Magnolia LNG awards $40 million for liquefaction equipment

Magnolia LNG, a subsidiary company of Liquefied Natural Gas Limited, announced on September 22 that it had awarded $40 million in contracts to Chart Industries, Inc. (CSA CSM), for a mid-scale LNG project at Lake Charles LA. Chart will initially deliver two identical trains, each with a nominal LNG production capacity of 2.0 million metric tons per annum (MMTPA). The trains combine Chart’s braised aluminum heat exchangers (BAHX), Core-in-Kettle® and cold box technologies into an integrated system to support Magnolia’s plan to deliver natural gas to customers in the United States and abroad.

Magnolia’s business model provides liquefaction services to LNG buyers who pay a monthly fixed capacity fee, plus all LNG plant operating and maintenance costs. LNG buyers contract for liquefaction services under two contract models—a Liquefaction Tolling Agreement, whereby the LNG export terminal is only responsible for processing natural gas into LNG, and an LNG Sales and Purchase Agreement, wherein the customer buys LNG on a Free On Board (FOB) basis.

Chart anticipates a further award will be confirmed by the first quarter of 2016 for an additional two trains, bringing overall plant capacity to 8.0 MMTPA. All Chart equipment will be engineered and built in the US at Chart’s waterside cold box fabrication facility in New Iberia LA. “We are delighted with this award which is further demonstration of the benefits of a multi-train, modular concept, crucial in delivering the project aim of LNG to market in 2018. Establishing standardized, repeatable plant designs, centered on Chart’s BAHX technology, also lays the foundation for the fulfillment of future projects and opportunities for LNG Limited and Chart,” says Mike Durkin, president of Chart Energy & Chemicals.

Magnolia’s project involves development on a 115-acre site located on an established LNG shipping channel in the Lake Charles LA. In July 2015 the Federal Energy Regulatory Commission (FERC) prepared a draft Environmental Impact Statement (EIS) for the project. It determined that construction and operation of the facility would only impact the environment in limited ways, primarily during construction, “although some long-term and permanent environmental impacts on wetlands, vegetation and land use would also occur.”

In a statement issued on September 14, Magnolia said it is working with FERC, the National Marine Fisheries Service and the Army Corps of Engineers on a dredging issue at the site. It is also addressing concerns raised by the Environmental Protection Agency in advance of FERC issuing its Final EIS.