A 90% interest in Commonwealth LNG, which is developing a proposed 9.3 million metric ton/year (mmty) natural gas export project in Louisiana, has been acquired by a unit of Kimmeridge Energy Management Co.
Eagle Ford Shale-focused Kimmeridge Texas Gas LLC (KTG), the infrastructure fund’s natural gas production firm, is boosting its equity ownership and will take the reins. The project partners expect to reach a final investment decision (FID) by the middle of 2025.
"We are excited to take a controlling interest in Commonwealth LNG as we integrate our business from wellhead to water,” and help to complete the liquefied natural gas export facility, Kimmeridge Managing Partner Ben Dell said.
Kimmeridge has also tapped David Lawler, former chairman of BP America, to helm KTG as CEO. Lawler had served as CEO of BPX Energy Inc., the London-based supermajor’s Lower 48 business. Lawler in 2018 helped to spearhead BP’s $10.5 billion acquisition of BHP assets, which expanded its Lower 48 portfolio.
Lawler’s experience with large-scale operations and initiatives to curb emissions aligns with the firm’s goals to make KTG a net-zero operator, Kimmeridge said.
Kimmeridge has been on the hunt to expand the firm’s exposure to the LNG market. It also has worked to build its production assets in the South Texas area.
In conjunction with the sale, Commonwealth founder and Executive Chairman Paul Varello is retiring. After creating the company in 2014, Varello helped to advance the project by leaning on his background in engineering to market an LNG export terminal that combined modular construction and the potential for low carbon cargoes.
CEO Farhad Ahrabi, who joined Commonwealth in 2022, is to remain in his position under Kimmeridge ownership.
Kimmeridge in 2023 signed on to supply Commonwealth with feed gas and take up to 2 mmty in offtake as part of a tentative equity deal. Now, after more than six months of regulatory limbo during the Department of Energy’s (DOE) pause on worldwide export permits, Commonwealth could be getting an injection of capital needed to push it to FID.
Before the DOE pause was announced in January, Commonwealth had placed around one-half of its export capacity under contract with international buyers and U.S. production companies. It had previously targeted an FID for early 2024 with first exports sometime in 2027.
First cargoes are now projected in 2028 – if Commonwealth reaches a positive FID in the first half of next year.
At least seven projects in the United States and Mexico under DOE jurisdiction – and considered commercially advanced – have been impacted in the near-term by the pause, according to an NGI review of pending projects. That amounts to a combined 9.3 Bcf/d in export capacity under increased risk.
