March 23, 2021 Read More →

Annova cancels planned LNG export terminal in South Texas

Platts ($):

Exelon Corp.-backed Annova LNG has scrapped development of a proposed 6.5 million-tonnes-per-year natural gas export facility in South Texas, the operator said in a March 22 statement.

The operator, in response to questions from S&P Global Platts, said the decision was the result of “changes in the global LNG market.”

The decision to immediately discontinue the gas liquefaction and export project was announced after the abrupt departure of CEO Omar Khayum, who recently left to take a vice president job at Canada’s TC Energy Corp.

While global price swings, shipping constraints and supply outages at existing terminals during a volatile 2020 prompted a higher level of commercial engagement for some U.S. developers, others — especially those with greenfield projects that are to be built from the ground up — have continued to struggle to secure sufficient long-term contracts to sanction the multi-billion dollar facilities. As a developer of one of three liquefaction projects proposed for the Brownsville Ship Channel, Annova had yet to announce any firm long-term contracts tied to supply from its terminal, and it had not yet reached a final investment decision.

The end of the Annova project came after power generator Exelon tried and failed to find a “suitable offer” to sell its majority stake in the project, Exelon spokesman Mark Rodgers told S&P Global Platts. Abandoning the LNG project, while not its first choice, “better financially positions Exelon’s generation business going forward,” he said.

The two other Brownsville, Texas, proposals — NextDecade Corp.’s up to 27-Mt/y Rio Grande LNG project and Glenfarne Group LLC’s Texas LNG Brownsville LLC project, which is expected to include 2 Mt/y of capacity in its first phase — have not yet been sanctioned. Only NextDecade has announced any firm long-term contracts: a single deal for 2 Mt/y with Royal Dutch Shell PLC. NextDecade said March 18 that it was continuing work to as finalize commercial agreements needed to be able to sanction at least two trains at Rio Grande LNG later this year.

[Harry Weber]

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