Firm considering public investors for LNG plant
Published 8:13 am Wednesday, July 16, 2014
It’s been two months since Southern California Telephone & Energy executives announced their plans to build an LNG plant on Monkey Island. Now they are looking to take their project to Wall Street investors.
Greg Michaels, SCT&E’s chairman and CEO, told the American Press on Tuesday that he is “90 percent sure” his company will go public in its search for investors in the proposed $2.4 billion LNG plant within the next month.
“We’re seriously considering it,” Michaels said. “All of my companies today are private companies. But now we want to move the property into a publicly traded entity.”
Michaels said several large investors are advising him to keep the project in privately owned hands.
“At this point I’m looking at the strength of the product and the market, and it really makes sense for the future financing of the project,” he said. “It could drive some really powerful value to shareholders.”
The company’s plans to seek public investors for the project comes on the heels of its recent announcement that it would triple the size of the facility. Initially, the Monkey Island plant was to comprise four liquefaction trains, each of which would have produced 1 million metric tons of LNG each year.
But the growing demand for LNG, especially in the European and Asian markets, prompted SCT&E officials to increase the number of the facility’s trains from four to six, each of which will be capable of producing an annual total of 2 million metric tons of LNG.
SCT&E’s decision to triple the size of its facility compelled executives to withdraw their initial application with the Department of Energy for a free trade agreement export permit, which would have allowed the company to export up to 4 million metric tons per year. The company resubmitted a new FTA permit application to the department, requesting approval to export LNG at an annual total of up to 12 million metric tons.
“We always had in mind of doing 12 million metric tons,” Michaels said. “That’s why we bought the size of the property that we did. But we figured we were going to do it in stages. We started analyzing all of the tremendous demand for off-take once we announced, and we realized that 4 million metric tons might have been shortsighted.”
Michaels said SCT&E is looking to submit its application to DOE for a non-FTA export license “within the next week.” He said the company is re-evaluating its proposed liquefaction technology for the Monkey Island project, which must be established prior to submitting an application to the Federal Energy Regulatory Commission.
“We were working with George Salof GE Products because we thought that was the best product for under 1 million metric tons,” Michaels said. “But now that we’re going to move the trains to 2 million metric tons we’re re-evaluating that technology.”
Michaels said the Monkey Island project will create at least 2,000 construction jobs. He said work on the plant could begin by the fall of 2016.
In May SCT&E announced it had acquired more than 230 acres on Monkey Island to build its proposed LNG plant. Monkey Island is less than three miles from the Gulf of Mexico.
SCT&E is based in Temecula, 70 miles southeast of Los Angeles.
