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Corpus Christi, TX: Cheniere files permits to build terminal, export LNG

By Mike D. Smith
Posted September 4, 2012 at 11:02 p.m.

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.

© 2012 Corpus Christi Caller Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Norwegian LNG on Way to U.S.

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The latest LNG cargo to be loaded at Norway’s Hammerfest terminal has been dispatched to United States, according to shipping data.

The 165,500 m3 Maersk Meridian departed Hammerfest yesterday, and is expected to arrive at U.S. Sabinne Pass terminal on February 17.

Statoil said on January 20 that it has resumed production at the Hammerfest LNG plant following a temporary shutdown due to rupture of a firewater line.

The Hammerfest terminal has a capacity to produce 4.3 million mt/year of LNG.

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An emerging player

LMOGA News

Louisiana could see additional jobs, new market prospects and increased tax revenue as a result of export opportunities.

When it comes to natural gas, the United States has been largely an importer. But export is the new game, and Louisiana is emerging as the biggest player.

Cheniere Energy, which owns the Sabine Pass Terminal in Cameron Parish, received the go-ahead in May from the U.S. Department of Energy to export liquefied natural gas to any company not prohibited by law.

That made Sabine Pass, which opened in 2008 as a terminal to take in shipments from overseas, the first bidirectional LNG facility in the country, capable of importing and exporting the super-chilled liquid.

Cheniere announced last fall that it would invest $6.5 billion in the Sabine Pass terminal—located less than four miles from the Gulf of Mexico on the widest point on the Sabine River navigation channel—marking one of the largest capital investments in Louisiana. Construction on the new facility will begin this year, with new, permanent employees being hired in 2014.

The company will open the liquefaction facility in 2015, and the second phase of the project is expected to be completed by the end of 2018. It has already signed three long-term contracts for those future exports.

A few months after that announcement came word that Lake Charles Exports, a subsidiary of Houston-based Southern Union Co. and BG Group, received approval to ship exports from its Trunkline terminal. Trunkline was authorized to import LNG in the late 1970s and opened in 1981.

BG Group is one of the top 10 natural gas marketers in the country, with major interests in the Haynesville and Marcellus shale plays, as well as other production in Louisiana. Southern Union’s preliminary cost estimate to modify its terminal to liquefy about 2 billion cubic feet of natural gas per day is estimated at $2 billion to $3 billion.

Louisiana Mid-Continent Oil and Gas Association President Chris John says it wasn’t too long ago when companies were investing billions of dollars building massive facilities to import natural gas into the state. The business model now is reversed, and companies are remaking their capabilities.

“The need and demand for natural gas in the United States was projected to grow, and we didn’t have enough of it,” he says. “Boy, has that all taken a 180-degree turn. The needle on the natural gas industry has gone from ‘we don’t have enough of it’ to now ‘we’re awash in it.’”

Louisiana Economic Development Secretary Stephen Moret says the state expects to see even more massive capital investment projects associated with the Haynesville Shale announced over the next few years.

“The economic benefits of historically low, stable natural gas prices in Louisiana have only begun to be realized,” he says.

Driving forces

The expanded harvesting of shale formations in Louisiana and elsewhere in the country has led to an oversupply of natural gas, making exports more attractive. Six LNG export proposals around the country currently are awaiting approval from regulators as producers look for ways to move their low-cost gas overseas.

In 2010, the latest year for which statistics are available, marketed production of natural gas reached 22.7 million cubic feet, the highest recorded total since 1973. Storage inventories reached a record 3,847 billion cubic feet. And the average natural gas rig count rose 18% over the previous year, from 799 to 942, according to the Energy Information Administration‘s Natural Gas Annual.

Technological advances in drilling and well-completion techniques continue to push the break-even point of production down, making it economical despite low prices. Even as the focus has shifted away from drilling solely for natural gas, increased interest in drilling the shale plays for oil still results in natural gas as a byproduct, continuing to add to the glut in the market.

Not surprisingly, imports have reached a 16-year low, accounting for just 11% of the nation’s natural gas consumption. At the same time, LNG exports—mostly to Canada—doubled in 2010.

“The main reason for the shift itself has been this big supply growth that is not being met adequately, at least domestically, with a corresponding increase in demand for natural gas,” says David Dismukes, associate director and professor at the LSU Center for Energy Studies. “Right now, we’re at record supply production levels, and the conventional wisdom, at least in the near term, is that those levels aren’t going down. Export becomes the next-best alternative.”

Big player

If planned liquefied natural gas conversion projects happen, U.S. exports could have significant impact on world energy politics, with Louisiana likely the biggest player, at least early on.

“It’s good for us,” John says. “The more that we become exporters of natural gas, the more the demand is going to increase, which obviously the price follows. And once the price follows, you’ll see increased activity amongst all of these shale plays. It’s very good for our industry that we are finding different markets, and it’s an incredible turnaround for the United States to be an energy exporter in the field of natural gas.”

The nation could end up exporting as much as one-fifth of its gas, roughly 12 billion cubic feet of gas per day—equivalent to almost 90% of European sales from Russia, the world’s largest exporter, according to the World Fact Book.

Demand for America’s natural gas exports is expected to be high. Japanese imports to replace nuclear power after the Fukushima Daiichi disaster are already at record levels, and the country’s acceptance of new plants is expected to wane. There’s also been a 27% jump in China’s first-half purchases. Western Europe and India continue to rely heavily on imports, particularly from Russia and the former Soviet republics.

At the same time, the world’s spare production capacity shrank about 50% this year as consumption grew, and is projected to continue declining through 2014.

Dismukes says the fact that many entities have been willing to sign long-term contracts years before the export facilities are even operating indicates “there’s a genuine and bona fide interest in this and people are willing to put their money where their mouth is on it.”

What it means for Louisiana is, of course, additional jobs, new market opportunities for in-state producers and additional tax revenue for communities where the export facilities are located, among other benefits.

There also are all those pipelines needed to move the natural gas to the export terminals. John says the industry is already seeing an enormous amount of projects on the book of networking a lot of the plays into major pipelines that are already in existence.

“From a standpoint of surveyors, welders and all of the workforce that is needed to lay pipelines, that is frankly exploding right now across Louisiana and from there, connecting all over the country,” he says. “You are seeing a lot of preparations in anticipation of the growth of all this natural gas. The future is very bright for Louisiana.”

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Total Concerned With Possibility that Sabine Pass LNG Export Permit Could Be Rescinded

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Posted: December 21, 2011

A report in “Poten & Partners – LNG in World Markets” suggests that Total remains interested in an LNG export deal with Cheniere Energy at the Sabine Pass terminal, but that the French company is concerned about contractual provisions that would require Total to pay a fixed charge for two years following declaration of force majeure. According Platts LNG Daily [subscription required], force majeure provisions would apply if both of Cheniere’s LNG export authorizations are revoked.

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Buccaneer Signs Gas Sales Deal with ConocoPhillips to Supply Kenai LNG Plant in Alaska

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Buccaneer Energy Limited today said that it has executed a gas sales contract with ConocoPhillips, to supply natural gas to ConocoPhillips’ LNG facility located on the Kenai Peninsula approximately 10 miles north-west of Buccaneer’s 100% owned Kenai Loop project.

The contract with ConocoPhillips commences when Kenai Loop # 1 starts production in December 2011. The contract is expected to conclude on 30 April 2012, with the potential to end earlier, if construction of the Cook Inlet Natural Gas Storage (CINGSA) facility is completed prior to this date.

Once the CINGSA facility is on line, Buccaneer has a gas sales contract in place with ENSTAR – the largest gas utility in Alaska. ENSTAR will purchase the Kenai Loop gas and inject into CINGSA for storage and use at a later date.

Buccaneer said in a statement that is not obligated to sell any gas under the ConocoPhillips contract, however it gives the Company both flexibility and surety as it will allow the Kenai Loop # 1 well to flow continuously from the commencement of production, while being able to sell gas either into the ConocoPhillips gas contract or the daily auction to supply local peak demand requirements during the Northern Hemisphere winter. The daily auction to supply gas does not provide guaranteed daily volumes.

Buccaneer has the ability to sell up to 2.5 BCF to ConocoPhillips under the contract. The pricing as part of the gas sales contract is consistent with recently executed gas contracts.

Buccaneer Director Dean Gallegos said:

This gas sales contract with ConocoPhillips is another milestone for Buccaneer. With secured contracts for the gas produced at Kenai Loop #1 from the time of first production, and the flexibility to be able to sell into the peak demand daily auction market, places Buccaneer in a strong position with substantial cash flows from December 2011 rather than April 2012.

Further, the ability to flow the well continuously will give us the opportunity of assessing the reservoir performance prior to the commencement of the ENSTAR gas contract in April 2012. If the reservoir performs as testing has indicated, it will give us the ability to increase the production rate from the anticipated minimum of 5.0 MMCFD.”

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USA: Cheniere Plans Corpus Christi LNG Export Terminal

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Cheniere Energy has proposed to construct a second LNG export terminal on the U.S. Gulf Coast, according to a filing this week with the federal energy regulator, Reuters reported.

The company plans to build the export terminal at Corpus Christi in Texas, originally the site for a planned liquefied natural gas import terminal with three 160,000 m3 LNG tanks.

The terminal would have the capacity to export 1.8 Bcm of gas per day and could start operations by 2017.

Corpus Christi site is located on 612 acres on the northern coast of the Corpus Christi Bay, along the La Quinta Ship Channel, a deepwater ship channel dredged to 45 feet.

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Golden Pass LNG

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Year constructed:
2009

Major units:
two unloading berths, five full containment storage tanks, vaporization facilities, gas send-out system, ship unloading system, and a natural gas pipeline connecting to existing interstate and intrastate pipelines

Product:
Regasified LNG

Post-project processing capacity:
15.6 million MTA of LNG or 2 billion cubic feet per day of natural gas

Project cost:
$1B

Contractor:
Chicago Bridge & Iron Company N

Located two miles northwest of Sabine Pass, Texas, and 10 miles south of Port Arthur, Texas, the Golden Pass LNG Terminal is situated on the Sabine-Neches Waterway that separates Texas and Louisiana. The LNG terminal will include two ship unloading berths, five full-containment storage tanks, vaporization facilities, and gas send-out and ship unloading systems. The $1 billion contract for engineering, procurement and construction of the project was awarded to Chicago Bridge & Iron Company NV (CB&I) in August 2006. Construction began on the terminal the following month, with operation start-up slated for mid-2009 and total construction completion planned for 2010.

On September 28, 2010, Golden Pass announced that it expected to receive its first LNG cargo during October 2010. The commissioning cargo was en route from Ras Laffan, Qatar via a Q-Flex LNG carrier.

LNG will be shipped to the Golden Pass LNG Terminal primarily from the Ras Laffan 3 and Qatargas 3 projects in Qatar. The terminal will then re-gasify the hydrocarbons. Processing capacity for the terminal is 15.6 million metric tons per year of LNG, which is comparable to 2 billion cubic feet of natural gas a day.

Natural gas will be sent from the Golden Pass LNG Terminal by pipeline to US markets. In addition to the LNG terminal, the project scope includes the Golden Pass Pipeline, which is a 42-inch pipeline that will span 68 miles across four Texas counties and one Louisiana parish to connect with 11 interstate and intrastate pipelines, as well as a short pipeline that will tie-in to the Beaumont industrial area. Start-up for the pipeline coincides with the terminal start-up.

According to the Gulf Times DOHA, the Golden Pass Terminal will receive a third of the gas imports to the US, or 20 million tons, in two to three years of operation start up.

Related Articles

Golden Pass Becomes Fully Operational
May 10, 2011 – Golden Pass LNG Terminal LLC (Golden Pass LNG) announced Tuesday that it has been granted authority by the Federal Energy Regulatory Commission (FERC) to place into service the Phase 2 terminal facilities.

Golden Pass Begins Commercial Ops
Mar 14, 2011 – The Golden Pass LNG Terminal LLC and Golden Pass Pipeline LLC announced Monday that it has been granted in service authority by the Federal Energy Regulatory Commission (FERC) and has commenced commercial operations.

Golden Pass Expects First Cargo Next Month
Sep 28, 2010 – The Golden Pass LNG terminal announced Tuesday that the first cargo to be used for commissioning the facilities is anticipated to arrive during October 2010.

Coast Guard Issues Recommendation Letters for Eight Terminals
Apr 10, 2009 – The U.S. Coast Guard said Friday that it has issued letters of recommendation for eight liquefied natural gas facilities under development on the Gulf Coast.

Startup Delayed for Golden Pass
Dec 19, 2008 – Recently uncovered damage at Exxon Mobil Corp.’s (XOM) $1 billion natural gas import terminal under construction in southeast Texas will delay the facility’s scheduled startup next year.

ExxonMobil: Golden Pass May Face Delay
Dec 12, 2008 – The opening of the Golden Pass liquefied natural gas terminal in the United States will likely be delayed by hurricane damage, while Britain’s South Hook LNG terminal now looks set to open in early 2009, an executive from ExxonMobil said on Thursday.

Port Arthur Pipelines Pass Final Hurdle
Jan 04, 2008 – Two pipelines tied to upcoming industrial projects soon will snake their way through the city with the Port Arthur (Texas) City Council’s stamp of approval.

Port Arthur to Host Hearing on Golden Pass Pipeline Route
Dec 13, 2007 – A 42-inch pipeline running from the Golden Pass LNG facility through Port Arthur, Texas, en route to Calcasieu Parish, La., will be the subject of a Jan. 2 public hearing.

Port Arthur Council Okays Land for Golden Pass
Jul 19, 2007 – The City of Port Arthur, Texas, shed 180 acres of vacant land and another 26 acres of submerged land for the ExxonMobil LNG facility near Sabine Pass.

CB&I Garners LNG Terminal Contract
Aug 01, 2006 – CB&I has been awarded a contract by Golden Pass LNG Terminal LLC for the engineering, procurement, fabrication and construction of a liquefied natural gas (LNG) import terminal located near Sabine Pass, Texas.

FERC Okays Two LNG Import Terminals; Providence LNG Fails on Safety Issues
Jun 30, 2005 – In front of a packed crowd that included some local, state and federal officials Thursday, the last day of Chairman Pat Wood’s term, FERC conditionally approved the Weaver’s Cove LNG import terminal in Fall River, MA, and the Golden Pass LNG terminal in Sabine Pass, TX.

FERC Okays Two LNG Import Terminals; Providence LNG Fails on Safety Issues
Jun 30, 2005 – In front of a packed crowd that included some local, state and federal officials Thursday, the last day of Chairman Pat Wood’s term, FERC conditionally approved the Weaver’s Cove LNG import terminal in Fall River, MA, and the Golden Pass LNG terminal in Sabine Pass, TX.

Interior Takes Aim at FERC’s Assessment of Golden Pass LNG
Apr 11, 2005 – The Department of Interior has said that FERC, in its draft environmental impact statement (DEIS) on ExxonMobil Corp.’s proposed 2 Bcf/d Golden Pass liquefied natural gas (LNG) terminal and associated gas pipeline along the Gulf Coast, failed to adequately assess the project’s impact on endangered species and wetlands.

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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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