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Home › Dodgy Deals ›
Dodgy Deal
Driftwood LNG terminalUnited States

Project – Active

This profile is actively maintained
Lead organisation:
BankTrack
Contact:

climate@banktrack.org

Last update: 2022-09-23 00:00:00
Schematic overview of Driftwood LNG terminal. Photo: Driftwood LNG project website

Project – Active

This profile is actively maintained
Lead organisation:
BankTrack
Contact:

climate@banktrack.org

Last update: 2022-09-23 00:00:00
Why this profile?

Why this profile?

The Driftwood LNG terminal, if fully realised, would have the capacity to produce and export 37 billion cubic metres of LNG every year, which is at odds with calls from international climate organisations such as the UN’s Intergovernmental Panel on Climate Change to reduce global LNG exports this decade to mitigate global warming. The Driftwood LNG terminal is also located in an area of Louisiana in which there are pre-existing air quality issues, according to data from the US Environmental Protection Agency.

What must happen

LNG export terminals are capital-intensive, financially risky and environmentally destructive. Financial institutions involved in these projects share responsibility for the impacts of these facilities. These impacts span people and ecosystems: communities around the terminal site, communities at the point of extraction and communities along pipeline routes.

By financing practices that are incompatible with a climate-stable future, the financial institutions involved threaten global agreements to address climate change. Therefore, Goldman Sachs and Société Générale, should withdraw their involvement as financial advisors to this project, and other banks should not provide project financing.

About
Sectors LNG Terminal
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website http://driftwoodlng.com/

Driftwood LNG is a proposed LNG export terminal in Calcasieu Parish, Louisiana sponsored by Tellurian Inc. The proposed 96-mile Driftwood LNG Pipeline, also sponsored by Tellurian Inc., would supply gas for the project. In March 2022, initial construction activities started on the project’s first phase, which is expected to cost at least USD 12 billion, although a final investment decision had not been taken and project financing was not secured. 

Impacts

Impact on human rights and communities

The Driftwood LNG terminal is sited in an area with pre-existing air quality issues, according to data from the US Environmental Protection Agency (EPA). The EPA’s EJSCREEN tool finds that the area within a three-mile radius of Driftwood LNG has EPA environmental indicators for fine particulate matter (PM 2.5), air toxics cancer risk, and respiratory hazard index that exceed the national medians.

Driftwood, like all LNG export facilities, would pose an immediate danger to the surrounding community. These terminals flare and vent noxious chemicals into the air, pollute nearby water sources, and can cause deadly accidents.


Impact on climate

The life cycle emissions from the Driftwood LNG terminal have been estimated to be 143 million tonnes of CO2 equivalent, evaluated on a 20-year timeframe, which is equivalent to the annual emissions of nearly 40 coal plants.

Financiers

The overall cost for the project is estimated at USD 30 billion. A final investment decision for the project has yet to be taken and project finance loans have not been secured.

The project's financial advisors are Goldman Sachs and Société Générale, and the hoped for financing package would involve USD 7 billion in capital from the project partners and USD 20 billion in project finance debt for overall costs (IJGlobal).

In May 2019, the Swiss bank UBS provided Tellurian with USD 75 million in loans (one year tenor) for the project (IJGlobal). Credit Suisse said in April 2022 that it expects project financing for Driftwood to be finalised in the “coming months”, involving a combination of convertible preferred equity and debt.

In June 2022, Tellurian issued US$500 million in senior secured convertible notes. The following month, Tellurian announced it would release additional notes and make a public offering to raise funds for the project.

Institution type
Finance type
Year
Companies

Project sponsor

Tellurian

United States
Website
Tellurian Inc. is the owner of the Driftwood LNG project and the associated Driftwood Gas Pipeline
No companies

Other companies

Bechtel

United States
Website
Contracted for the engineering, procurement, and construction of the Driftwood LNG project

Gunvor

Switzerland
Website
Signed a 10-year sales and purchase agreement with Tellurian for 4 billion cubic metres per year of LNG

Shell

United Kingdom
Profile
Website
Signed a 10-year sales and purchase agreement with Tellurian for 4 billion cubic metres per year of LNG

Vitol

Switzerland
Profile
Website
Signed a 10-year sales and purchase agreement with Tellurian for 4 billion cubic metres per year of LNG
No companies
Governance
Bank policies
The following bank investment policies apply to Driftwood LNG terminal:
Goldman Sachs
2020-02-11 00:00:00

Environmental policy framework

Bank policy
2020-02-11 00:00:00 | Goldman Sachs
Société Générale
2014-09-01 00:00:00

Environmental and social general guidelines for business engagement

Bank policy
2014-09-01 00:00:00 | Société Générale
2022-01-31 00:00:00

Oil & gas sector policy

Bank policy
2022-01-31 00:00:00 | Société Générale
UBS
2021-05-03 00:00:00

Environmental and social risk policy framework 2021

Bank policy
2021-05-03 00:00:00 | UBS
News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Global banks pledged to cut emissions – but still invest billions in US gas exports

Many banks promised to work toward net-zero emissions – but their targets explicitly exempt liquefied natural gas projects
2023-04-06 | The Guardian
BankTrack news BankTrack blog Partner news Partner blog

Killing blows for Driftwood LNG?

2022-09-30 | IEEFA
BankTrack news BankTrack blog Partner news Partner blog

Gulf Coast gas export frenzy raises tough questions for U.S., Europe

2022-04-21 | The Washington Post
BankTrack news BankTrack blog Partner news Partner blog

Tellurian Looking at U.S. Export Financing for Driftwood LNG

2022-04-19 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Tellurian starts building $16.8B Driftwood LNG

2022-03-29 | Houston Chronicle
BankTrack news BankTrack blog Partner news Partner blog

‘Return of North American LNG FIDs’ Seen in 2022 — LNG Spotlight

2021-09-17 | Natural Gas Intel
BankTrack news BankTrack blog Partner news Partner blog

Tellurian says talks with banks underway for $12 billion Driftwood LNG project

2021-08-09 | S&P Global
BankTrack news BankTrack blog Partner news Partner blog

Tellurian ‘Adapts’ Driftwood LNG Plan on Heels of Covid-19

2021-04-09 | Natural Gas Intel
Resources
Documents
Links
2022-05-16 00:00:00

Q1 2022 financial statements

Company document
2022-05-16 00:00:00 | Tellurian
2022-05-16 00:00:00

Annual report 2021

Annual report
2022-05-16 00:00:00 | Tellurian
2021-08-31 00:00:00

Despite Hype, Tellurian’s LNG Plans Face an Uphill Battle

Is Tellurian’s Driftwood LNG Plant Making Real Progress, or Blowing Smoke
Other document
2021-08-31 00:00:00 | IEEFA
2022-03-31 00:00:00

Gas Run Aground

NGO document
2022-03-31 00:00:00 | Global Energy Monitor
2022-04-30 00:00:00

How Long Does it Take to Build an LNG Export Terminal in the United States?

Examining the development timelines of existing US projects
NGO document
2022-04-30 00:00:00 | Global Energy Monitor

Dangerous Driftwood LNG

Campaign website providing information about the potential and present risks of the Driftwood LNG terminal.

Updates

2022

2022-09-23 00:00:00 | Shell and Vitol terminate their purchase contracts with Tellurian

Following the failure of a US$1 billion high-yield bond sale earlier this month, Driftwood LNG promoter Tellurian has also seen Shell and global energy trader Vitol terminate their purchase agreement contracts for a total of 6 million tonnes per annum (mtpa) of LNG from its proposed export terminal facility in Louisiana. One agreement, with the commodity trader Gunvor, remains active for 3 mtpa of LNG. As a result, the company’s outspoken co-founder Charif Souki has recognized the need for a rethink of the company’s business model and accepted that Driftwood will be further delayed. In his latest YouTube video, Souki urged investors to now consider Tellurian “a solid American production company with very real domestic prospects”, with the ability to sell LNG globally as a “Holy Grail”. (GEM.wiki) 

2022-09-21 00:00:00 | Tellurian to focus on finding equity partners for Driftwood LNG

Tellurian will now focus on finding equity partners for its Driftwood LNG export project in Louisiana after it withdrew a senior notes offering, according to the firm’s co-founder and executive chairman, Charif Souki. Due to uncertain conditions in the high-yield market, Tellurian withdrew the offering that would allowed the firm to stay on schedule to deliver LNG from Driftwood in the first half of 2026. Souki added that the company would continue with its plans, but staying on schedule would become “more difficult”.

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