Category Archives: Freeport

Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown metropolitan area and is situated in Southeast Texas.

Energy secretary backs natural gas exports

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The low price of natural gas is hurting domestic job growth, and exporting a small amount of the fuel will boost the economy, U.S. Energy Secretary Steven Chu told a Houston audience Thursday.

Speaking at a town hall at Houston Community College, Chu said a modest increase in the price of natural gas wouldn’t significantly raise its cost to U.S. consumers who use it to heat their homes and manufacturers who need it to make products.

Natural gas futures closed at $2.55, up 17 cents, in trading Thursday on the New York Mercantile Exchange. It brings much higher prices in other countries.

“Exporting natural gas means wealth comes into the United States,” Chu said.

The Energy Department’s Office of Fossil Energy is reviewing several applications to export liquefied natural gas. The exports would relieve the glut of natural gas on the domestic market and raise revenue, but also potentially increase prices for domestic consumers.

Several U.S. energy companies have announced plans to close their natural gas wells and curb spending in natural gas fields, as its price has fallen from more than $13.50 in 2008.

In his State of the Union speech last week, President Barack Obama called for an “all-of-the-above” approach to domestic energy production, including investment in oil, natural gas and renewable energy sources.

Chu said it’s important that the United States be at the forefront of innovations and technologies in renewable energy.

“We have a choice. When all these things become cost-competitive, do you want to buy or do you want to sell?” he asked. “If we are buying, that is wealth out of the country. If we are selling, that’s wealth into the country.”

Before the hour-long session with students at the college, Chu met with oil and gas executives and explored the Texas Medical Center’s energy efficiency upgrade.

At the college, he answered questions about the Obama administration’s rejection of the Keystone XL pipeline and Iran’s threat to close the Strait of Hormuz, among other topics.

Chu said the administration is open to exploring alternate routes for the pipeline that would carry oil from Canadian tar sands to Gulf Coast refineries.

It’s become a touchstone issue for supporters who say it will create jobs and reduce U.S. dependence on oil from hostile nations, and opponents who argue it could threaten water supplies and promote use of an especially dirty form of oil.

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Photo: Melissa Phillip / © 2011 Houston Chronicle

 

Chu said he supports construction of pipelines nationwide, particularly to relieve the glut of oil at the hub in Cushing, Okla., a major price point for domestic oil.

“There is such a shortage of pipelines between Cushing and Houston,” Chu said. “There will be major construction of pipelines in the next decade or so. All the job creation from Cushing to Houston is being done now.”

Chu touted government investment in wind, solar and other renewable energy sources, as well. He said he expects the cost of solar power to fall by 50 percent within six to eight years.

Chu also dismissed Iran’s threats to close the Strait of Hormuz, a key oil shipment channel, in retaliation for international sanctions aimed at the nation’s nuclear program.

“I don’t think they can really shut down the Strait of Hormuz,” Chu said. “We certainly have capabilities to reopen it.”

simone.sebastian@chron.com @SimonesNews

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USA: Nineteen LNG Cargoes Re-Exported Last Year

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The U.S. re-exported 19 LNG cargoes or 1,142,057 mt in 2011, according to U.S. DOE.

Most of the re-exports were handled by Cheniere at its Sabine Pass LNG terminal.

There are currently three U.S. LNG terminals that have been granted Federal approval to re-export LNG: Freeport in Texas, Sabine Pass and Cameron in Louisiana.

Re-exportation of LNG lets marketers and suppliers store gas, while waiting for price signals before delivering their LNG to the higher-paying markets in Asia, Europe, and South America.

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Macquarie Vies To Sell U.S. LNG To India

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For all the hubbub over the competitive threat posed by U.S. gas exports to Australia’s rapidly growing liquefied natural gas sector, Macquarie clearly smells an opportunity.

Indian energy company GAIL expects to sign a deal within a month with Macquarie Energy to buy 2 million tons of liquefied natural gas annually for 20 years from the Freeport LNG project in the U.S.

“We are in advanced discussions with Macquarie. I think we will be able to sign the deal in a month’s time,” a senior executive with India’s largest gas distributor told Deal Journal Australia’s colleague Rakesh Sharma in New Delhi.

Macquarie Group’s North American energy marketing and trading arm, Macquarie Energy, and Freeport LNG Expansion LP, are jointly developing and marketing liquefaction capacity at the LNG terminal in Freeport, Texas.

Macquarie’s corporate communications team weren’t immediately available for comment on the talks with GAIL.

The U.S. shale-oil and natural-gas boom has transformed the gas market, made the country a net exporter, depressed gas prices and has prompted several players to set up LNG export operations with an eye on rapidly-expanding Asian markets.

GAIL in December agreed to buy 3.5 million tons per year of LNG for over 20 years from Sabine Pass Liquefaction LLC, a unit of the U.S.-based Cheniere Energy Partners LP, at a free-on-board price indexed to the Henry Hub price, the main international benchmark for natural gas prices in North America.

The executive said the deal with Macquarie will also be linked to Henry Hub, instead of crude-oil prices. This will help GAIL get LNG at competitive rates as its end-customers in India are price sensitive, he added.

GAIL projects its gas import needs to grow seven times to 187 million standard cubic meters a day by 2015 from end-2010. The share of imported gas in its total gas use is set to rise to around 48% from 15% during the same time period, IHS Global Insight said in a note last month.

The gas pipeline utility is pushing hard to line up supplies. In September, it took a 20% stake in Houston-based Carrizo Oil & Gas Inc.’s Eagle Shale Ford acreage and in November set up a unit in Singapore for LNG trading.

“The deal [with Macquarie] is a part of company strategy to assure long-term supplies,” Bhavesh Chauhan, an analyst with Mumbai-based Angel Broking, said.

Another analyst, who didn’t wish to be named, said the deal will be a big positive as a fall in domestic Indian gas production has reduced GAIL’s transmission volumes and its pipeline network is facing low utilization.

Last month, the head of global gas at UK-based energy consultancy Wood Mackenzie said the U.S. could emerge as a major competitor to Australia’s burgeoning gas-export market, challenging the viability or expansion plans of close to a dozen Australian liquefied natural gas projects.

“We’re of the view that North America will have 20 million tons of LNG capacity maybe as early as 2018,” Woodmac’s Noel Tomnay said. “Consequently, that will remove potential market share for Australian LNG projects.”

Investment totaling over A$175 billion has been earmarked for new Australian LNG terminals focused mainly on Asia since 2007, which could catapult Australia ahead of Qatar as the world’s largest LNG exporter within a decade. Friday, Japan’s Inpex and France’s Total formally approved construction of their $34 billion Ichthys gas-export facility in the Northern Territory.

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USA: Freeport Re-Exports LNG Cargo

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The U.S. Freeport liquefied natural gas terminal in Texas re-exported a LNG cargo yesterday, according to shipping data.

The cargo is being hauled by Neva River, a 147,608 cubic-meter tanker.

The Freeport LNG import terminal commenced commercial operations in June 2008 with capacity to unload and vaporize approximately 2.0 Bcf/d (gas equivalent) of LNG.

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US Freeport LNG set to re-export cargo by early Oct

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By Edward McAllister

NEW YORK, Sept 22 (Reuters) – The U.S. Freeport liquefied natural gas terminal in Texas is set to re-export another cargo of LNG in the next two weeks to take advantage of higher-paying markets in Asia or Europe, a company representative said on Wednesday.

A tanker is expected to load up and transport LNG overseas at the end of September or beginning of October, said Mark Mallett, Freeport’s vice president of operations and engineering.

The Al Ruwais LNG tanker, which recently offloaded at the Altamira terminal in Mexico, headed north toward Freeport this week and was seen about 100 miles (160 km) from the terminal on Wednesday, according to AISLive ship tracker on Reuters.

“We have received no official notification from our customers if this is the ship, but we expect to load a tanker by early October, maybe in late September,” Mallett said.

This would be the latest in a growing number of re-export deals done since the terminal received approval in May 2009 to import LNG, store it and export later to more attractive markets overseas.

It is a symptom of over-supply in the U.S. gas market and the subsequent weak prices which have deterred shippers from sending much LNG to U.S. terminals this year.

On Thursday, U.S. gas futures, just below $4 per mmBtu, were about $2.80 below British gas prices and about $5 below Asia spot LNG prices, making it profitable for traders to send cargoes to Asia from the U.S. even after shipping costs. <0#NG-NGLNM=R>

The last re-export cargo left Freeport at the beginning of September for Japan in the Excalibur tanker, after Freeport customer ConocoPhillips (COP.N) sold a cargo to Citi Group (C.N). [ID:nN31238805]

Cheniere Energy’s (LNG.A) Sabine Pass terminal in Louisiana, which also has re-export capabilities, could make similar use of an empty tanker.

Sabine Pass and Freeport — currently the only U.S. terminals that can re-export LNG — have together exported 9.7 bcf of gas since they received the approval last year, according to Waterborne Energy analysts in Houston. Sempra Energy‘s (SRE.N) Cameron LNG terminal in Louisiana has recently applied for a re-export license.

Cheniere has gone one step further, planning to build a liquefaction plant that would export domestically-produced gas. Freeport LNG is also considering its options in that area, Mallett said. (Reporting by Edward McAllister; Editing by Marguerita Choy)

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