Cheniere will get $2 billion from Blackstone to build natural gas export facility in Louisiana - Washington Post article
By Associated Press,
NEW YORK — Cheniere Energy Partners will receive $2 billion in financing from The Blackstone Group to fund the construction of a natural gas export plant in Southern Louisiana.
The facility was built to import natural gas, but huge increases in production of natural gas from shale formations under several states has created a glut of natural gas in the U.S. Prices in the U.S. fell to a 10-year low this winter. Now Cheniere and others are hoping to export natural gas to markets that pay prices up to 5 times higher.
Cheniere stock was up 13.8 percent to $15.99 in premarket trading.
Cheniere has lined up international customers for the natural gas and received approval from the Department of Energy to export it. The company is still awaiting approval from the Federal Energy Regulatory Commission to begin construction.
If Cheniere gets approval, it plans to make a final investment decision on the project and begin construction later this year. Construction will take two to three years.
Natural gas must be chilled to a liquid before it can be shipped. That requires so-called trains of machinery and equipment that removes impurities and chills the gas to -260 degrees Fahrenheit before the liquefied natural gas can be loaded onto specialized tankers and shipped abroad.
Not including financing costs, Cheniere says it will cost $4.5 billion to $5 billion to build the first two of four trains planned for the site. Cheniere hopes to export 2.6 billion cubic feet of gas per day, about 4 percent of daily U.S. production.
U.S. natural gas futures closed at $2.55 per thousand cubic feet on Friday. It costs about $3 per thousand cubic feet to liquefy the gas. LNG sells for roughly $10 per thousand cubic feet in Western Europe and $15 in Asia.
Some lawmakers, environmentalists and industrial customers oppose plans to export natural gas. They say it will raise natural gas prices in the U.S. Environmental groups say the process of liquefying and shipping natural gas wastes too much energy and that exporting natural gas will lead to an increase in the controversial drilling process called hydraulic fracturing in the U.S.
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey.
Views: 629
Replies to This Discussion
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Permalink Reply by LP on -
I wish Fahey would name the lawmakers who, he says, are opposed to exporting natural gas for fear of raising prices. As for the "fear of fracking" freaks, their obcession is not worth a comment.
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Permalink Reply by Skip Peel - Mineral Consultant on
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The lawmakers who oppose the export of LNG are from states with little or no oil and gas production. They are looking out for their constituents as consumers who benefit from low nat gas prices. The others are representing the chemical industry that likes cheap feed stocks and wish to protect their significant investments in expansions of existing facilities and new plants. The anti-fracking crowd is fighting a loosing battle. When gasoline surpasses $4/gallon nationally they will have a shrinking pool of supporters. The average consumer/voter will not care.
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Permalink Reply by Hopeful About Natural Gas on
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If gasoline prices go higher won't that make voters want to keep the NG here in the US?? Why send it overseas it it will raise our prices? That's what lots of reps are hearing and it is a powerful argument when oil prices are going up.
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Permalink Reply by Skip Peel - Mineral Consultant on
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The debate about exporting natural gas has no correlation to the price of gasoline at this time. The only way that it would was if CNG/LNG was a viable alternative as a vehicle fuel. That day is some years off. IMO Cheniere will be exporting LNG for years before any appreciable percentage of vehicles are fueled with CNG or LNG.
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Permalink Reply by Hopeful About Natural Gas on
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Skip, sorry, that answer won't fly with consumers and voters. I agree there is no industry link between exporting NG and the price of gasoline - but it is certainly linked in the consumer/voters mind. Oil AND Gas have been mentioned in the same breath for almost 100 years.
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It's very understandable that consumers would not want to risk increasing the price of their natural gas electricity as they also watch the price of gasoline rise - or even if gas prices go down. I think exports of natgas are going to be limited until the voters/consumers feel like exporting gas will not raise the prices or else are convinced that paying higher prices for natgas is better in the long run. That's being tried in the climate change debate - that higher prices are good for you in the long run. Voters don't buy that argument either. Oil and gas are linked in the consumer's mind.
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Don't get me wrong - as someone with a vested interest in natgas I want the price to go much higher. But, as a consumer I'd want the price to stay as low as possible. There are few of us compared to consumers/voters.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I disagree. The average consumer who is not a royalty recipient doesn't give a second thought to the current price of natural gas. However we will all hear quite a bit about the price of a gallon of gasoline between now and November.
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Permalink Reply by tc on
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I agree with Skip, until I looked at my gas bill, I didn't know I was paying $4.48/MCF, but I know the price of gasoline at the corner was $3.75 last night and I am wondering what the price will be this morning. Also moving NG prices have less direct impact as my gas bill of $144 only includes $66 in commodity charges, all the rest are other charges like Customer, Delivery, Capacity, etc. which have fixed rates. Finally autopay and budget payment plans blur the price of natural gas, but staring me in the eyes at every corner is the rising price of gasoline.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Our utility bills are based on long term purchase contracts as opposed to spot prices. When you see operators report their hedge and collar positions those prices are what large end users such as gas and electric utilities pay. In 2009 when hedged natural gas prices were twice what they are today we heard little or no complaints from consumers. It was not a concern. If the price of a gallon of gas were to double we all know the reaction it would generate.
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