stonespeak’s contributions will be used to support 75% of the capital expenditures at the plant through 2026.
Daniel Kalms, executive vice president and international chief operating officer for Woodside, said global LNG demand has increased by 60% over the past decade and is expected to grow another 50% over the next 10 years.
About 500 people are already working at the Louisiana LNG site, Kalms said. Pilings have been driven in the ground, concrete has been poured and dirt has been moved.
“One of the advantages of this project is that a lot of early work has been done,” he said. “It’s perfectly poised to take off now with this final investment decision.”
The project is a “game-changer” for Woodside that will position the company as a global LNG leader, CEO Meg O’Neill said in a statement. The location will allow the company to sell LNG to clients in Europe and Asia, which gives it options in case the Russia-Ukraine war ends and Russian natural gas is once again allowed to be sold in Europe, she told the Wall Street Journal.
Greg Upton, executive director of the LSU Center for Energy Studies, said the global demand for Gulf Coast LNG is being driven by the low price of natural gas in Louisiana and Texas, compared to the cost in Europe and Asia. LNG costs just under $3 per million British thermal units at the Henry Hub, which runs through Erath, but $11.68 at the main European transfer facility in the Netherlands and $11.90 at the East Asia transfer point, according to figures from the U.S. Energy Information Administration.
The Russian invasion of Ukraine jump-started some LNG projects that were going nowhere.
“Countries around the world are willing to pay a premium for long-term natural gas contracts,” Upton said.
Currently, 13% of the natural gas being produced in the U.S. is exported as LNG. Upton said there is no theoretical ceiling on how much supply could be exported, as long as customers are willing to pay the high costs of liquification and shipping.
“That shows how much the global market values that natural gas,” he said.
Louisiana Bucket Brigade SWLA Program Coordinator Lori Cooke was less enthusiastic about Louisiana LNG.
“There (are) so many (LNG facilities) trying to get in on the ground floor, but they’re already too late,” Cooke said. “There’s so many of them, and they’re frantically trying to start shipping LNG, so they can, you know, kind of capitalize on this boom, but there’s already a glut.”
Cooke mentioned that the new facility will also bring problems with erosion and dredging as well as continued pollution to the area.
“We’ve sacrificed enough of our health and our family’s health and our ancestors’ health with those dangerous chemicals that are going into the air, and (this new facility) is just going to add to that,” Cooke said.
Staff Writer Courtney Pedersen contributed to this report.
