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Liquefied Natural Gas signs supplier agreement with Chart Industries

The alliance with Chart to provide liquefaction cold boxes and heat exchangers is central to the company’s efforts to produce a standardised, repeatable design. This will be used initially on Magnolia LNG and then applied to other projects such as Bear Head LNG.

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Liquefied Natural Gas Limited (ASX:LNG, OTC ADR:LNGLY) has entered into a supplier alliance agreement for Chart Industries, Inc. (NASDAQ:GTLS) to provide liquefaction cold boxes and heat exchangers to current and future projects.
   
It also reiterated previous EBITDA guidance for the Magnolia LNG project in the Port of Lake Charles, Louisiana, of US$2.50 per million British Thermal Units or greater.

The global alliance agreement with Chart reflects the company’s strategy to standardise its OSMR® liquefaction technology design.

Under the agreement, LNG Limited and Chart will work collaboratively together on both current and future company projects.

Negotiations are continuing with other key equipment and service providers.

Earlier this month, the company signed its first legally binding liquefaction tolling agreement with Meridian LNG Holdings Corporation at Magnolia LNG in Louisiana and received its Draft Environmental Impact Statement for the 8 million tonne per annum four train project.

John Baguley, Magnolia LNG chief operating officer, stated:

“We are particularly pleased to be joining an alliance with Chart, one of the world’s leading suppliers of cryogenic liquefaction equipment. This equipment is vital to our mission to deliver LNG to market by the end of 2018.

“With Chart on board, we will be working closely with them and our EPC contractor to establish an overall asset management program to jointly address the successful design, fabrication, installation, commissioning and operation of the Chart equipment within our overall facility.”

Sam Thomas, chief executive officer of Chart Industries, commented:

"We are excited to partner with LNG Limited to supply key equipment components for the OSMR® liquefaction technology across all their projects, again demonstrating Chart BAHX as the highly efficient, low risk technology platform for LNG. 

“We look forward to providing our track record of safety, quality and experience as a leader in our sector.”

Maurice Brand, LNG Limited managing director, added:

“The use of alliance agreements with key suppliers such as Chart is central to our efforts to produce a standardised, repeatable design that we are able to replicate across all our projects and opportunities.

“Our strategy is to establish and demonstrate the clear advantages of our OSMR® technology and modular construction approach on Magnolia LNG, and then apply this to our subsequent projects such as Bear Head LNG in Nova Scotia, Canada.”


Magnolia LNG EBITDA Guidance


The recent milestones achieved along with the status of negotiations with other offtake counterparties and potential alliance candidates provide increasing certainty of development of the full 8Mtpa Magnolia LNG project.   

Brand stated:

“We remain on schedule to provide first LNG in December 2018 with full LNG supply of 8Mtpa completed in 2019.  

“Our recent announcements and continuing negotiations combine to reinforce our previous Magnolia LNG EBITDA guidance across the full 8Mtpa project of US$2.50/mmBtu or greater.”


Magnolia LNG


The wholly-owned Magnolia LNG project comprises the proposed development of an 8Mtpa LNG project on a 115 acre site, located on an established LNG shipping channel in the Lake Charles District, Louisiana, U.S.

The project is based on development of four LNG production trains of 2Mtpa each using the company’s wholly owned OSMR® LNG process technology.

Feed gas supply will come from the highly-liquid U.S. Gulf Coast gas market via several gas suppliers.

Gas supply will be delivered to the site via the Kinder Morgan Louisiana Pipeline under a binding 20-year pipeline capacity agreement.


Analysis

LNG Limited’s alliance with Chart and possibly other key suppliers is central to its efforts to produce a standardised, repeatable design that will first be used at Magnolia LNG before being replicated across its other projects and opportunities.

This and other milestones such as the binding tolling agreement and draft environmental statement have also allowed the company to reiterate its EBITDA guidance of US$2.50/mmBtu for the full Magnolia LNG project.

It is also working with the Kellogg Brown & Root LLC and SK E&C Group engineering, procurement, construction and commissioning joint venture to finalise Capex for Magnolia LNG this quarter.

As the company draws closer to Financial Close for Magnolia LNG in the first quarter of 2016, it is worth revisiting the potential for a further re-rating of LNG Limited in 2015/16 given that Houston-based Cheniere Energy (NYSEMKT:LNG) is valued at US$16 billion.

Cheniere is less than six months away from producing its first LNG for export from the 4.5Mtpa Train 1 at Sabine Pass, which will mark the first US export of LNG outside Alaska.

LNG Limited has $181.8 million in cash as at 30th June 2015.



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