PERIODIC UPDATES: U.S. LNG EXPORT AND GLOBAL LNG MARKET - SEMPRA CAMERON LNG UPDATE

NEW YORK  Markets | Mon Nov 9, 2015 5:07pm EST  reuters.com

Cheniere Energy's landmark Sabine Pass liquefied natural gas export plant in Louisiana will receive its first tanker for loading on Jan. 12, according to ship tracking data and a source with knowledge of the plant's operations.

The Energy Atlantic LNG tanker, which was last seen on Thomson Reuters ship tracking data on Monday steaming west across the Indian Ocean, is the first in a string of test cargoes that will be loaded before commercial operations begin later in the year.

The expected arrival of the tanker to Sabine Pass was confirmed by a source and by IHS Waterborne consultants that track LNG shipments globally.

It marks a milestone for the long-awaited project, the first of its kind to be built in the United States in nearly 50 years, and for the U.S. gas market that has been swamped with new supply in recent years due to a domestic drilling boom.

It is unclear when the Energy Atlantic will actually leave Sabine or where it will go.

One source said the test phase could take four to six months before the first shipments under a long term contract between Cheniere and LNG shipper BG Group begin.

The first export shipment represents a turnaround for Cheniere, which in 2008 built an import terminal at the same site in Sabine Pass which was quickly rendered obsolete by the rise in U.S. production.

Now, however, other headwinds exist for exports, including a global glut of supply that has pushed prices way below year-ago levels.

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Elba Island gets Ferc approval

Caroline Evans  02 June 2016 16:00 GMT upstreamonline.com

US regulators have given the green light to Kinder Morgan's Elba Island liquefied natural gas export facility on the coast of the southeastern state of Georgia.

A second wave of Texas LNG export projects could take off in the next decade

By Jordan Blum June 27, 2016 Updated: June 28, 2016 8:57am houstonchronicle.com

The United States became an exporter of liquefied natural gas this year with Cheniere Energy's first shipments from Louisiana, but a glut of LNG globally is creating questions about when a "second wave" of LNG export projects will move forward.

Five U.S. LNG export projects are under construction, including ones in Freeport and Corpus Christi, but many others are awaiting both regulatory approval and corporate decisions on whether to invest billions of dollars during a market downturn.

Perhaps the most brazen project is The Woodlands-based NextDecade's Rio Grande LNG project in Texas. NextDecade proposes building what could be the nation's largest LNG export facility, with the first of three phases scheduled to come online in 2020. The $6 billion project would be constructed on 1,000 acres at the Port of Brownsville near the Mexican border.

"We want to be the leader of the second wave of export projects out of the U.S.," said NextDecade CEO Kathleen Eisbrenner, a former executive at Royal Dutch Shell before founding the company in 2010.

Despite the large supplies of natural gas coming from Australia, Russia and the Middle East, many industry analysts and executives expect LNG demand to pick up at some point after 2020 as countries reduce their reliance on coal, in part from international accords on climate change. The expansion of the Panama Canal, which will be able to accommodate LNG tankers, will make Asian markets more accessible to Texas and other Gulf Coast exporters.

"It's like a drug," Eisbrenner said. "Once a country gets a taste of LNG they never want to go back."

These projects are risky though, particularly since it remains unclear how long it will take for demand to work through the supply glut. Most analysts expect LNG demand and prices to rise over the long term, but it remains unclear when that might happen. So, for companies investing billions in projects that take years to complete, timing is everything.

Luana Siegfried, energy analyst with Raymond James in Houston, said it might take longer than many in the industry believe, noting weaker European demand, slowing growth in China, and the potential for Japan to return to nuclear power now that more than five years have passed since the Fukushima Daiichi nuclear disaster.

Spencer Dale, BP's chief economist, expects liquid natural gas supplies to grow by 40 percent over the next four years as new LNG facilities begin operations, meaning it could take another decade for demand to catch up and prices to rise. As a result, many new projects won't be profitable at first, he said.

But, he added, "Over a period of time, that big growth market in Asia is going to mean you're going to need a lot more gas. "

The shale boom turned the United States into the world's largest natural gas producer and drove energy companies to seek new markets. Transforming the gas into a liquid through a supercooling process known as liquefaction allows it to be shipped worldwide. LNG terminals that once accepted imports are being retooled to ship exports.

The first project online, developed by Houston's Cheniere Energy, began exporting in late February to South America, Asia and Europe.

The Federal Energy Regulatory Commission in May began reviewing NextDecade's Rio Grande application. Eisbrenner hopes to begin construction as soon as September 2017 to bring the first of six liquefaction units, called trains, online by the end of 2020.

All six trains would produce 27 million tons of LNG a year or 3.6 billion cubic feet a day - roughly the same size as Cheniere's Sabine Pass project in Louisiana, if it's built to capacity.

The biggest challenge for NextDecade is locking in long-term contracts with LNG buyers. Without guarantees from customers to buy the LNG at set prices over periods of 20 years or so, the risk would be too great to secure the investment needed to build the project. NextDecade only has non-binding agreements thus far.

NextDecade has financial backing from a few New York firms and hedge funds - York Capital Management, Halcyon Capital Management and Valinor Management, NextDecade declined to disclose the amount it has raised.

Eisbrenner recently canceled NextDecade's proposed Pelican Island LNG project in Galveston partly because of concerns about not having enough property, as well as to keep the focus on Brownsville.

NextDecade is facing both competition and opposition in Brownsville. Two smaller LNG export projects, one by Houston-based Texas LNG, the other by Chicago's Exelon Corp. are also under review. Analysts expect only one proposal to move forward.

Environmental and community activists in the Rio Grande Valley also are pushing a "Save RGV from LNG" campaign to oppose all three projects.

Still, Eisbrenner believes future market demands and access to Texas' cheap and abundant shale gas are on her side.

"I like our timing," she said. "There needs to be a break between the first and second wave."

The new Panama Canal: How will it affect US businesses?

The expanded Panama Canal will allow bigger ships across the narrow country, which may benefit oil exports from the United States.

By Roya Sabri, Staff July 3, 2016 csmonitor.com

The newly widened Panama Canal could rewrite how fuel extracted in the US traverses the globe.

The canal expansion opened on June 26 with a third lane that accommodates big ships such as liquified natural gas (LNG) ships, 90 percent of which may now travel across the canal, including those that hold as much as 3.9 billion cubic feet (Bcf) of fuel, according to a report from the US Energy Information Administration released June 30.

Along with a new lane, the canal has enlarged its locks that are 180 feet wide and 60 feet deep, compared to the 110-foot wide and 42-foot deep 1914 canal. The project cost a total of $5.25 billion.

The previous canal allowed just 6 percent of the current global fleet, or 30 of the smallest LNG tankers who could carry up to 0.7 Bcf of fuel, the report claims. The reduced travel time and transportation costs for LNG shipments could help United States natural gas exports to northern Asia. With the United States’ natural gas economy growing to the world’s third-largest LNG producer by 2020, the expansion could be a new favorite route.

 “The expansion of the Panama Canal will have significant impacts on shipping routes, port development, and cargo distribution,” reported the Army Corps of Engineers in 2008.

The canal will reduce the voyage time from the US Gulf Coast to 20 days, down from 34 days around Africa or 31 days through the Suez canal. The new route will also reduce travel time to Chile from 20 days to eight or nine days and to Colombia and Ecuador from 25 to five days, according to the Energy Information Administration. Transportation costs will also decrease through the canal with a new system that encourages LNG traffic.

At the opening, Panamanian President, Juan Carlos Varela, said: "Our commitment to provide value to our customers remains paramount. Today, we make history and improve global connectivity. We thank our customers for their support and appreciate the 170 reservations we have received thus far to transit the expanded canal."

Although the Canal will be a cheaper and faster option, competing with other traffic could prove troublesome, Michael Hinrichs of Veresen Inc. – which is hoping to build the Jordan Cove LNG terminal and storage facility – told The Daily Sentinel of Grand Junction, Colorado.

Demand to cross the quicker and cheaper route may make queues long and delay shipment, he said. The “supply chain is more about reliability than transit time,” South Carolina Ports Authority chief executive James I. Newsome III told The Washington Post.

Despite some uncertainty, the updated canal will give US companies an incentive to expand East Coast ports. “We’re evaluating how the Panama Canal might change shipping patterns to the Gulf Coast ports,” Rob O’Brian, president of the Joplin, Mo., Chamber of Commerce, told Inbound Logistics. “The expansion presents an opportunity for shippers to better utilize the middle part of the country, take advantage of rail and highway network that connects with the ports.”

 

 

Cameron LNG Liquefaction Expansion Project Receives Non-FTA Export Authorization From DOE

SAN DIEGO, July 18, 2016 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today announced that Cameron LNG has received authorization from the U.S. Department of Energy (DOE) to export an additional 1.41 billion cubic feet of natural gas per day (Bcfd) from its proposed Louisiana liquefaction expansion project to countries that do not have a free-trade agreement with the U.S. With this order, Cameron LNG's export capacity will be 24.92 million tons per annum or 3.53 Bcfd.

Earlier this year, Cameron LNG received approval from the Federal Energy Regulatory Commission to site, construct and operate the proposed expansion project, which will include up to two additional liquefaction trains (trains No. 4 and No. 5) and one additional full containment LNG storage tank (tank No. 5). The expansion project will be located next to the Cameron LNG terminal and liquefaction facilities that were approved for construction in 2014 in Hackberry, La.

"Receiving DOE's authorization is an important step forward for the Cameron LNG expansion project," said Octavio M.C. Simoes, president of Sempra LNG & Midstream.  "We appreciate the support and leadership of the community and our federal, state and local officials for their commitment to this project that will provide incremental benefits to the economy, while meeting market demand for new LNG supplies."

Construction on the first phase of the $10 billion Cameron LNG liquefaction project (trains No. 1-3) currently is underway.  The facility is expected to commence operations during 2018, with the first full year of operations in 2019.

The proposed expansion project is subject to completing the required commercial agreements, securing all necessary consents and approvals, obtaining financing and reaching a final investment decision, among other things.

Cameron LNG Holdings, LLC is a joint venture owned by affiliates of Sempra Energy, ENGIE, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a joint venture formed by affiliates of Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha, and comprises the Cameron LNG liquefied natural gas (LNG) receipt terminal in Hackberry, La., and the construction and operation of the liquefaction export facilities.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2015 revenues of more than $10 billion. The Sempra Energy companies' 17,000 employees serve more than 32 million consumers worldwide.

Energy Veteran Betting on LNG Bounce Sees Future Floating at Sea

Dan Murtaugh danmurtaugh  July 17, 2016 — 6:00 PM CDT  bloomberg.com

  • Delfin LNG applying to be first U.S. floating LNG project
  • Company CEO helped found trading firm that became Glencore

Turmoil in the oil market gave Fred Jones his start in the energy business four decades ago. Now he’ll be hoping turmoil in the gas market doesn’t sour his new venture.

Jones, who in 1974 helped found the trading firm that became Glencore Plc, is now chief executive officer of Delfin LNG LLC, which has applied to build the first modern floating natural gas liquefaction plant in the U.S. He’s doing so at a time when new export projects are primed to flood the market, slashing spot prices and making buyers less interested in signing long-term contracts that underpin ventures like his.

“History suggests that when the tide turns in a commodity market, it turns much harder and faster than everyone expects,” Jones said in an interview in Singapore. “We are already seeing the seeds of this rebalance sown with potential supply projects abandoning their development plans and new demand centers being created amidst today’s low-price environment.”

Jones expects the rebalance to occur in the early 2020s, when his new venture, Delfin, would come online. Jones plans to build four floating liquefaction vessels, known as FLNGs, and moor them about 50 miles south of Louisiana, where they will receive shale gas piped from the shore. The company expects approval early next year for a deepwater port license from the U.S. Coast Guard and Maritime Administration, he said.

Marc Rich

Jones, a native of New Zealand, moved to London in the early 1970s and started chartering ships for commodities trading powerhouse Phillip Brothers. At the time, Marc Rich was leading the firm into crude trading after the Arab oil embargo caused prices to soar and left U.S. refineries searching for supplies.

Rich and fellow trader Pincus Green left Phibro over a pay dispute in 1973. Jones said he called Rich to tell him he was interested in whatever his next venture would be, and Rich invited him to join on the spot. Rich, Green, Jones and two secretaries started March Rich + Co. in 1974. The firm became Glencore Plc in 1994, several years after Jones had already left. Two former colleagues confirmed Jones’s account. Glencore declined to comment.

Funding and Floating

Enbridge Inc. has purchased a 5 percent interest in Delfin, and the Korean Development Bank recently agreed to provide $1.5 billion in financing to the project. Jones said lenders are more comfortable funding floating liquefaction plants like his project because they can be moved if market conditions change and liquefaction at the original location is no longer profitable.

With the market over-supplied, only projects at the low end of the cost curve with well-funded partnerships that can handle price risk will move forward, Sanford C. Bernstein & Co. analysts including Neil Beveridge said in a July 8 research report.

Many investors don’t see FLNGs as a proven technology, according to Rafael McDonald, the Cambridge, Massachusetts-based global director of gas and LNG for IHS Inc. The first modern FLNG left a South Korean shipyard in May and is expected to begin producing from offshore Malaysia for Petroliam Nasional Bhd later this year. Many lenders want to see FLNGs perform for a few years before they’ll feel comfortable, he said.

“I have not heard of a great level of comfort emanating from the broader financing community,” McDonald said by e-mail. “The flip side, of course, is that for project developers, you don’t need all financiers to be comfortable with the concept. You only need enough to fund your project.”

Half of America’s Gas Exports Claimed by Asia in Next 3 Years

Naureen Malik naurtorious  July 21, 2016 — 9:48 AM CDT  bloomberg.com

 Most U.S. gas exports have gone to Latin America so far

  • Panama Canal expansion stands to benefit Asian buyers: BNEF

More than half of the liquefied natural gas leaving the U.S. over the next three years is contracted by Asian buyers, signaling a potential shift in a market that has been dominated by Latin America since shale exports began in February.

The U.S. is slated to bring online 42.9 million tons a year of LNG export capacity in the next three years, with 52 percent contracted to utilities and national oil and gas companies in Japan, South Korea, India, Taiwan and Singapore, a Bloomberg New Energy Finance analysis shows. A recent expansion of the Panama Canal that opened up the locks to massive tankers carrying the fuel may prompt the first cargoes bound for Asia, according to the report.

The U.S. is emerging as one of the largest suppliers of the heating and power-plant fuel in the world as America’s shale drillers seek to eliminate a glut of gas at home. Five export terminals are under construction across the nation with another two dozen projects under consideration. While suppliers have targeted Asia as a prime market for U.S. cargoes, shipments have so far been delivered most frequently to closer-by South America.

Watching Asia

“Everybody is watching Asia because they consume so much,” Bloomberg New Energy Finance analyst Anastacia Dialynas said by phone. “It’s impressive that so many have contracted for U.S. exports.”

More than half of the LNG shipments sent abroad by Cheniere, which became the first U.S. shale gas exporter in February, have gone to Argentina, Brazil and Chile, Dialynas said. Others went to Kuwait, the United Arab Emirates, Portugal and India.

“I don’t think anybody anticipated South America to be such a big purchaser,” she said.

Bottom of Form

One big advantage to sourcing U.S. supply is flexibility in long-term contracts. Australian exporters, for example, have required in agreements that their LNG be delivered to a certain destination. By contrast, those who contract with U.S. exporters including Cheniere Energy Inc., Freeport LNG Development LP and Dominion Resources Inc. have some flexibility in the volume they take and where it’s shipped, Dialynas said.

This also makes it difficult to predict where U.S. gas will end up in the world, she said. Of the U.S. export capacity slated to come online through 2019, about a third either isn’t contracted or is held by project investors, she said. Another 22 percent of the capacity is held by so-called portfolio buyers such as Royal Dutch Shell Plc.

 

U.S. Shale Gas Shaking Up Global Markets as LNG Supply Surges

Naureen Malik naurtorious  CDT Updated on July 28, 2016 — 1:34 PM CDT bloomberg.com

  • With start of U.S. exports, global price premiums collapsing
  • U.S. to have 14% of LNG capacity by 2020: Energy Aspects

Shale drillers from Pennsylvania to Texas flooded the U.S. with so much natural gas over the past decade that prices slid to a 17-year low. Now they’re going global, with the potential to upset markets from London to Tokyo.

The U.S. began shale gas exports by sea this year and is projected by the International Energy Agency to become the world’s third-largest liquefied natural gas supplier in five years. Gas will challenge coal at European power plants and become affordable in emerging markets, where prices have been high and supplies limited, according to the IEA and Goldman Sachs Group Inc.

LNG became the world’s second most traded commodity after oil last year and demand will keep growing, Goldman said. U.S. gas is adding to the global glut triggered by new Australian supply and weakening Asian consumption. Shale is having an outsized impact on how LNG is sold, prompting spot trading in lieu of long-term contracts.

“The U.S. clearly changed the picture,” Costanza Jacazio, a senior gas analyst with the Paris-based IEA, said in a phone interview. “It’s going basically from zero to the third-largest LNG capacity holder in the space of five years and it brings a new flexible dimension to the LNG market.”

With supplies growing, some Asian nations like Japan are contracted to buy more than they can consume, leaving surpluses to be sold. That’s lured major traders into the LNG market in recent years, including Vitol Group, Trafigura Group, Koch Industries Inc., Gunvor Group Ltd. and Noble Group, the IEA said.

The annual capacity of liquefaction plants, where gas is chilled and compressed for shipping, grew to 415 billion cubic meters in 2015 and will expand to 595 billion by 2021, according to the energy agency.

Cheniere Energy Inc. has sent 19 tankers of the liquefied gas abroad from its Sabine Pass terminal in Louisiana. By 2020, five terminals will be operating on the U.S. Gulf Coast and in Maryland.  Global export capacity will surge 45 percent and the U.S.’s share will jump to 14 percent from nothing, according to Energy Aspects Ltd.

While U.S. supply is still relatively small, it’s having an impact because the American contracts are flexible. Australian and other foreign processors conclude long-term agreements to send gas to specific countries such as Japan and China. Asian buyers have contracted for more than half of the U.S. supply, but they have the freedom to ship the fuel to anywhere in the world, encouraging spot trading.

Global Prices

The change will weigh on already low global LNG prices. The WGI Northeast Asia spot LNG price has averaged just $5 per million British thermal units this year, a premium of $2.83 over benchmark U.S. prices. Two years ago, the gap was about $10. The premium for U.K. futures to the U.S. narrowed by almost half to $2.16.

The widening of the Panama Canal is going to have an impact as well. It’s now able to handle most of the world’s LNG tankers and will reduce time and costs for U.S. cargoes to destinations such as Chile and Japan.

This week, Maran Gas Apollonia became the first LNG tanker to pass through the newly enlarged Panama Canal after picking up a cargo at Cheniere’s terminal in Louisiana. It’s carrying the shale gas to the Far East, according to an official at Maran Gas Maritime Inc. By 2021, the U.S. may dispatch as many as 550 tankers a year through the waterway, the U.S. Energy Information Administration forecasts.

Most of Cheniere’s cargoes so far have gone to South America buyers in Brazil, Argentina and Chile. Costs to ship to Chile will plunge with the canal expansion, the EIA said.

Creating Competition

Shale gas created intense competition between coal and gas in the U.S., and now U.S. LNG may fuel European gas plants that are operating at about 20 percent of capacity on average, Christian Lelong, a New York-based analyst with Goldman, said in a phone interview.

Last year, LNG trade reached about $120 billion, making it the second-largest commodity traded globally, surpassing iron ore, he said.

Egypt, Jordan, Pakistan and Poland all became LNG importers last year for the first time. Indonesia’s Arun terminal, which started producing LNG in 1977, has been converted for imports, according to the IEA.

Bottom of Form

In emerging markets, smaller and cheaper floating import vessels have become popular. They cost $200 million to $300 million compared with $1 billion or more for larger onshore plants. Egypt got its first two floating units last year and has been operating them at maximum capacity, said Jason Feer, head of business intelligence with ship brokerage Poten & Partners in Houston. There are 19 operating worldwide, with plans for as many as 15 more, he said.

“There are markets like Bangladesh and Pakistan where traditionally they would have gone with coal but now gas can be the cheaper option once you include the cost of new infrastructure,” Lelong of Goldman said. “You are seeing these energy poor countries often with poor credit ratings turning to LNG.”

Massive LNG project near Lake Charles starts to shake up skyline

Daily Report Staff  August 15, 2016

Three cylindrical buildings—each larger than the Superdome—now dot the Hackberry skyline, signaling that construction on Cameron LNG is well underway.

The American Press reports the project, backed by San Diego-based Sempra LNG & Midstream and its partners, is one of about eight announced LNG projects in the Lake Charles area. But it’s the only one that is under construction, according to Cameron LNG spokeswoman Julie Nelson.

Construction of three liquefaction trains started at Cameron LNG about two years ago and is projected to end in 2018, Nelson says. Progress has been steady, she says, with some interruptions due to heavy rains.

Nelson said more than 75 cranes are operating on the project, and that major pieces of equipment—such as air coolers, pressure vessels and compressor packages—are being received and installed. She says continued electrical work, structural steel work and piping are all part of the current phase of construction.

The project has created thousands of temporary jobs in construction, which is the sector responsible for bringing the most new jobs to the local market this past year, according to a recent report by the Louisiana Workforce Commission.

Nelson said more than 4,500 contractor construction workers—many of them craft workers recruited from this region—are working on the project.

great news, especially for that region.  It has been 30 years since I last visited Hackberry.  I saw some aerial photos of that area after Hurricane Rita.  very devastating. Trying to wrap my mind around 4500 construction workers driving down Hwy 27, drawbridge and all, every day for work.

Google Earth has photos of the plant.  It's big.

 

If you go back that far, Steve, you may remember a bar, one of two in Hackberry, Charlie C's.  It was owned and run by my cousins.  My first cousin is retired on south Toledo Bend now and I see her often as I keep a boat there.  She keeps up with a lot of friends and family in that area and all they can talk about is just how horrible the traffic has become.  Those narrow two lanes weren't built for the amount of traffic they now must support.  It has become a bumper-to-bumper nightmare during rush hours.  And not much better outside of rush hours.  Yes, the jobs are quite welcome and the level of traffic will not last forever.

sorry to say i did not check out either of those 2 bars.

the traffic is one obvious price of their success in landing such a large facility

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