Commonwealth LNG Signs Another Deal for Supply with EQT

Commonwealth LNG has entered into a heads of agreement (HOA) with EQT Corp. for one million tons per annum (mtpa) of liquefied natural gas (LNG) under a 15-year tolling agreement, and associated gas supply to Commonwealth LNG's facility in Cameron, Louisiana.

Commonwealth expects a final investment decision for the project in the first quarter of 2024, with the first cargo deliveries expected in 2027. The final terms remain subject to negotiation for a definitive agreement between EQT and Commonwealth, the two companies said in separate news releases Monday.

Commonwealth said that an accelerated construction schedule would allow the project to be built in three years “using a modular approach with major components being fabricated offsite”. The company added that the terms anticipated under the HOA would begin at the start of the facility’s commercial operation.

"We are very pleased to add a US producer of EQT's stature to Commonwealth's customer portfolio", Commonwealth Founder and Executive Chairman Paul Varello said. "This agreement will connect EQT's vast natural gas assets to Commonwealth's LNG facility, thus creating a robust value chain from wellhead to water. Accessing EQT's natural gas production, which achieved a 20 percent year-over-year reduction in Scope 1 and Scope 2 greenhouse gas emissions, supports Commonwealth's goal of achieving best-in-class environmental standards”.

"This HOA with Commonwealth represents another step forward in EQT's risk-adjusted LNG strategy, which seeks to diversify a portion of our production to international markets via arrangements that offer the best combination of upside exposure and downside risk mitigation”, EQT President and CEO Toby Rice said. “Our tolling capacity gives us the flexibility to sell our gas directly to end users globally and we are currently pursuing long-term purchase agreements with prospective international buyers”.

"EQT's scale, peer-leading inventory depth, and environmental attributes uniquely position us to provide energy security while driving emissions reductions via coal displacement both domestically and abroad. We are excited to begin unleashing EQT's reliable, low-emissions natural gas on the global stage”, Rice noted.

Commonwealth is developing a 9.3 mtpa LNG export terminal project located on the Calcasieu River on the Gulf of Mexico near Cameron, Louisiana. Earlier in the month, the company entered into a HOA with the MET Group, an integrated European energy company headquartered in Switzerland, for the sale and purchase of one mtpa of LNG for 20 years. According to an earlier news release, the Commonwealth LNG project already has the necessary permits and will include six natural gas liquefaction trains and associated facilities.

In August, Houston-based Commonwealth LNG signed a strategic agreement with Baker Hughes for work on its LNG facility. Baker Hughes will work with Commonwealth LNG to maximize the project’s output and minimize emissions through the use of Baker Hughes’ LM9000 aeroderivative gas turbine technology, according to a separate news release.

Also in August, EQT closed its acquisition of THQ Appalachia I Midco LLC (Tug Hill) and THQ-XcL Holdings I Midco LLC (XcL Midstream) for a total consideration of approximately $2.4 billion in cash and 49.6 million common shares of EQT, after purchase price adjustments.

Tug Hill's upstream assets are producing approximately 800 million cubic feet of gas equivalent per day with a 20 percent liquids yield. XcL Midstream's gathering and processing assets add 145 miles of owned and operated midstream gathering systems that connect to every major long-haul interstate pipeline in southwest Appalachia.

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