Kimmeridge Energy Management Co. LLC has sealed agreements announced last year to supply Glencore Ltd. with 2 million metric tons per annum (MMtpa) of liquefied natural gas (LNG) from Commonwealth LNG and equivalent natural gas from Kimmeridge Texas Gas LLC (KTG).
“Inclusive of agreements with Glencore, Commonwealth has 3 Mtpa of offtake under long-term agreement, with line of sight towards finalizing its commercial book ahead of a targeted final investment decision in Q3 2025 and anticipated first LNG production in 2029”, the parties said in a joint statement Tuesday.
The volumes from KTG, which produces in the Escondido, Olmos, Austin Chalk and Eagle Ford formations and sells in the South Texas market, will be supplied at international prices under a netback agreement.
“Our partnership with Glencore furthers the transformation of KTG into an integrated natural gas champion that provides reliable, clean energy from wellhead to water”, KTG chief executive David Lawler said.
Glencore head for global LNG, gas and power Maxim Kolupaev commented, “Finalizing our agreements with Kimmeridge Texas Gas and Commonwealth marks an important step in advancing our global gas strategy”.
The parties announced the initial agreements September 19, 2024. Earlier that year KTG took over Commonwealth LNG after Kimmeridge raised its stake in the project through an acquisition from project founder Paul Varello, who retired following the sale.
Earlier this month Commonwealth said it had signed a 20-year offtake agreement with an unnamed “major” Asian customer for 1 MMtpa of LNG.
To rise along the Calcasieu River on the Gulf Coast near Cameron, Louisiana, the project has a planned capacity of 9.5 MMtpa, equivalent to about 441.4 billion cubic feet per year of natural gas according to Commonwealth.
In February the Department of Energy granted the project a conditional permit to export to countries with no free trade agreement with the United States.
Concurrently the Federal Energy Regulatory Commission (FERC) issued a draft Supplemental Environmental Impact Statement to resolve a court challenge against the project. The Court of Appeals for the District of Columbia Circuit had ruled that the Commission failed to properly assess the cumulative effects of the project’s nitrogen dioxide (NO2) emissions.
“Commission staff conclude that cumulative modeled National Ambient Air Quality Standards exceedances for 1-hour NO2 may be significant”, FERC said.
Commonwealth expects the first phase of development to bring over $11 billion in investment to Louisiana and generate about $3.5 billion in annual export revenue. It also expects to employ around 2,000 people during the peak of construction.
To contact the author, email jov.onsat@rigzone.com
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