Update: First LNG export from Louisiana delayed for another month or two

UPDATE

First LNG export from Louisiana delayed for another month or two

Daily Report Staff  January 14, 2016  businessreport.com

Cheniere Energy Partners says it now plans to export the first liquefied natural gas cargo from its Sabine Pass terminal in Louisiana in late February or early March, a delay from the previous estimate of late January.

Bloomberg reports the company is citing “instrumentation issues” discovered during the final phases of plant commissioning and cool-down as the reason for the delay. The issues will require additional work over the next few weeks. Bechtel Corp. is the engineering and construction contractor.

“With construction of Train 1 finished, we remain well ahead of the guaranteed contractual schedule with Bechtel and anticipate no issues in meeting all contractual targets and guaranteed completion dates,” says Neal Shear, Cheniere’s interim president and chief executive officer.

The liquefaction plants are referred to as trains. Trains 2 through 5 continue to be on an ”accelerated schedule,” Shear says.

The shale gas boom is projected to transform the U.S. into one of the world’s largest suppliers of the fuel by the end of the decade. The country may be capable of exporting 7.76 billion cubic feet of gas a day by 2019, a Bloomberg New Energy Finance analysis shows. The commissioning cargo from Sabine Pass would be the first LNG shipment from the lower 48 states.

Plants such as Sabine Pass will cool and liquefy natural gas to 1/600th of its volume for easier loading onto tankers. Cheniere plans to build at least six trains to produce LNG at Sabine Pass by late 2018, allowing the terminal to supply more than 3.5 billion cubic feet a day. The project is estimated to cost at least $15 billion.

As reported on Wednesday, a fleet of tugboats that have gone unused over the past seven years are waiting along the Louisiana coast to assist in the LNG exports.

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Don, the Cove Point facility has a relatively small capacity.  I don't think that 0.82 Bcfd will have any impact on NG prices in the Marcellus.  Much more gas will go to the Gulf Coast facilities than to Cove Point.  The following are stated "capacities".  There is no guarantee that any of these facilities will operate at 100% of their capacity.

U.S. Export Terminals

APPROVED - UNDER CONSTRUCTION - FERC

6. Sabine, LA: 2.76 Bcfd (Cheniere/Sabine Pass LNG) (CP11-72 & CP14-12)

7. Hackberry, LA: 1.7 Bcfd (Sempra–Cameron LNG) (CP13-25)

8. Freeport, TX: 1.8 Bcfd (Freeport LNG Dev/Freeport LNG Expansion/FLNG

                                                Liquefaction) (CP12-509)

9. Cove Point, MD: 0.82 Bcfd (Dominion–Cove Point LNG) (CP13-113)

10. Corpus Christi, TX: 2.14 Bcfd (Cheniere – Corpus Christi LNG) (CP12-507)

Skip, as I said, "help a bit with this glut. . ."  Out of curiosity are Hackberry and Freeport going to be online before Cove Point?  I know Corpus is a ways out.

Don, the glut is so big that we need more than "a bit of help"  We need all five facilities under construction to come online on time and to operate as near capacity as possible.  Then we will see from where the NG is sourced and whether it is enough to budge the price needle.  I haven't checked the construction progress or projected start up dates in a while.  The best way to do that is to go to the corporate websites:  Cheniere, Sempra, Freeport LNG Development, and Dominion.

Agreed.  Okay, how about coupled with some more really cold winters in the NE.

Like the Polar Vortex in the first quarter 2014?  As much as I would like a higher price per mcf, I wouldn't wish that on anyone.  Although it could help drive home the point that those who clamber to get off all hydrocarbons, including NG, could very well freeze to death in the process.  NG for NE consumers should be a no brainer but irrational fears and extreme political views regarding energy seem to have a home there.

Even the effects of a Polar Vortex don't last too long.  And the same weather would probably have less impact now considering the increase in supply and connections to end users in place since 2014.  Link to NG settlement prices follows:

http://gsfi.net/common/NYMEXSettlementHistory.pdf

To add a little to what Skip has said - some recent Marcellus or Utica wells have come on at more than 40 mmcf/day.  If they stayed at that rate, it would only take 20 wells to supply Cove Point.  With decline curves, the actual number of wells to supply it are on the order of 100 to 200 total wells.  I haven't done the math, but I suspect that's less than 10 rigs/frac crews.

Because of thermodynamics and capital costs, I do expect most of the plants to run at or near capacity.  But I don't expect all of them actually get built.

Jay - 

LNG export in particular helps our allies and reduces the hold of certain hostile powers over the energy market.  

I'd rather that oil and LNG go out as value added products, but until more petrochemical plants get built that's going to be hard to do.  Particularly for NG/LNG I'm an "all of the above" type guy.  

Should read 3.5 Bcf/day not 3.5 million per day. Correct?

3.5 Bcfd is greater than the reported capacity of the Sabine Pass facility.  I suspect it is a conversion error from the unit of measure - tons (tonnes).  Although we deal in mcfs when discussing natural gas, in liquid form (LNG) is measured in tonnes.  Think liquid units of measure as opposed to gaseous units of measure.

http://www.prometheusenergy.com/_pdf/LNGQuickFacts.pdf

There are plenty of pipelines in this area. Several major pipelines are reversing their flows from NE US to SW La to accommodate increased demands.  Additionally several new compressor stations are under construction as well as added horsepower at existing stations.  

First LNG export from Louisiana delayed for another month or two

Daily Report Staff  January 14, 2016  businessreport.com

Cheniere Energy Partners says it now plans to export the first liquefied natural gas cargo from its Sabine Pass terminal in Louisiana in late February or early March, a delay from the previous estimate of late January.

Bloomberg reports the company is citing “instrumentation issues” discovered during the final phases of plant commissioning and cool-down as the reason for the delay. The issues will require additional work over the next few weeks. Bechtel Corp. is the engineering and construction contractor.

“With construction of Train 1 finished, we remain well ahead of the guaranteed contractual schedule with Bechtel and anticipate no issues in meeting all contractual targets and guaranteed completion dates,” says Neal Shear, Cheniere’s interim president and chief executive officer.

The liquefaction plants are referred to as trains. Trains 2 through 5 continue to be on an ”accelerated schedule,” Shear says.

The shale gas boom is projected to transform the U.S. into one of the world’s largest suppliers of the fuel by the end of the decade. The country may be capable of exporting 7.76 billion cubic feet of gas a day by 2019, a Bloomberg New Energy Finance analysis shows. The commissioning cargo from Sabine Pass would be the first LNG shipment from the lower 48 states.

Plants such as Sabine Pass will cool and liquefy natural gas to 1/600th of its volume for easier loading onto tankers. Cheniere plans to build at least six trains to produce LNG at Sabine Pass by late 2018, allowing the terminal to supply more than 3.5 billion cubic feet a day. The project is estimated to cost at least $15 billion.

As reported on Wednesday, a fleet of tugboats that have gone unused over the past seven years are waiting along the Louisiana coast to assist in the LNG exports.

 

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