Calcasieu Pass LNG export terminal gets final federal authorization ahead of construction
DOE approval allows shipments to non-FTA countries
Status of final investment decision and financing unclear
Houston — Venture Global LNG's proposed Calcasieu Pass export terminal received US Department of Energy approval Tuesday to ship cargoes to countries with which the US does not have free-trade agreements.
While the developer has a contractor, long-term offtake agreements with shippers covering the bulk of its capacity, and plenty of market momentum, it has not yet publicly announced a positive final investment decision, which generally comes before full construction begins. The status of financing arrangements to pay for the billions of dollars in costs also has not been disclosed. A spokeswoman did not respond to messages seeking comment.
The company has been the most active among developers of second wave US projects in securing commercial agreements for the LNG it plans to produce, and it has said previously that it wanted to be able to make an FID and begin construction as soon as possible so it can be up and running by the early 2020s to help meet the forecast global demand during that timeframe.
When the Federal Energy Regulatory Commission announced last month that it had approved Venture Global's permit certificate for Calcasieu Pass in Cameron Parish, the developer said in a statement that it planned to "immediately commence construction activities" in coordination with regulatory agencies. Tuesday's company statement following the DOE authorization to export up to 1.7 Bcf/d of LNG to non-FTA countries said only that it was looking to "commence site works imminently," in line with an implementation plan it filed with FERC.
When Venture Global announced that Kiewit had been awarded the engineering, procurement, and construction contract for Calcasieu Pass, it did not disclose how much it had agreed to pay. It also has not disclosed how much offtakers Royal Dutch Shell, Italy's Edison, Portugal's Galp, Britain's BP, Spain's Repsol and Poland's PGNiG have agreed to pay for the LNG that the terminal will produce. Though questions remain, the extensive experience those counterparties have in the global LNG market provides a level of support for project financing.
Besides Calcasieu Pass, Venture Global LNG is also proposing to build a 20 million mt/year export terminal in Plaquemines Parish, south of New Orleans. The company continues its efforts to sign contracts to commercialize that project.
The US is poised to become a much bigger player in the global supply of LNG, with the number of domestic liquefaction terminals in operation expected to double by the end of 2019. Price volatility, international trade tensions and the outcome of commercial efforts continue to create a level of uncertainty for the next wave of export projects.
-- Harry Weber, Harry.Weber@spglobal.com
Cameron LNG Marks Transition
by Matthew V. Veazey Rigzone Staff Tuesday, April 16, 2019
Train 1 of the Cameron LNG project in Hackberry, La., has reached the final commissioning stage, McDermott International, Inc. and joint venture partner Chiyoda International Corp. reported late Monday.
According to a written statement emailed to Rigzone, McDermott and Chiyoda have introduced pipeline feed gas into Train 1 of the liquefaction export facility. Representing the transition from construction to startup, the milestone marks the precursor for the production of LNG, McDermott stated.
“We are extremely proud of the Cameron LNG project team for this achievement and their remarkable safety performance,” Mark Coscio, McDermott’s senior vice president for North, Central and South America, stated. “Their accomplishment is more than just a project milestone; it is an impressive feat of engineering and construction. Once Train 1 is fully operational, it will have the capacity to produce 4 million tonnes of LNG per year.”
McDermott and Chiyoda have provided the engineering, procurement and construction (EPC) for the Cameron LNG project. McDermott’s website states that the scope of work under the approximately $6 billion EPC contract included adding liquefaction and export facilities at the existing LNG regasification complex. The company added that the project includes three liquefaction trains with a projected export of 12 million tonnes per annum, or approximately 1.7 billion cubic feet per day.
Owners of Cameron LNG include affiliates of Sempra LNG LLC, Total, Mitsui and Co. Ltd. and Japan LNG Investment, LLC. Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha (NYK) jointly own the latter firm.
FERC authorizes Driftwood, Port Arthur LNG export terminals
Port Arthur, Driftwood OKs lift prospects for second-wave developers
Differences over GHGs have fed uncertainties at FERC
Washington — The Federal Energy Regulatory Commission on Thursday granted certificate approval to the Driftwood LNG and Port Arthur LNG export terminals, bolstering prospects for two projects in the second wave of US LNG development.
As Commissioner Bernard McNamee noted, after two years without approving an LNG project, FERC in two months has advanced three export projects that together add the capacity to export 7.3 Bcf/d of LNG.
With the 3-1 votes Thursday, the commission was again able to act despite recent differences among Democratic and Republican commissioners over greenhouse gas emissions considerations. It was unclear whether an agreement on GHG emissions reached in February when FERC approved the Venture Global Calcasieu Pass LNG project would prove durable as a model for other projects.
NOTE OF CAUTION
Commissioner Cheryl LaFleur, a key swing vote in favor, injected a note of caution at FERC's Thursday meeting.
"In spite of the fact that we have reached compromises on some [GHG] language, it's getting harder, not easier, to do that in these cases." As courts continue to speak on that matter, she added, "I don't understand why we do not act proactively together to work to address the issues in our cases. ... I think we're just waiting for the court to impose requirements on us."
On the sidelines of FERC's monthly meeting, LaFleur said it was harder to get on board because of cumulative impacts as FERC acts on more, larger LNG projects, and because of her frustration with FERC's approach to the National Environmental Policy Act.
Chairman Neil Chatterjee hailed the approvals as important not only to the US economy but to partners around the globe. He called it a "very good day for America and a very bad day for Russia." He remained optimistic the compromises would continue to allow a path forward for other pending projects.
One key to winning LaFleur's vote in the Driftwood case was an agreement to respond to a commenter inquiring about cumulative GHG emissions. Commissioner Richard Glick continued to dissent, and said the "dirty little secret" is that following the current approach, FERC would never consider GHG emissions significant no matter how large the emissions. "I think everyone knows what's going on here," he said, noting that FERC requires mitigation for a host of other environmental effects. "This is climate change. That's why we just can't talk about it."
Acting Thursday, FERC signed off on the roughly 27.6 million mt/year, or 3.6 Bcf/d, Driftwood LNG facility in Louisiana, proposed by Tellurian, along with Tellurian's 96-mile pipeline intended to feed 4 Bcf/d of natural gas to the facility (CP17-117, CP17-118).
Also approved was Sempra Energy's Port Arthur terminal, in Jefferson County, Texas, proposed by Port Arthur LNG, with a nameplate capacity of 13.5 mt/year, along with two pipelines -- the 34.2-mile Texas Connector, and the 130.8-mile Louisiana Connector (CP17-20, CP17-21, CP18-7).
The approvals lift prospects of the developers amid uncertainty in the market about how many of the dozen or so active second-wave US projects will ultimately get built.
By 2026, S&P Global Platts Analytics estimates total global LNG demand is expected to exceed total supply by 6 Bcf/d-7 Bcf/d, based on total current capacity and projects that have received a final investment decision or are already under construction. This means projects like Driftwood and Port Arthur, targeting mid-2020 commercial service dates, stand to play a role filling that gap.
Tellurian and Sempra find themselves in a relatively good position commercially, with experienced backers that previously have taken LNG terminals to construction.
Tellurian signed an agreement in early April for France's Total to make a $500 million equity investment in the holding company that owns the Driftwood terminal and three planned pipelines. In exchange, Total would have the right to lift 1 million mt/year of LNG from the export terminal for the life of the facility.
Total also agreed to buy 1.5 million mt/year of offtake from Tellurian's marketing unit, indexed to the Platts JKM benchmark price for spot-traded LNG in Northeast Asia, and to purchase around 200 million shares of Tellurian common stock.
Sempra has expressed confidence that its commercial efforts at Port Arthur will allow it to reach a positive final investment decision and possibly expand the proposed facility over time.
In December, Sempra signed a firm 2 million mt/year offtake deal with Polish Oil & Gas that will support the Texas terminal. The volume represents about 18% of the 11 million mt/year offtake capacity currently envisioned for the two-train facility. Sempra has said it would like to contract as close to 100% of the capacity as possible before making a final investment decision.
The cascade of LNG export project news continues. In the past week, yet another "second-wave" U.S. LNG export project - NextDecade's Rio Grande LNG - cleared FERC's environmental review process. That follows news of three other projects that received their environmental approvals this month; plus two other projects - Tellurian's Driftwood LNG and Sempra's Port Arthur LNG - got final FERC authorization to construct their facilities, should they make the financial commitment to proceed; and, finally, plans for a brand new export terminal, Venture Global's Delta LNG, were unveiled. All in all, there are more than 20 announced projects totaling 235 MMtpa (~35 Bcf/d) that are looking to catch the second wave of U.S. LNG exports in the next decade. The timing of their regulatory approvals and final investment decisions will determine, in part, when this next wave - or shall we say tsunami - of export demand will materialize. - RBN Energy 5/1/2019
Sempra asks U.S. for more time to complete Louisiana Cameron LNG export plant
May 22, 2019
(Reuters) - U.S. energy company Sempra Energy asked U.S. energy regulators for more time to complete its $10 billion Cameron liquefied natural gas (LNG) export terminal in Louisiana.
The U.S. Federal Energy Regulatory Commission (FERC) approved construction of three liquefaction trains at Cameron on June 19, 2014. That order required the project be completed within five years.
Sempra said the first train at Cameron started producing LNG earlier in May and is expected to export its first cargo in coming weeks.
The company has said Cameron Trains 2 and 3 will enter service in the first and second quarters of 2020.
Sempra asked FERC for a 15-month extension to put the full plant into service until Sept. 19, 2020.
Separately, Saudi Aramco signed a 20-year agreement on Wednesday to buy LNG from Sempra’s proposed Port Arthur LNG export plant in Texas.
The first three trains at Cameron will produce about 12 million tonnes per annum (MTPA) of LNG, or roughly 1.7 billion cubic feet per day (bcfd) of natural gas. One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.
Cameron is jointly owned by affiliates of Sempra, Total SA, Mitsui & Co Ltd, and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp and Nippon Yusen Kabushiki Kaisha (NYK). Sempra indirectly owns 50.2% of Cameron.
McDermott International Inc and Chiyoda Corp are the lead contractors at Cameron.
Sempra has a long-term goal of exporting 45 MTPA of North American LNG and is developing a second two-train phase at Cameron, the Port Arthur LNG export terminal in Texas and plans to add export facilities in two phases at its existing Costa Azul LNG import terminal in Baja California in Mexico.
Cameron LNG sends out first export shipment
By Sergio Chapa Updated 12:05 pm CDT, Friday, May 31, 2019
Developed by San Diego utility company Sempra Energy and four overseas partners, crews recently completed the first of three production units known as trains.
Production from the facility will be dedicated toward fulfilling long-term contracts with customers in Europe and Asia. However, any liquefied natural gas made during the weeks-long startup process can be sold on the global spot market through shipments known as commissioning cargoes.
Marvel Crane left the Hackberry, La., facility with a commissioning cargo from Train 1. Although a destination was not immediately clear, the LNG tanker remains in the Gulf of Mexico where its cargo can be sold anywhere on the global market.
"This achievement brings Cameron LNG, one of Sempra's five strategically located LNG infrastructure projects, one step closer to commercial operations," Sempra North American Infrastructure Chief Executive Carlos Ruiz Sacristán said in a statement. "Seeing the first tanker depart loaded with U.S. LNG produced at this world-class facility is significant for our company."
Used to stabilize production and test the performance of equipment, commissioning cargoes are considered a critical step in the startup process for LNG plants. Commercial operations are expected to begin in mid-2019 after the facility receives authorization from the Federal Energy Regulatory Commission.
Sempra owns 50.2 percent of Cameron LNG. Its partners include French energy company Total, Japanese industrial conglomerate Mitsui & Co. and Japan LNG Investment — a joint venture between Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha.
FERC officials have given crews until September 2020 to complete the second and third production units at the Louisiana facility. Once all three are in operation, Cameron LNG will be able to make nearly 12 million metric tons of liquefied natural gas per year.
Those production figures translate roughly to about 1.7 billion cubic feet of natural gas per day, enough energy to power 8.5 million U.S. homes for a day.
Argentina Exports First-Ever Cargo Of LNG
By Irina Slav - Jun 03, 2019, 9:30 AM CDT oilprice.com
Argentina’s state oil and gas company YPF is loading the country’s first-ever export cargo of liquefied natural gas, Reuters reported, citing a company statement.
“This is the first step of a process that YPF is leading to export and expand gas markets to the world,” a company vice president said.
The cargo is the equivalent of 30,000 cubic meters and its sale is being handled by U.S. LNG major Cheniere Energy. The destination, however, has not been revealed.
The gas for the cargo was extracted from the coveted Vaca Muerta shale play—one of the world’s largest shale formations and Argentina’s great energy hope. Called “the Argentine Permian”, and the play that can turn Argentina from a net importer of oil and gas into a net exporter. According to Argentine government estimates, the Vaca Muerta could double the country’s oil production to 1 million bpd by 2023, with natural gas production rising to 260 million cubic meters daily.
YPF has estimated liquefied natural gas exports alone could bring in more than US$200 million. This would constitute a tenth of the company’s overall export revenues. According to plans, LNG will be exported during the summer season when local demand is at its lowest since Argentina is not yet producing enough gas for both domestic consumption and exports on a year-round basis.
Billions of dollars have been poured already into the Vaca Muerta, which could be the world’s second-largest gas deposit, but return is slow to come because of the lack of infrastructure in the area, which is boosting the cost of pretty much everything from frac sand to moving the output to export markets. Legislative changes have also affected the profitability prospects of operators in Vaca Muerta and have slowed down its development, with several companies postponing their investment plans for the area.
Cheniere Energy inks deals to support two expansion projects
By Sergio Chapa Updated 10:24 am CDT, Monday, June 3, 2019 chron.com/business/energy
Cheniere announced early Monday morning that the company made final investment decision to build a sixth production unit known as Train 6 at its Sabine Pass LNG export terminal in Louisiana.
In order to finance the project, Cheniere entered into a $1.5 billion credit agreement with MUFG Bank Ltd. and 28 other banks that includes $750 million in loans and up to $750 million of credit.
Cheniere gave general contractor Bechtel a notice to proceed with construction. Once complete, the production unit will be able to make up 4.9 million metric tons of LNG per year.
In a separate deal to support an expansion project at its Corpus Christi LNG export terminal, Cheniere also signed a natural gas supply deal and marketing contract with Houston exploration and production company Apache Corp.
Cheniere already holds a permit for three large-scale production units at the South Texas facility but is seeking permission from federal regulators to build seven-midscale production units that will make a combined 9.5 million metric tons of LNG per year in a project known as Corpus Christi Liquefaction Stage III.
Under the 15-year deal, Apache will supply the Stage III units with nearly 140 million cubic feet of natural gas per day that will be used to make roughly 850,000 metric tons of LNG per year. Cheniere will market the LNG overseas while Apache will receive an LNG price minus a fixed liquefaction fee and other costs.
"This first-of-its-kind long-term agreement with Apache represents a commercial evolution in the U.S. LNG industry, as it will ensure the continued reliable delivery of natural gas to Cheniere from one of the premier producers in the Permian Basin, while enabling Apache to access global LNG pricing and receive flow assurance for its gas," Cheniere CEO Jack Fusco said in a statement.
In a third Monday morning announcement, Cheniere's board of directors approved a $1 billion stock buyback program as well as a capital allocation framework that is expected to improve the company's financial results.
"The market-leading execution we have achieved across our world-class LNG platform has provided stable and growing cash flow, which forms the foundation for this capital allocation framework, and we remain committed to delivering long-term shareholder value through growth," Fusco said in a statement.
Apache sure has had quite a few good things happen for them lately.
Shell Says First LNG Cargo From Floating Project Prelude Imminent
By Tsvetana Paraskova - Jun 05, 2019, 2:00 PM CDT oilprice.com
The first shipment of liquefied natural gas (LNG) from Shell’s floating liquefied natural gas (FLNG) facility Prelude offshore Western Australia is imminent, the oil and gas supermajor said on its Management Day 2019 presentation to analysts.
“With Prelude now producing LNG for more than a week and the first shipment of LNG being imminent, we are further de-risking the delivery of our $8-10 billion organic free cash flow target in 2020,” Shell’s Integrated Gas & New Energies Director, Maarten Wetselaar, told analysts, discussing the company’s LNG financial performance and targets.
“Over the past three years we have consistently been growing both our LNG liquefaction and LNG sales volumes,” Wetselaar said.
It was the LNG business that helped Shell post better-than-expected Q1 earnings, as the trading and natural gas businesses offset weak oil prices and depressed refining margins that plagued the other majors in the first quarter this year.
The Prelude FLNG project is the last of the wave of major projects offshore Australia to go online over the past decade, after Total began gas exports from the Ichthys LNG project offshore Western Australia in October last year. LNG projects that began operations in Australia in recent years include Chevron-operated Gorgon and Wheatstone.
Australia currently has the world’s largest LNG export capacity, according to the EIA. Over the next few years, Australia, Qatar, and the United States will be competing for supplying more LNG to export markets.
The U.S. Department of Energy has recently authorized additional exports of LNG from the Freeport LNG Terminal in Texas, describing the gas bound for exports as “freedom gas.”
According to new production forecasts by Rystad Energy, Australia will become the world’s largest LNG producer in 2020 and will keep that title until 2024, when Qatar will retake the top spot.
“Australia has no intention of relinquishing its hard-earned LNG crown without a fight. Over the next two years, pending approvals on up to seven Australian integrated LNG projects could challenge Qatar as the country with the largest sanctioned LNG volumes from integrated projects during that period,” Readul Islam, Research Analyst on Rystad Energy’s Upstream team, said earlier this week.