EQT Corp. has signed a tentative 15-year tolling agreement with the proposed Commonwealth LNG export terminal in Louisiana to liquefy 1 million metric tons/year (mmty) of the super-chilled fuel that the top producer can sell on international markets.
The heads of agreement (HOA) builds on another agreement EQT signed to liquefy 1 mmty at the proposed Lake Charles liquefied natural gas project earlier in the year. Final terms of both the deals need to be finalized.
"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,” said EQT CEO Toby Rice.
EQT, the largest natural gas producer in the United States, launched an initiative last year to promote domestic gas exports and quadruple the country’s export capacity to 55 Bcf/d by 2030.
“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," Rice noted.
The deal marks another step into the global gas market for North American exploration and production companies. Many began pursuing deals to secure LNG supplies for overseas customers after international gas prices spiked last year when Russia cut off exports to Europe.
U.S. export capacity is rapidly expanding as well, with five projects under construction that would put the nation on track to have nearly 25 Bcf/d of liquefaction online by the end of this decade. Another 600 MMcf/d of capacity is under construction in Mexico, where the facilities would also utilize U.S. feed gas.
The 9.3 mmty Commonwealth project expects to make a final investment decision (FID) early next year. It is aiming to load its first cargo in 2027.
Commonwealth is still awaiting a decision from the U.S. Department of Energy on a global export permit. If the deal with EQT and another offtake agreement signed last month with Kimmeridge Energy Management Co. LLC is finalized, the project would have more than 50% of its capacity under contract. Commonwealth Executive Chairman Paul Varello told NGI in June that the firm was aiming to place around 80% of the total volumes under sales and purchase agreements before reaching FID.
