APGA filed a motion to intervene and protest in response to the application by Cheniere Marketing, LLC to export approximately 2.1 billion cubic feet per day (Bcf/day) of LNG from the proposed Corpus Christi Liquefaction Project to any country that the United States does not have a Free Trade Agreement (FTA) with.
To date, 20 applications have been filed at the Department of Energy (DOE) to export 28.67 Bcf/day of LNG to FTA countries. This equates to approximately 45 percent of our daily consumption. APGA members unanimously approved a resolution to oppose the export of LNG at the 2011 APGA Annual Conference.
In its filing APGA states that “proposed exports from Corpus Christi, Texas will increase domestic natural gas prices, burdening households and jeopardizing potential growth in the manufacturing sector, as well as the transition away from more environmentally damaging fossil fuels.” APGA’s comments also respond to a recently released DOE commissioned study on the macroeconomic impacts of LNG exports from the United States. Specifically, the comments state that although the study communicated that LNG exports will result in net economic benefits.
It also concluded that the higher the volume of LNG exports, the more domestic natural gas prices will rise. APGA’s filing concludes that “Cheniere’s proposal to export domestic LNG to non-FTA nations is inconsistent with the public interest because it will increase domestic natural gas and electricity prices to the detriment of all consumers, inhibit this nation’s ability to forge a path toward energy independence, and undermine sustained economic growth in key manufacturing sectors.”
Excelerate Liquefaction Solutions (ELS), a wholly-owned subsidiary of Excelerate Energy, has filed an application at the U.S. DOE to export up to 10 MTPA (approximately 1.33 Bcf/d) for a 20-year period.
ELS is seeking authorization to export LNG from the proposed Excelerate Liquefaction Project to be located in Calhoun County, Texas to any country with which the United States of America does not now, or during the term of the license requested will not, have a Free Trade Agreement (FTA) requiring the national treatment for trade in natural gas; that has, or in the future develops, the capacity to import LNG; and with which trade is not prohibited by U.S. law or policy.
This application represents the second part of ELS’s two-part export authorization request. On May 25, 2012, ELS filed in DOE/FE Docket No. 12-61-LNG its application requesting long-term, multi-contract authorization to export up to 10 MTPA of domestically produced LNG for a 20-year period commencing the earlier of the date of first export or seven years from the date authorization is granted by DOE/FE.
ELS requested that such long-term authorization provide for export to any country with which the U.S. currently has, or in the future may enter into, a FTA requiring national treatment for trade in natural gas, and which has, or in the future develops, the capacity to import LNG.
ELS requested authorization to export LNG on its own behalf and also as agent for other parties who hold title to the LNG at the time of export. DOE/FE granted this authorization to ELS in Order No. 3128.
If, in addition, this application for authorization to export to non-FTA Countries is granted, the combined effect of the DOE/FE Order addressing this Application and Order No. 3128 will be to authorize ELS to export up to 10 MPTA (equivalent to approximately 1.33 Bcf/d or approximately 502 million MMBtu per year) of domestic natural gas as LNG to any country with which trade is not prohibited by U.S. law or policy.
As such, grant of this application would not increase the total amount of natural gas that ELS would be entitled to export, it would only broaden the range of countries to which such natural gas could be exported.
- Trouble in China for U.S. LNG Exports? (investorplace.com)
Main Pass Energy Hub filed an application with the U.S. DOE for a long-term, multi-contract authorization to export up to 24 million metric tons per annum (MTPA) of domestically produced LNG.
The company seeks this authorization for a 30-year period commencing on the earlier of the date of first export or eight years from the date the requested authorization is granted.
The company seeks authorization to export domestically-produced LNG from existing and new facilities that it intends to modify, build, and operate, located in Federal waters in Main Pass Block 299, 16 miles offshore of Louisiana (MPEH™ Deepwater Port) to any country with which the U.S. has, or in the future may have, a Free Trade Agreement (FTA).
- Corpus Christi, TX: Cheniere files permits to build terminal, export LNG (appliedagrotech.net)
- Pro-LNG Export Group Urges Chu to “Think A Little Differently” (mb50.wordpress.com)
CORPUS CHRISTI — Cheniere Energy has filed for permits from the federal government to build its proposed liquefied natural gas terminal in San Patricio County.
The company’s subsidiary, Corpus Christi Liquefaction, applied this past week with the Federal Energy Regulatory Commission, or FERC, to build and operate the terminal along the La Quinta Channel near the Sherwin Alumina plant.
Liquefied natural gas, or LNG, is gas that is supercooled to liquid form for shipping. Cheniere then would export the product overseas.
The terminal — worth in excess of $10 billion — would feature storage tanks, docks and three liquefaction trains, or chilling facilities, each capable of processing millions of tons of natural gas.
Cheniere proposes processing about 1.8 billion cubic feet per day of LNG at the facility, drawn from sources including the gas-rich Eagle Ford Shale formation about 65 miles northwest of Corpus Christi.
The project includes a 23-mile pipeline that will tie in with the regional pipeline network.
Cheniere has more than 660 acres along the San Patricio County shoreline available for development, including a 52-acre piece under lease from the Port of Corpus Christi.
“After an eight month pre-filing process with the FERC, we have determined that our site at Corpus Christi meets all of the requirements of an attractive liquefaction project,” Charif Souki, chairman and CEO of Cheniere, said in a statement.
Cheniere once considered an LNG import facility at the same location. The import project received full approval from the federal government before plans were shelved because of market shifts.
That prior approval may help Cheniere with certain parts of its new export project during the approval process, company spokesman Andrew Ware said.
Company officials anticipate the terminal is on target to begin operation in late 2017.
Cheniere also applied for permission from the U.S. Department of Energy to export as much as 15 million tons per year of LNG from the site.
If approved, the department’s set of permits would allow Cheniere to export to all countries the U.S. has free trade agreements with and those it doesn’t, the company announced.
Due to an oversupply of natural gas in the U.S., low prices have made gas extraction less profitable.
Producers are flaring gas rather than selling it, which makes a case for exporting LNG to other countries, Ware said.
A condition of the Energy Department’s permission is that the company must prove there is an alternative public need for the gas the terminal will process, Ware said.
Cheniere also has applied for corresponding permits through the Texas Commission on Environmental Quality and air permits from the Environmental Protection Agency. The entire permitting process for the site is being marshaled by federal energy regulators, Ware said.
The company expects to have its regulatory approvals and financing commitments secure by early 2014, with construction beginning about that time.
Commercial agreements could be done by the third quarter of 2013.
- USA: Golden Pass Files with DOE to Export LNG (appliedagrotech.net)
Christopher Helman, Forbes Staff
I’m based in Houston, Texas, energy capital of the world.
Paul Buhlman swears the president’s ban on deepwater drilling killed his oil company. The whole story is a bit more complex.
(This story will appear in the Sept. 11, 2012 issue of Forbes Magazine)
When I get Paul Bulmahn on the phone rumors are swirling that he’s just days from putting his company, ATP Oil & Gas, into Chapter 11. He can’t confirm it yet, but he wants to make one thing perfectly clear: If it does come to bankruptcy (which it did on August 17) it isn’t his fault. The founder and chairman of publicly traded ATP (Nasdaq:ATPG), Bulmahn wants the world to know that the Obama Administration—and its illegal ban on deepwater drilling in the wake of the BP disaster—is to blame for the implosion of his company. Not him.
“It is all directly attributable to what the government did to us,” he rails. “This Administration has gone out of its way to create problems for my company, the company that I formed from scratch.” He’s more than angry. Bulmahn, 68, has already brought suit against the U.S. government seeking damages ($68 million to start with) for the 2010 moratorium that shut down deepwater operations in the Gulf of Mexico for the better part of a year. In an earlier case brought by ATP and rig company Ensco, Federal District Judge Martin Feldman ruled in May 2011 that the feds “acted unlawfully by unreasonably delaying action” on drilling permit applications. Still, ATP has a long, winding road to any hope of recovering damages from the government (which says it’s protected from claims by sovereign immunity).
That’s proving disastrous for Bulmahn. While hundreds of companies with operations in the gulf were affected by the government’s decision, perhaps no other was as hard hit as ATP—or as vulnerable. In 2010 the company had completed work on its $800 million deepwater production platform Titan and floated it out to the deepwater Telemark field 160 miles south of New Orleans. Bulmahn planned for Titan to complete drilling the final feet of four wells, hook them up, and let the oil—and the cash—start rolling in.
On April 19, 2010 ATP refinanced and rolled up $1.5 billion in debt into a new bond issue “and celebrated with champagne.” He says that at the time ATP stood a good chance of doubling its oil and gas volumes to 50,000 barrels per day within a year.
But the Deepwater Horizon exploded April 20. “We didn’t foresee an impact. The Titan is 80 miles farther south, and the spill is going to drift to the north,” says Bulmahn. Underwriter JPMorgan agreed, and it closed on the bond offering.
Soon ATP was informed by regulators that it would not be allowed to complete those Telemark wells, even though Titan was already outfitted with all the safety redun- dancies subsequently required for deepwater work. “They closed our spigot on revenues, but didn’t stop our expenses” for interest payments, rig contracts and the like. Bulmahn scrambled to spin off Titan as a subsidiary and borrowed $350 million more against it. ATP posted a net loss of $349 million in 2010.
It hasn’t gotten much better since. Overleveraged, ATP was balanced on a knife edge. The final Telemark wells didn’t get hooked up until earlier this year. Meanwhile, ATP has been burning through cash on what appears to be an ill-advised exploratory drilling campaign off Israel. In the past year ATP has lost $250 million on $600 million in revenues and now heads into bankruptcy, crushed by $2.7 billion in long-term debt and obligations and $300 million in annual interest payments. Bulmahn’s shares used to be worth $400 million; now they’re worthless.
But, say those who know ATP, you can only blame the Obama Administration for so much of the drama. “The moratorium had an effect on a lot of companies, but this is the only one blaming the moratorium two years later,” says an oil executive with direct knowledge of ATP.
Ravi Kamath, high-yield analyst with Global Hunter Securities, has been bearish on ATP for years and had a sell rating on ATP debt since early 2011, when it was trading at 104 cents on the dollar. It’s fallen to 29 cents now. Kamath says ATP’s problems reach far beyond the moratorium. He keeps a spreadsheet with 105 instances from the past decade where he says ATP has overpromised and then underdelivered. “Bulmahn has said lots of stuff that never happened,” says Kamath. “They have 11 years of bad forecasts.”
The first Telemark well was hooked up to Titan before the BP blowout, “but the project was already a year behind schedule and over budget.” Multiyear delays were normal at other ATP fields, too. What’s more, in August 2011 ATP said the third Telemark well was going to deliver 7,000 barrels per day. One month later the well was doing only 3,500. “With their cost of capital it’s just crazy to invest hundreds of millions to build a platform from scratch,” says Kamath. “They live in fantasyland.”
Yet instead of slashing costs and circling wagons, Bulmahn in late 2010 chose to take ATP on an international adventure. “I felt the need to find a way to keep our technically expert people occupied,” he says. That meant forging a deal with Isramco to drill an exploratory well offshore of Israel, near an area that has seen some massive natural gas discoveries. One well was finished in June; drilled to a depth of 14,000 feet it tapped as much as 800 billion cubic feet of gas. Sounds good, but it will be years before the infrastructure can be put in place to harvest it. Meanwhile ATP has $40 million in costs sunk off the coast of Israel.
Bulmahn says he’d like to retire; he owns a horse farm in Florida and has cashed out $100 million in ATP stock over the years (though, he insists, he’s eschewed $7 million in bonuses granted him since 2009). Earlier in 2012 he hired Matt McCarroll as ATP’s new CEO. McCarroll had expanded deepwater operator Dynamic Offshore Resources and sold it to SandRidge Energy for $1.3 billion. Yet after a week at ATP McCarroll left and rescinded his agreement to buy 1 million shares. The belief is that McCarroll was scared off by Bulmahn’s unwillingness to back a complete overhaul of ATP. Trying to salvage the status quo wasn’t an option. “He wasn’t the right fit,” says Bulmahn. McCarroll declined comment.
So what happens to ATP from here? They have already secured $600 million in debtor-in-possession financing, but after first-lien holders like Michael Dell’s MSD Capital are paid off, that won’t get it very far. Analysts say investors holding common shares, preferreds, convertible bonds and unsecured debt will get wiped out. Buyout bids are welcome.
So at this point, legal claims might be the most valuable asset ATP has left. In addition to the case pending against the U.S. government, ATP is pursuing claims against deep-pocketed BP. Who knows? With luck and lawyers, Bulmahn could still strike something.
More from the archives:
- ATP Oil And Gas Files For Bankruptcy, CEO Blames Obama (zerohedge.com)
- Drilling Moratorium Leads ATP to Chapter 11 (gcaptain.com)