Houston-based Commonwealth LNG has signed a strategic agreement with Baker Hughes to work on Commonwealth’s 9.3 million tonne per annum (MMtpa) liquefied natural gas (LNG) facility under development in Cameron Parish, Louisiana, located on the Calcasieu River in the Gulf of Mexico. .
Baker Hughes will work with Commonwealth LNG to maximize the project’s production and minimize emissions by using Baker Hughes’ LM9000 aeroderivative gas turbine technology, Commonwealth LNG said in a press release on Monday. Commonwealth expects the order for the LM9000 equipment to be awarded in conjunction with the financial close of the Commonwealth LNG project, which is expected to be in the first quarter of 2024.
The collaboration will also feature other key equipment, services and software from Baker Hughes to support the project, including its proven compressor technology, spare parts, maintenance services and the Cordant asset performance management suite, according to the communicated Commonwealth LNG said its relationship with Baker Hughes is “vital to ensuring Commonwealth LNG commences production in early 2027”.
Meanwhile, Commonwealth LNG closed a development equity investment from private funds managed by Kimmeridge Energy Management Company LLC, an alternative asset management firm focused on the energy sector, according to a separate press release.
The investment completes the development funding required for Commonwealth LNG to reach a Final Investment Decision (FID) on its LNG export facility. Financial terms of the investment were not disclosed.
Commonwealth LNG and Kimmeridge have also agreed in principle the terms of a 20-year, two MMtpa LNG gathering commitment from the facility along with associated gas supply. The agreement also includes key terms for Kimmeridge’s participation to provide more capital to Commonwealth LNG to support construction of the facility, according to the statement.
“We are delighted to partner with Kimmeridge, a company committed to the transition to a lower carbon future,” said Paul Varello, Executive Chairman and Founder of Commonwealth LNG. “This agreement represents another important milestone in the development of the project and an alignment with a strategic partner who shares our vision for the future of global energy security.”
“Our transaction with Commonwealth LNG gives Kimmeridge the opportunity to be vertically integrated from the wellhead to the water, enabling us to deliver reliable, safe and clean energy to global markets,” said Ben Dell , managing partner of Kimmeridge. “We have been impressed by the strong management team that Commonwealth LNG has assembled and their commitment to successfully sanctioning and building the project.”
“This agreement brings an additional 2 mtpa of input to the project from a customer that is willing and able to maintain its commitment,” said Commonwealth LNG President and CEO Farhad Ahrabi. “The recent LNG commercialization progress, the completion of FEED [front-end engineering design]and the conclusion of the EPC [engineering, procurement, and construction] The contract with Technip Energies ensures that the Commonwealth will start delivering LNG to our customers in early 2027.”
“Commonwealth LNG brings a differentiated offering to the LNG market through our modular design that reduces costs, accelerates time to market and avoids contractor concentration risk,” added Ahrabi.
According to a separate PItchBook press release, Kimmeridge used about a third of the $1 billion raised for his sixth flagship fund to build the Eagle Ford position.
“Recently, you’ve seen the majors (ConocoPhillips, Total, Chevron) looking to build more integration into LNG ownership. I think we’re clearly one of the first people in PE. [private equity] “When we started investing in South Texas, we had a very clear vision of what we wanted to build.”
Kimmeridge’s sixth flagship fund, in addition to being the firm’s largest, is the largest oil and gas fund raised since Blackstone Energy Partners III, a 2020 vintage fund that raised $4.4 billion, according to the release, citing data from PitchBook.
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