New Fortress Energy Inc. (NFE) Earnings Call Transcript & Summary

Good day, and welcome to the Fast LNG update call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Brett Magill, Managing Director and Head of Investor Relations. You may begin.

Thank you, Michelle. Good morning, everybody, and welcome to New Fortress Energy's Fast LNG update conference call. This call is being recorded and will be available by replay until April 8. We plan to reference our Fast LNG update presentation, which we released yesterday evening. The presentation is posted to our website and will remain available after today's call. The presentation includes a series of important disclosures related to forward-looking statements. We encourage participants to review these important disclosures in addition to the description of risk factors contained in our SEC filings. Joining me here today is Wes Edens, CEO and Chairman of the Board, along with several other members of the NFE team. And with that, I'll turn the call over to Wes.

Okay. Great. Thanks, Brett. Thanks for calling in, everyone. Obviously, I expect that all of you saw the announcements had been made yesterday about our Fast LNG update. We posted a brief summary on the web page that hopefully you all have, and I'll refer to that. Let me just give a little bit of background on what we see in the world and what our focus is. I'll spend a couple of minutes on this, and then just answer a bunch of questions. We obviously got inundated with a lot of calls yesterday, we just want to make sure everyone has access to all the information at the same time. So we'll just give you a little bit of color around that. So well, to state the obvious, we are very much in a global energy crisis. The war, Ukraine underscores the pronounced risks that Europe has in relying on Russian gas. There's an uncertainty with respect to supply of gas and energy and electricity in general. I mean the big picture is Russia supplies 40% of Europe's natural gas. The numbers, numerically, that's 155 bcm. So that's equivalent of about 100 million tons of LNG production. And just to replace just half of that supply, they would need incremental 50 million tons. So that's the big picture kind of overview of it. When we look at the world, my view, our view is that the world was structurally short natural gas before the war. There's roughly 400 million tons, a little less than that, of actual production in 2021. So if you believe as I do, as we do that there was actually a structural short going into it. You add an incremental need of 50 million tons, so you can see what a big impact that it has. The Fast LNG solution that we have been talking about really for the last 1.5 years or so, we believe can help alleviate the current energy crisis. We own a fleet of jackup rigs and semi-submersible vessels. This is the marine infrastructure that we intend to install our equipment on to. We ordered equipment years ago. So in hindsight, it looks prescient. We obviously didn't predict this, but we did see that there was a gigantic need in the market for faster, cheaper, better, more environmentally friendly solutions. And so that's what started with this. And then earlier this year, we then intensified our focus on domestic solutions. We filed a permitting application with the Maritime Administration that we referenced yesterday, that's a brief 8,000-page document that we met them in the parking lot and gave to them in the middle of the day on Wednesday. This is -- this starts a review process by the Marine (sic) [ Maritime ] Administration that actually rolls up into the Department of Transportation, that we have hopes and beliefs that this can conclude in relatively short order and are looking forward to now getting into the final stages of our construction, installation and hopefully have the permits to actually put this in place here by the end of the year. So with that, let's turn to the brief summary that we have here and look at Page #2. So just to recap, we announced FID in our first Fast LNG unit in January 2021, so just under 1.5 years ago. The decision to do so was based on our belief that we thought that there was the need from additional market volumes. And in our business, our growing business around the world, we are very desirous of having the ability to produce LNG and gas for our own customers. And so thus, kind of closing the loop and basically being a fully integrated company is what we really wanted to do. We did so without having a place to put the liquefiers. So basically, it was definitely a calculated risk and exposure that we didn't know exactly where we were going to do, but I was optimistic, we were optimistic that we would find places around the world to do so. That then set off a string of travel in the middle of COVID. I think I -- as I said, I visited 19 countries in 12 months. So I had an extensive travel schedule, as did people in the company. We visited a lot of opportunities around the world. We think there are a lot of opportunities around the world. But at the end of the day, our conclusion was, just like Dorothy and the Wizard of Oz, there's no place like home. And the U.S. has incredibly abundant supplies of natural gas. It has extensive infrastructure and of course, it has the technical capability and people to mobilize that. And so thus, our focus for our first LNG project in the world for our own portfolio is here in the United States, which is -- that's what we announced yesterday. We also did announce though in February that we have a partnership that we've agreed to with Eni to place one of the liquefiers off the coast of Congo on a large development that they've got there. And we think that these 2 elements of our business make a lot of sense when you view them together. So on Page 3, the business model itself focuses on 2 primary uses for FLNG. One is the tolling relationship where we basically produce the equipment. We charge a lease rate for it. We enter into a transaction with a highly credit quality counterparty, buy a portion of the offtakes, we basically do generate supply at market prices, which is great for our portfolio. But we're really acting as a partner to the person who owns the resource who is actually looking to then get their LNG out of the ground. The merchant side of it, which is the transaction that we announced yesterday is where we don't produce the gas, but we do produce the LNG. So basically buy gas from the marketplace from producers or from the market just generally. We build our own liquefiers. We liquefy it ourselves. And this is the process that we're talking about initially starting off the coast of Louisiana, that provides market volumes to us for the portfolio. One nuance to this that I think is actually quite important and -- so I'll just focus on it now is when you look at the way that LNG production is financed in large part around the world, what happens is that in order to pay for the LNG facility, people pre-sell all the volumes. So it's not an oversimplification to say of the 400 million tons of production of LNG there in the world, roughly 400 million tons of it has been presold. It's not exactly that, but it's illustrative of the fact that the vast majority of it sold, those contracts that are actually entered into then provide the foundation for the financing of the LNG production facility itself because these are large projects. What we have done is quite different. What we have done basically is we're building our LGN production facilities, and we are unencumbered by our forward contracts. And what that means in very simple terms is we then have market volumes that we can then sell into the marketplace for the crisis in Europe caused by the war in Ukraine, in particular. This is a very, very relevant point, so just to put context to it. When President Biden went to Europe and said, the U.S. wanted to be a great ally and to be a part of the solution in replacing some of the dependence on Russian gas, and we wanted to supply 15 bcm of gas. 15 bcm of gas is about 10 million tons -- it's about 11 million tons actually to be precise. Our 2.8 million ton unencumbered facilities are roughly 25% of that and that's a significant balance. And when you look at the challenge of producing LNG, it's not a technical challenge. It's really a challenge of time. And so the land-based facilities can take 3, 4, 5, 6 years to develop between permitting and actual construction. Our Fast LNG is called Fast LNG for a reason. We think that the production -- number one, we've already committed on it, and we started to work on it 1.5 years ago. So that's a valuable piece of time behind us. Number two, just the nature of what we're doing, which is to take liquefiers, put them onto existing marine infrastructure and then assemble and put in place, it's just a much faster production process than doing it onshore. So when you look at Page #4, the goal for the company really is to build a virtual Fast LNG factory. I say "factory" in quotation marks because it's not a technical factory. It's not a place with a big roof on it someplace where everyone shows up for work every day. But we're using the shipyards in Texas. We're assembling our modules in that yard. It's transported then to the shipyard. It's then assembled in place and then the marine infrastructure is then either towed or it steams out to wherever it's going. So we have a portfolio of jackup rigs that we have purchased and are working on. We're working on a number of fixed platforms, and then we have these Sevan ships, these big drillships that are actually in the process now of being engineered and [ then cleared ] in preparation to be a part of this. Page #5, the addition of Fast LNG does create this fully integrated business model. So we had -- we started our business as a company by going to our customers downstream and trying to help them solve their problems, build power plants, supply gas to them, provide gas for industrial purposes, provide gas for transportation, go to the customer, solve their problem. So I said many times before, if you want to make a great fortune, you should start by solving a big problem. The problem downstream is significant. People lack access to clean, affordable, environmentally-friendly energy. That's been our mission all along and that's where we started. We now have a dozen, roughly, terminals around the world. It's a bit of a geography quiz when you run around to them, but basically, they -- it's Jamaica and Puerto Rico and Mexico, Nicaragua, Brazil, Sri Lanka, et cetera, et cetera. Never -- when we started this business, never did I really think that we would then look to Europe to be a natural place for us to be expressing our business, given that they had significant amounts of supply from pipelines, in particular, from Russia. Obviously, with the war in Ukraine, all that has changed. In my view, it has changed forever in the future. I think that now there's a real focus on not just the cost of energy, but the security of energy. Energy security is a huge, huge issue. And with that, I think you're going to see a huge shift in terms of how the Europeans view their own energy security and what role LNG plays in that, and thus, the role that we have on it. From our standpoint, we then -- on the midstream side, we have access to -- we have about 20% of the world's FSRUs. We have a number of other ships that we either own or we lease in. Liquefaction for us is really just closing the loop because this now provides us this fully integrated model, where we now produce LNG for our own customers and other customers around the world. So just a little bit about the specifics of what we're doing here on Page #6. You can see that basically, we're developing our first U.S.-based LNG off the coast of Louisiana. We completed FID in the process of developing the first 2 liquefiers totaling 2.8 million tons. It will be put 16 miles offshore. So it's just outside the 12-mile circumference that it actually puts it into MARAD jurisdiction. The most important aspect of when you look at the schematic on the right-hand side is you can see the jackup rigs and the fixed platforms with the liquefaction on them and then you see the ship that's there. The way that this works in very simple terms is there's a pipeline that runs underneath the water that we have contracted with. That pipeline then buys gas off of the U.S. trunk lines. There's an interconnect that is put there. The gas comes up to these liquefaction facilities. The liquefiers themselves then process the gas, turn it into LNG, a very fancy cryogenic hose that connects it to a ship. That shift fills up on average every 10 days or so. The ship fills up, another ship pulls alongside. There's a ship-to-ship transfer. The LNG is put on to it, and that's the logistics chain that then allows us to then bring it to the different markets. We have done more ship-to-ship transfers than the other company in the hemisphere. This is not a new technology or a new process for it. It's just basically using exactly what we've been doing and now expressing it in a different way. One of the main reasons why we believe that the offshore liquefaction is such a big step in the right direction is that essentially, we are repurposing old ships as storage. If you're building the liquefiers onshore, building storage is a big, big part of the cost, a big, big part of the time. It's a big part of the environmental footprint of them putting it there. So they basically recycling old ships, by using old ships -- because they don't really have to be highly efficient ships because they're really just acting as storage. It's a big recycling operation. And by doing so, we use existing ships for the storage. It's a very efficient way of doing it. It cuts down the time, it cuts down the cost substantially. So a busy page on what the actual application is itself. The bottom line from my standpoint is it's a very extensive application. This is not like filling out an application for a credit card, right? This is 8,000 pages. It's 13 environmental reports. It's a tremendous amount of engineering, environmental process and whatnot. And really, the way that the process works, if we look at Page 8, is very straightforward. You file it, which we did this week. There's 21 days that MARAD takes to look at the 8,000 pages and determine that it's a complete application, which, of course, we believe it is. Again, one of the nuances of this is that we are not really permitting a project. We're really permitting what we're already building. And so my experience, and we've had a lot of experience in building things is the more specific you can be about what you're permitting, the more clarity you're giving to the regulatory agencies and the better off your interactions are. So that's exactly what the situation is here. Once that 21 days goes by and there's a stamp that's put on it that says it's an effective application, then the hard work begins with all the agencies that have to work on it. I was in Washington with the team yesterday. We met with a bunch of different lawmakers and people on Capitol Hill, White House, et cetera. Our message for them is simply to tell them what we are doing, number one. Number two, not to request that they change any of the rules for us, that's not what we want. Simply put, what I would like to see happen, especially given the situation in the world is just that they actually all operate in concert with each other. In the most basic terms, what that means is review our application simultaneously, not sequentially. That can cut down the time dramatically. Our construction schedule basically will be complete by the end of this year. In an ideal world that would actually mesh up with when the MARAD process itself finishes, we have a project which is completed from a construction standpoint, and we're working 24 hours a day on that every day of the year, and then the permitting side actually meets up with that. Page 9. I already mentioned this, but I'll just -- here's the numbers. The solution is significantly faster and less expensive than traditional liquefaction facilities. The traditional LNG, 60 months, $1.2 billion for this, 1.4 million tons. Environmental footprint is significant. Our liquefier is 50% to 70% less. Our cost of construction, basically half is what we think. And the impact is obviously minimal because we're already using the storage. The air permit for this, when you think of like what actually happens on the liquefier is gas comes in, it's already been treated. It then is put into the cold box, which is the piece of technology you buy and plug in place. You provide compression and you provide the power for that compression and gas runs through the cold box and LNG runs out the bottom of it. It actually is that simple. In round terms, each liquefier, 1.4 million ton takes about the 25 megawatts of power. So when you think of the environmental footprint of this, obviously, there's many, many thousands of power plants in the United States that produce 25 megawatts of power. That's basically the environmental footprint that we have. The platform or the marine infrastructure we're installing, there are literally tens of thousands of marine infrastructure like this installed around the world, and there are many thousands of these installed in the Gulf of Mexico. So we really talked to the permitting agencies who are saying, look, we're going to install a platform. We're going to install jackup rigs. This is something they're very familiar with, that they've seen over and over and over again. And then the only thing that's unique is the liquefier on top with this -- with the small power plant that actually provides the power to get this done. Page 10, which is really the last page of this is really finishing where we started. Natural gas prices rose dramatically last year before there was a war in Ukraine. So there was a systematic shortage of gas and LNG around the world. Obviously greatly exacerbated by the war in Ukraine, and it probably extends the duration of that shortage for a long time, meaning there is no question in my mind that European governments are going to change their energy profile, their energy security profile. And as a result, there's going to be a pronounced shortage and the way to fix that is to basically provide gas from our standpoint. I think it's a massive geopolitical event for the United States. It gives us great ability to be a big part of the solution of this and we want to do our part for that. As I said, the supply is constrained because, number one, the volumes are largely already committed; and number two is, it takes a long time to do it. One of the aspects of this when I look at it is that, as is always the case, the people that are going to suffer the most from this lack of supply are the people that can least afford to do it. Because what's going to happen is a practical matter, and it's already happening right now is there's no new supply that's created to address this. What happens is supply simply gets diverted from other people. And so the poorer countries in the world, the people who are least able to pay for it, they suffer because the supplies are priced up and then moved away from them. The first derivative of the energy crisis from a power standpoint, of course, is food because one of the big users of natural gas in the world is the fertilizer business, ammonia being the feedstock for that. Ammonia prices have risen dramatically as a result of this, fertilizer prices have risen dramatically. So it really is a existential energy crisis that occurs not only on the power side of it, but also on the food side of it. So it's a big issue. And with that, that's the narrative. I'm going to pause and we'll answer a few questions on it. And so please open it up, Brett?

Thanks, Michelle. We'll go ahead and take it into Q&A from here.

[Operator Instructions] Our first question comes from Spiro Dounis with Crédit Suisse.

Just want to go back to that concept of the Fast LNG factory that you mentioned. A pretty common question we got over the last day was what is preventing you from adding several more of these units in the Gulf of Mexico or elsewhere over the next 3 years. To your point on the structural short, there's really only Golden Pass coming online between now and 2024. And then after that, kind of a big void again until about 2026, 2027. So curious how you're thinking about the speed at which you can add these units and what some of the practical constraints are here?

Sure. So with respect to the locations that we can put this into, basically any place where there is pipeline connections from the shore or there's adequate gas supply, you can put it. So you look around the United States, that obviously is the case in Louisiana. It's obviously the case in Texas. And it could be in other places as well if they had adequate pipelines. One aside is that in our learning and investigation of the gas markets in the United States, my simple view is that we don't really have a gas shortage problem. What we really have is a pipeline and infrastructure and regulatory challenge because really, you have significant pipeline constraints. And I'm not trying to solve all the problems of the energy world. But the obvious conclusion you reach when you look at this is, there are significant constraints on the pipeline side of it and that's what causes the lack of production. That's something obviously that can be addressed from a regulatory standpoint. But I think it's the obvious constraint with this. From our standpoint, this factory notion is quite simple. What we want to do is, to the extent possible, create a repeatable engineering process that we can then shorten the time frame, lower the cost and actually produce more rapidly. We have world-class partners that are working with us on this. So it's Baker Hughes and it's Fluor and is Kiewit. We have tremendous partners on this. And our engineering team, which is a very, very capable team, has done a great job of creating not only our first and second and third liquefiers, but also a real template for us to repeat this. The long lead items in the liquefaction business are the specialized turbines and compressor strings. There's lots of different parts that go into it, including the cold box and whatnot, but those are truly the long lead items. Fortunately, those are the things that we procured some time ago, and that's what allows us to go at such speed here. We're also very focused with our partners in creating this true factory where we make a commitment to a number of these and then they can produce a train a month, and then it allows us to then go and source the infrastructure and get the people and move it. So when I say factory, it really does start with the compressor strings, the turbines themselves and then the modules that get then produced, that are then put in place. That's what creates the speed of this. So we think that at the beginning of this, we're talking 2.8 million tons. This could be a 5 or 10 or 20 million-ton program in the relatively short term, we think, if we execute this properly.

That's helpful color. Second question, just as it relates to sourcing gas for this particular unit in the Gulf of Mexico. I know you mentioned basically buying at the market price. But curious how you think about any sort of formal agreements that need to be tethered to this. You're going be out there in the Gulf of Mexico. Are you sort of just bidding away volumes from Henry Hub? And do you need to actually structure any sort of agreement with the upstreams in the Gulf of Mexico?

Yes, so great question. The pipeline itself that is connected to this, we actually signed the agreements with that company yesterday. That was not a manufactured signing, it was actually just a natural process. We've been working with them for a number of months. So we signed the definitive agreements on the pipeline that we're using on the offshore yesterday. The interconnects then give us an array of different options. And we're now really starting serious conversations with marketers to help us look at what supplies are available and then direct producers. And as with most things, and my view is that there will be some combination of all those things. And from the producer standpoint, we're an attractive customer because we're looking to have 24/7, 365 offtake, which is what they want to run their business and make their plans. From our standpoint, that's -- we want exactly the counterpoint to that. So there's a good marriage there. But also from the just marketing standpoint, there's lots of gas in the system, right? And so hiring one or more marketers to help us access those volumes in the most efficient way is really what the plan will be.

Our next question comes from Martin Malloy with Johnson Rice.

The first question, just I wanted to go over the cost for this. It looks like maybe $600 million to $800 million is what you're talking about here. And looking at the illustration on Page 6, it's a combination of jackups and fixed platforms. But maybe if you could give -- make sure that that's -- that I'm thinking about it correctly, that would be helpful.

Yes, that's correct. We think that -- for installations where we expect to be there for a long time, a fixed platform, we think, is a very, very appropriate way of doing that. The analogue to that also are jackup rigs, which actually look like fixed platforms. You can think of this as we bought these jack-up rigs and then have worked very hard to basically take everything off of them. But at the end of the day, what you're looking for is, call it, roughly 100,000 square feet of deck space and then sufficient size and stability to be able to support the liquefiers themselves. So it's a very homogeneous footprint is what we're looking for, regardless of the nature of the actual energy -- of marine infrastructure itself. So for shallow water, installations where you think you're going to be around for a long time, either jackup rigs or fixed platforms we think is great. If the term was going to be shorter than the 20 years then you want to be able to pick it up and move it someplace. So a jackup rig in that case, even if it was in shallow water, would be the right form of infrastructure. The Sevan ships, we've bought a couple of them thus far and we're looking at other similar forms of infrastructure are -- they're actually designed to be deepwater drilling ships. So they're actually their specific design is it fits the purpose exactly for some of the deeper water solutions. So what will be consistent is the nature of the liquefaction infrastructure, right? We want to use the same form of equipment in all of these. And then just the jacket, the actual marine infrastructure itself then can be selected based on what the job is at hand.

Okay. And would you mind giving us an update on maybe discussions with Europeans in terms of potential projects over there and how that has changed over the last month or 2? And maybe touch on the Ireland project.

Yes. So I've been in Europe a couple of times in the last few weeks. The amount of focus on this in our experience is extraordinary, right? So people that are very, very focused not only on energy supply, but also on the infrastructure to do so. So one of the things that we're very focused on right now is we own a number of the FSRU, so call it 20% of the world's fleet. That is also a long lead item. So if you're Germany or Italy or France or Greece or whoever, there's many, many countries that are looking at this. If they want to build import terminals, there's the infrastructure of actually building the terminal itself, which is either a lot of work or a little work depending on the nature of the port infrastructure that's in place. But then you need the equipment to then put next to it, that's the FSRU. So we are -- we're blessed to have an active portfolio of that. We're having lots of dialogues around that, and we think obviously, those could be attractive situations for us and they solve a real need for those different countries. The energy supply component of it is also something which is a hot topic. And I think the minute that we have certainty about the timing of our project from a regulatory standpoint and a construction standpoint, we can offer our firm supply. We think that there will be many, many people that are interested there. The Ireland project continues. As we said, we're down to a planning commission meeting, which we expect to get announced at some point in the near future. We don't have direct visibility as to the timing of that, but we're standing by and are prepared for that. That's the last step towards then final planning decisions, which we're optimistic about. But I can't offer any timing because we're not we're not really in charge of when they schedule that meeting. But we're -- I mean, the events in the world have certainly conspired in favor of that project, right? Energy security, which was a very good idea 12 months ago is now an imperative today. So we feel like the need for the project and the nature of it is more important than ever.

Our next question comes from Craig Shere with Tuohy Brothers.

My first, I'm a little confused at the beginning because I thought 1 of the 2 FIDs you already announced was going to go to the 20-year [ any toll ]. So I'm trying to understand -- are you working on all -- you have the 2 jackups you bought that you're combining together to make the 100,000 square foot platform. And then you got the 2 drill ships that you acquired and you already FID-ed one. Are you working on all 3 now?

We are working on all 3. So we think that -- there's been no change. So the conversations with ENI are continuing at a high pace, and we're optimistic we'll get to final documents with them in the near term. And with this behind, we're now kind of announcing the FID of these 2 projects, 1 is on fixed platforms and 1 on jackup rigs. So sorry if there seems to be confusion. The other infrastructure, the Sevan ships we bought at this point are unencumbered by a project. We think there's great prospects for them and have numerous inquiries, both on a merchant basis as well as on a tolling basis for those. So I think you'll see a string of projects that we will be involved with on this side. And as I said, the long-lead item for them is not the marine infrastructure, but it's really the liquefaction trains themselves.

And what beyond those 3 things, the 2 jackups and 2 ships that could support 3 projects separate from a fixed platform that you're talking about. What is the opportunity set out there to just pick up additional old dilapidated marine infrastructure as needed? And then separately, a number of clients that I asked, well, if it's just buying pennies on the dollar decades old marine infrastructure and using third-party technology, why can't anybody do this? Maybe you can talk about why you have a year or 2 lead time on everybody else in terms of internal engineering work, equipment bought on SPEC and various kinds of relationships that have been developed over the last year, way ahead of anybody else.

Well, you can start on Page 1, get to Page 8000, that will be a good place to start. So no, we have, we believe, actually a unique set of technical capabilities and a balance sheet and the capital and the experience to be very efficient about this. Like all things in the world, if it's a good idea, there will certainly be people that will do it as well. I think that when you look at the first tolling agreement that we're putting in place with Eni. Eni is one of the most sophisticated oil companies in the world. They're also one of the most sophisticated gas and liquefier companies. They have built liquefaction on land. They had built liquefaction on a ship and they have selected us presumably because they think we can do it faster and cheaper and are a better solution than simply doing it themselves. That's not to say that they wouldn't do it themselves. I'm sure that they think about that as all these folks do. But I think that the competitive -- sustainable competitive advantage are the 3 words that are right at the top of every investment that we look at. That's the goal for all of us. I think the sustainable competitive advantages here are the experience set to do so. The capital that is required to do it, the will that is necessary to take risk and take FID. And then lastly, it's just the execution of it. And when you look at the decision that we took at the beginning of last year, so nearly 1.5 years ago, to build these on a speculative basis, I knew, we knew at the time that, that would either be a very good decision or a very poor decision, but it was unlikely to be an average one. And had we not taken that decision, the dialogues that we would have had in the 19 countries and 12 months around the world would have been very, very different. We've been talking about -- the death of infrastructure projects is there's many that are proposed, and there's far fewer that are actually built. And so just simply being in a position where you've made the commitment, you've committed the capital, you've committed the time and process to it, puts you in a very, very different position than somebody who shows up with a flip book that says, "Here's what we're thinking about doing." And so I don't think that there is anything that cannot be replicated by people that are listening to this call or people that are actually out in the marketplace. Time is the one commodity that you cannot buy. So the last 1.5 years of time that has been spent on this is a significant advantage for us. And what I would say, anything when you're looking at innovation and entrepreneurship, it's not about what you have done. It's about what you will do. And if there is a competitive advantage for our firm and for my focus on it and the individuals working on this, is that we are very willful about what we're doing on this. I mean to give it a very pointed perspective, we have a call at 8:00 every morning of the year on the FLNG projects and have done so for the last 1.5 years. And it's -- sometimes it's a short call, and sometimes it's a long call, but we basically put everybody that's involved in the project on the phone and go through what the different challenges are, be they technical or they're regulatory or they're on the permitting side, gas side, pipelines, there's a whole litany of things we go through every day. And I think that's what's allowed us to move this project from a concept 1.5 years ago to something where we filed an 8,000-page permit and we're really ready to go. And of course, we obviously thought there was a need for it when we went FID on it, and that need has become more pronounced with the events of last summer when the market first became dislocated and obviously, even more pronounced with the events in Ukraine and the war with Russia.

And just to cap it off, that question about the availability of additional infrastructure for FLNG 4, 5 and 6 to be able to buy at $20 million to $40 million at a crack of new marine infrastructure. Can you do that anytime?

Yes. I think that the marine infrastructure question is a really, really good one. The jackup rigs we bought are great solutions for part of it. We think fixed platforms, which are really new construction for the most part are also a good solution. The Sevan ships I'm excited about, one of our customers, I talked to a couple of days ago, very excited about because here you're buying a $600 million, $700 million piece of equipment for $11 million. So you start in a pretty good place. There's obviously a lot of work that has to be done to make it suitable for this. But I think you'll see a range of different marine infrastructure aspects to it. On the ship side, I would call them mature, not dilapidated. So -- but they're not dilapidated at all. They're just less efficient, right? The nature of gas is it's actually quite a clean product. So the -- if you look -- if you walked inside the tank of a 40-year-old LNG tank, which I have done before, it's in remarkably new condition, right? So there's not a lot of corrosion. There's not a lot of [ product that wouldn't ]. It would be a very different experience walking inside the tank of a 40-year-old oil tank, to say the least. So the infrastructure itself is not dilapidated. it's simply less efficient. And so really, that means the method of propulsion for it has changed dramatically. So that's the big difference for it. The ships themselves are in terrific condition and the tanks themselves are in terrific condition. So it's not that so much. It's really the propulsion itself is just less efficient. So -- but there's lots and lots and lots of options for that.

Michelle, we have time for one more question I think if we have another.

Okay. Our next question comes from Sam Margolin with Wolfe Research.

Just trying to nail down the commercial side a little bit because your regas assets, your terminals are fully committed. You don't have any gas procurement needs to fill your committed sales volumes, but you've got spare capacity and presumably a lot of customers behind them who would love to pay a discounted price for gas relative to TTF today. And you don't need $20 per MMBtu margins to generate a ton of cash through your system. So I was wondering if you could speak to how you envision the commercial piece of this new Fast project and maybe what kind of market exposure you're trying to get on the pricing side?

Yes, sure. So the -- you're right, we are fully committed with our customers, which is great, right? We would not want to be short in this market. We're actually net long in this market. So that's an important point, and you're focused on that correctly in my view. So -- and you're also correct, we have -- in our downstream terminals, we have substantial amounts of demands to say the least, right? So -- and across our portfolio, we think, by our measure, we are something like 15%, 20%, 25% in a different terminal in terms of capacity. So there's lots and lots of room for us to supply additional volumes to people. And that thus becomes all about the gas that we're able to procure either in the marketplace or to do it ourselves. Our view is that the portfolio over time will be a balanced one. We announced recently, we bought a couple of million tons from the Venture Global folks. We have bought gas from Cheniere. We've bought gas from Shell, we've bought gas from the major producers in the world. That's not going to change. We think that's an important component of our business. We think that these guys have terrific businesses, sources of supply. They're very important counterparties for us. Adding the Fast LNG allows us to grow our portfolio and perhaps be a little bit more flexible in terms of what we can offer our customers. And so not just on price but flexibility, that gives us a big advantage and that's something we're very focused on. The arithmetic behind this particular project is actually really simple. Each of the liquefiers will generate about 70 TBtus, right? So add the 2 of them up, it's 140. Our on-cost will be Henry Hub plus operating cost and liquefaction. So today, that would be a massive discount to where the market is. We obviously don't think that the market like that is going to persist forever, but it's obviously it's a big, big delta between what it costs us to produce and what the market would be for a marginal cargo today. But really the way that I view the business plan is produce gas at a very low price, right, that is unfettered by contracts. Build a portfolio of terminals and continue to build the ones that we've got and look for additional opportunities to build them. Access to those terminals and customers gives you real downside protection in terms of your ability to sell at a profit relative to what you have produced it as. And then you retain the optionality for these spikes and high prices that allow you to generate truly kind of the higher marginal returns in a market that is as disruptive as this. My view is -- and this is what I said in the last earnings call is that even without this war, there is likely to be more disruptions in the future, just given the nature of the world and what the supply and demand relationships are. And so a business that has very limited amounts of downside, very stable long-term returns and the ability to generate these meaningful profits during these short swing periods, that's a great business. That's the business we have built. You need to put the specific numbers on it, so we were $33 million in EBITDA in 2020. We were $605 million in EBITDA in 2021. We have given guidance that we expect it to be $1 billion plus this year. Obviously, just doing the math on 140 TBtus with any kind of a marginal spread, and you can certainly do the arithmetic on that. The upside is many multiples that hopefully in the very near future. So...

Okay. Thank you, everybody, for joining today. We appreciate your time, and we look forward to being in touch in the near future.

Great. Thanks, everyone.

This concludes the program. You may now disconnect. Everyone, have a great day.