I’m Back (Back in the LNG Groove) - How Woodside's FID on Louisiana LNG Shakes Things Up

Friday, 05/02/2025Published by: Lindsay Schneider  rbnenergy.com

https://rbnenergy.com/im-back-back-in-the-lng-groove-how-woodsides-...

Woodside Energy’s final investment decision (FID) on the $17.5 billion Louisiana LNG terminal was a stunner. For one thing, only 1 million metric tons per annum (MMtpa) of the project’s 16.5 MMtpa (2.2 Bcf/d) of capacity is under contract — U.S. LNG export projects typically have commitments for two-thirds or more of their output before pulling the trigger. The project will also have an outsized impact on gas flows in a region already struggling to keep up, and it may well upend plans for other projects in the works. In today’s RBN blog, we take a closer look at Louisiana LNG, Woodside’s daring development approach, and the terminal’s impacts on gas demand, gas flows and pre-FID projects.

Australia’s Woodside Energy announced April 28 that it will establish its LNG foothold in the U.S. by building Louisiana LNG, a project the company acquired in October 2024 when it purchased the nearly bankrupt Tellurian — and its Driftwood LNG project — for $900 million. Driftwood LNG came close to becoming a reality more than once, only to crash, burn and be rebranded. Now, with a new owner and name, the three-train terminal just south of Lake Charles will be built, with first LNG expected in 2029 and its full capacity online in 2031.

We’ll get to Louisiana LNG’s physical particulars in a moment but first let’s look at Woodside Energy and the seemingly audacious decision by the company and its project partner — Stonepeak, the New York City-based investment firm — to take FID on an 11-figure project with less than one-sixteenth of its output under long-term contract.

Woodside Energy

Woodside is Australia’s largest independent oil and gas company and operates primarily offshore; it is also an international LNG supplier. The company expects to produce up to 537 Mboe/d in 2025, with about 40% of that to feed its LNG terminals (~1.25 Bcf/d), another 20% as pipeline gas (~623 MMcf/d) and the rest as oil (~215 Mb/d). The company operates two LNG terminals in Australia. One is the North West Shelf Project (NWSP; magenta diamond with No. 5 in left inset of Figure 1 below), which produces gas for domestic consumption and LNG export. NWSP has five trains with a total capacity of 16.9 MMtpa (2.2 Bcf/d). Woodside also operates Pluto LNG (magenta diamond at bottom right of left inset), a single-train, 4.9-MMtpa (0.65 Bcf/d) export terminal. An 8-MMtpa (1.1 Bcf/d) expansion is underway, with first LNG expected in 2026. The expansion is part of the Scarborough Energy Project (magenta diamond at left in left inset), which also includes development of the Scarborough Field (gold-shaded area) in the Carnavorn Basin off the coast of Western Australia. Woodside is also part of the Sunrise LNG project in the Timor Sea (between East Timor and Australia; striped magenta diamond in right inset), which is still pending development agreements.

Woodside’s first foray into U.S. LNG was in 2014, when it signed a long-term offtake agreement with Cheniere Energy. Woodside, along with fellow Pacific Basin LNG producer Pertamina, purchased offtake capacity from the first two trains at Corpus Christi to diversify its portfolio during the first wave of U.S. LNG development. Woodside also has offtake agreements with pre-FID Commonwealth LNG and Mexico Pacific LNG. The company previously said it would maintain those agreements, even as it shifted focus to its own LNG project, Louisiana LNG. When Tellurian was circling the drain, the company jumped at the opportunity to take its experience as an LNG operator in Australia and expand it to the U.S.

Stonepeak

Woodside announced in early April that it had entered into a binding agreement with Stonepeak to sell a 40% interest in Louisiana LNG Infrastructure LLC. Under the deal, Stonepeak will provide $5.7 billion toward the development of Louisiana LNG, including 75% of the project’s capital expenditures in 2025-26. This enables Woodside to delay the peak of its spending until 2027, when its Scarborough Energy Project is online. Stonepeak will own 40% of the LNG terminal, not including the gas supply, pipeline or LNG offtake. Stonepeak is not taking any capacity or cargoes as part of this deal but will receive a liquefaction fee.

Woodside will market about half the project’s capacity, or 8 MMtpa (1.1 Bcf/d), as part of its global LNG portfolio. The company has a number of deals, primarily delivered ex-ship (DES) from its portfolio, meaning that Woodside will be responsible for delivering LNG to a specified port — a very different arrangement than the typical FOB (free on board) or tolling structure of U.S. LNG terminals. (See Steady As She Goes for more or our LNG Voyager report for terminal-level contract details.) Such agreements include the recent ones with China Resources, JERA and Uniper.

Uniper is also a direct offtaker — currently the only one — from Louisiana LNG. It has signed purchase agreements totaling 2 MMtpa (0.26 Bcf/d) of LNG from Woodside — 1 MMtpa (0.13 Bcf/d) ex-ship from the global portfolio, which we just mentioned above, and 1 MMtpa FOB from Louisiana LNG. While Woodside may continue to sell DES from its global portfolio, the direct capacity from Louisiana LNG is much more likely to be sold FOB. DES deals are very uncommon in the U.S.

Strategy Shift

Woodside’s decision to commit to building Louisiana LNG before selling most of its capacity is a marked departure from how LNG projects have typically made their way to FID. In the U.S., developers have historically strived to have projects at least two-thirds sold out before taking FID; more recently, companies like NextDecade and Venture Global have been selling their projects out completely before committing to construction. As we said, Louisiana LNG currently has only 1 MMtpa in offtake agreements, the contract with Uniper. Even if you count the capacity Woodside plans to market in its global portfolio as sold, that still would only be 55%, well below the level of commitments U.S. projects have. S&P Global Ratings changed its credit outlook for Woodside from “stable” to “negative” after the developer’s FID announcement.

But Woodside has stuck its neck out before: It took FID on its Scarborough project in November 2021 after de-risking the two-train, 8-MMtpa project somewhat by selling a 49% stake in its 5-MMtpa second train to Global Infrastructure Partners (GIP); it sold an additional 15.1% ownership interest to JERA and a 10% stake to LNG Japan in 2024 after construction was well underway.

Woodside will look to sell the remaining 7 MMtpa (0.9 Bcf/d) of capacity while the project is being built and then self-finance the other half of the project, a structure more similar to Golden Pass, a joint venture between ExxonMobil and QatarEnergy. The capacity from Louisiana LNG and the Scarborough project will double Woodside’s Global LNG portfolio to 24 MMtpa (3.2 Bcf/d) by the decade's end. Woodside will expand its managed portfolio with a selection of short-, medium- and long-term contracts to help it hedge against market swings and take advantage of changing dynamics in each market. Previously, only huge global companies like Shell or ExxonMobil made deals like this, but the U.S. LNG landscape is shifting. Cheniere has shifted to a portfolio sales model as well, although the majority of its capacity is still underpinned by long-term contracts, and Venture Global has made no secret of its desire to do the same.

Impact on Gas Flows

The physical plans for Louisiana LNG (striped teal diamond in Figure 2 below) are identical to those when Tellurian was at the helm. Woodside will build three 5.5-MMtpa (0.7 Bcf/d) LNG trains, two storage tanks, two marine berths, and a 37-mile header pipeline to supply feedgas to the terminal. The project is also permitted for a two-train expansion, which would boost the terminal to 27.6 MMtpa (3.7 Bcf/d). The project is still under the engineering, procurement and construction (EPC) contract from before Woodside’s acquisition, part of what made the financially distressed Tellurian attractive to buyers. Tellurian issued a limited notice to proceed (LNTP) to Bechtel in 2022, and Bechtel began early construction work then. The site has been cleared and prepped for construction. In addition, pilings for Train 1 and the LNG tanks are already complete, giving the project a head start.

Tellurian had proposed a number of pipeline projects to support its LNG project, and Woodside will move forward with the Line 200 Pipeline (striped yellow line), which will run from Gillis, LA, to the new terminal. The pipe will have a capacity of up to 3.4 Bcf/d and have connections to the Arcadian (dark-purple line), DTE LEAP (bright-green line), Florida Gas (dark-green line), Tennessee Gas (orange line), Texas Eastern (red line), Transco (maroon line) and Trunkline (pink line) pipelines, according to regulatory filings. It will also connect to Cameron Interstate Pipeline (light-purple line) and Creole Trail (blue line), so it could deliver feedgas to other LNG terminals (solid and striped diamonds) in addition to Louisiana LNG. The pipeline was originally proposed as a dual-line pipe, but at this time Woodside is only going forward with Line 200, not the associated Line 300.

Gulf Coast LNG feedgas demand is currently above 15 Bcf/d, growing by more than 1.5 Bcf/d since the beginning of this year, thanks to commissioning progress at Venture Global’s Plaquemines LNG. There is now more than 94 MMtpa (12.5 Bcf/d) of LNG capacity under construction or commissioning in the U.S. that is due online in the next six years or so. That’s an astronomical amount of gas demand and will put an incredible strain on Gulf Coast infrastructure.

In the next few years, the flow of Haynesville supplies into Gillis will increase. Momentum Midstream’s New Generation Gas Gathering Pipeline (NG3) and Louisiana Energy Gateway (LEG) will both begin service at the end of this year and Whitewater’s Pelican Pipeline is anticipated to enter service in 2027. Combined, these three pipelines will transport 5.75 Bcf/d from North Louisiana into the Gillis area. But with growing LNG demand, RBN’s Arrow Model anticipates that this north-south capacity will be fully utilized even before Louisiana LNG becomes operational. Flows from the west and the east into the Sabine River, LA, region will decline in the coming years as it is flooded with gas from the north, but Louisiana LNG’s need for feedgas will cause east-west flows to increase again.

Woodside recently signed a supply agreement with BP for 640 MMcf/d. Specifics around the deal have not been announced, but BP will supply the gas to Line 200 on a long-term basis beginning in 2029. The two companies have a long history of working together. Woodside also cited BP’s experience working with MiQ as another reason for the partnership. MiQ is a non-profit, third-party group that assesses and certifies methane emissions across the supply chain (see our Better Way blog series for more on responsibly sourced gas). Woodside has said the Louisiana LNG project fits into the company’s emissions-reduction targets. The deal with BP is a start, but more gas supply and firm transport on the pipelines that connect to Line 200 will need to be secured before the project begins producing LNG.

Impact on Other LNG Projects

An FID on a project of Louisiana LNG’s magnitude — again, three trains with a combined capacity of 16.5 MMtpa — is sure to have an effect on developers promoting other, pre-FID projects along the Gulf Coast. These developers will now have a tougher job selling their projects, especially to investors and potential offtakers. Some pre-FID projects have large portions of their capacity “contracted” but these deals are done with Heads of Agreement (HOAs) rather than SPAs, the latter of which is a binding contract for offtake while the former is a less formal agreement that either party can back out of.

The potential availability of more than 7 MMtpa of FID-ed LNG capacity — 16.5 MMtpa at Louisiana LNG minus the 8 MMtpa for Woodside's global portfolio and 1 MMtpa to Uniper — will likely cause a shake-up in the U.S. LNG space, as offtakers looking to secure volumes may migrate toward the sure thing and away from more speculative projects. Venture Global’s 10-MMtpa (1.3 Bcf/d) CP2 project and Cheniere’s 2.9-MMtpa (0.4 Bcf/d) Corpus Christi Midscale expansion project are still likely to move forward, but this may slow progress for others that still need to make sales. We’ll continue to track Louisiana LNG’s progress and the project’s impact on others.