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    New Fortress finalises agreements for Lakach development

Summary

NFE will drill seven new wells to support production that could begin as early as Q1 2024.

by: Dale Lunan

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Complimentary, Natural Gas & LNG News, Americas, Liquefied Natural Gas (LNG), Corporate, Exploration & Production, Investments, News By Country, Mexico

New Fortress finalises agreements for Lakach development

US floating LNG developer New Fortress Energy said November 22 it had finalised agreements with Mexico’s state-owned oil company Pemex underpinning the development of the Lakach natural gas field in the Gulf of Mexico.

The agreements comprise a long-term strategic partnership, with the full support of Mexican president Andres Manual Lopez Obrador, to complete an integrated upstream and gas liquefaction development of Lakach, at 937bn ft3of reserves one of the largest non-associated gas fields in the Gulf. Lakach is located in deep Gulf waters some 90 km off the coast of Veracruz.

NFE will invest in the Lakach development by drilling seven offshore wells over the next two years and deploying its 1.4mn metric tons/year floating LNG (FLNG) unit Sevan Driller to liquefy most of the produced gas. Sevan Driller is currently undergoing conversion at a shipyard in Singapore.

In a separate statement, Pemex said the 10-year development plan at Lakach would see production of about 300mn ft3/day, with 190mn ft3/day going to NFE for liquefaction and the remaining 110bn ft3/day piped ashore to meet domestic Mexican demand. Production could begin as early as the first quarter of 2024.

Pemex and NFE will also examine the possibility of extending the life of the Lakach development considerably by developing the nearby Kunak and Piklis fields, which would increase the region’s resource potential to about 3.3 trillion ft3.

“We are pleased to finalise our strategic partnership with Pemex, which strengthens our commitment to long-term operations in Mexico and we believe demonstrates the substantial value of our integrated natural gas infrastructure business model,” NFE CEO Wes Edens said. “This arrangement represents the first of what we consider to be an ideal formula for the deployment of NFE’s FLNG units to stranded gas plays around the world – one that combines gas for domestic use with low-cost supply for LNG export into global markets.”

Under the agreements, NFE will provide upstream services to Pemex for the production of natural gas and condensate in return for a fixed fee on each unit of production. The fee is expected to resemble industry-standard gross profit-sharing agreements between a service provider and the owner of the resource.

NFE will have the right to purchase sufficient natural gas for its FLNG unit, while Pemex will market the remaining natural gas and all of the produced condensate.

Lakach was discovered by Pemex in 2007 but its future development was put on hold in 2014 amidst declining world oil prices. By then, Pemex had already invested $1.4bn in the field, and NFE expects to supplement this initial investment with $1bn of its own, the Pemex statement said.

“Pemex is pleased to finalise this strategic partnership with NFE, a leading energy infrastructure company,” Pemex CEO Octavio Romero Oropeza said. “We believe this partnership will enable Pemex to efficiently leverage our domestic natural gas resources, fulfill Mexico’s security of supply targets, and facilitate gas-fired power infrastructure development in the region.”