Magnolia LNG executes servitude deal with Turner’s Bay

Magnolia LNG has taken another step toward breaking ground on its multibillion-dollar export facility in Calcasieu Parish.

The LNG project — one of 10 in Southwest Louisiana, two of which have broken ground — has signed a servitude agreement with Turner’s Bay LLC to deposit material dredged during construction into the bay, restoring about 100 acres of wetlands.

“We have an issue of where to put the soil, and Turner’s Bay has lost wetlands,” said COO John Baguley. “This makes for a very elegant solution.”

Magnolia needs to dredge about 1 million cubic yards of material to carve out a place for docking LNG carriers at its export facility along the Industrial Canal. Baguley said Magnolia will install a temporary pipeline below the canal and use it to pump the dredged material over to Turner’s Bay, about three miles away, avoiding the hazard and cost of transferring the material by truck.

Baguley said the area will only need to be dredged like this once, although the company expects to do minor maintenance dredging when operating. Magnolia received federal approval for the dredging in October.

The move, which locks Magnolia into a long-term contract, shows the company has confidence in its project — despite it being delayed due to sluggishness in the market, he said.

Baguley noted that Magnolia could have chosen to extend its option period instead, allowing it to postpone commitment while it tries to convince hesitant customers to ink contracts. But it decided to commit, he said, so that other local LNG companies couldn’t swoop in and take the site. 

Now that construction has increased, he said, there are few places to deposit soil in the area. He said the market for these sites will only tighten as the other LNG projects progress toward construction. 

Although Magnolia has had trouble getting buyers, he said, the company’s faith in the project remains unshaken. “We have enough confidence going forward that we’re comfortable doing this,” Baguley said.

Magnolia made a similar move in March, when it signed a minimum 20-year lease with the Port of Lake Charles after having reserved the property with an option agreement. 

No other planned LNG project has made commitments like these, barring the two that already broke ground — Cameron LNG in Hackberry and Cheniere Energy’s Sabine Pass LNG, which is already operating. 

And no other company has completed the FERC process; signed its primary engineering, procurement and construction contract; and secured a buyer for a fourth of its offtake. 

Although buyers aren’t in a hurry to sign contracts now, Baguley said, it’s only a matter of time. And when they do, Magnolia will be “shovel ready,” he said.

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