Cheniere eyes sanctioning new Texas LNG train next year
Cheniere Energy said it plans to make a positive investment decision next year on a planned third liquefaction train at the Corpus Christi LNG export terminal in Texas.
"I have a whiteboard in my office with a to-do list on it, and the only thing on that to-do list is to FID Corpus Christi train 3," Cheniere chief executive Jack Fusco said today on an earnings call. An FID refers to a final investment decision.
Cheniere is building two trains and associated facilities at Corpus Christi for $11bn. Each unit would have peak capacity of 5mn t/yr, equivalent to 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr. The two-train project is 72pc complete and scheduled to start operating in 2019.
The Houston-based company has said it can build a similar-sized third train at a unit cost of $500-$600 per tonne of annual production, or about $2.25bn-$2.7bn for the baseload output. The third train would be cheaper by using existing infrastructure.
Cheniere signed some 20-year offtake deals for train 3 before oil prices dropped in mid-2014, but not enough to finance the unit. The company is negotiating with some large Asian utilities to sell more output from train 3, including potentially finalizing a preliminary agreement reached last week with China's state-owned CNPC.
Fusco said he is "guardedly optimistic" the CNPC agreement can be finalized early next year, but that deal is not necessary for Corpus Christi train 3 to move forward. Cheniere will soon ask the US Federal Energy Regulatory Commission for authorization to do some preliminary work for train 3 in anticipation of the investment decision, he added.
Six LNG export terminals are being built in the US that would have combined peak capacity of 73.5mn t/yr, including Cheniere's 25mn t/yr Sabine Pass LNG terminal in Louisiana. But it has been difficult for new US projects to sign customers since oil prices plummeted in mid-2014. The economics of US LNG exports are based on a wide differential between domestic gas prices and global oil prices, as most long-term Asian LNG contracts are linked to oil prices.
Cheniere is confident that it can secure more customers for Corpus Christi train 3 primarily because oil prices have started to climb, recently reaching the mid-$50s/barrel. Spot LNG prices and Asian demand have been higher than most analysts expected, but the spot market is not liquid enough to finance long-term deals, Fusco said.
"Our focus right now on Asia and CNPC is because it could be a real game-changer for the company as a whole," Fusco said. "So while we keep talking about Corpus 3, the demand forecast in Asia, and specifically in China, can double the size of our business. So we're happy taking smaller steps with Asian counterparties to get them comfortable with us and our ability. But the end goal for us is to radically transform our business."
Cheniere delivered six cargoes from Sabine Pass to Europe in the third quarter, but all of those went to premium southern European markets, indicating that buyers are willing to pay more than the netback price to northwestern European hubs, said Cheniere chief commercial officer Anatol Feygin.
Latin America and Asia received the majority of Sabine Pass shipments in the third quarter, and Mexico is expected to remain a strong market for Sabine Pass at least until the end of the year, Fegyin added.
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NSTA fines Neo Energy for North Sea methane venting
NSTA fines Neo Energy for North Sea methane venting
London, 18 April (Argus) — UK offshore regulator the North Sea Transition Authority (NSTA) has fined UK upstream firm Neo Energy £100,000 for breaching its methane venting permit at North Sea fields. The company emitted 1,200t of methane in excess of its permit from the Donan, Lochranza and Balloch fields in the first nine months of 2022. Neo had permission to vent 378t of methane from installations at these fields in that year, but incorrectly assigned volumes vented through unlit flares to its flaring consent, the NSTA found. Neo showed a "lack of oversight" by failing to detect the licence breach for seven months, NSTA said. The company reached its annual limit by 21 March 2022, but continued venting without authorisation until October 2022. The company said it did not update its flare and vent allocation process to reflect NSTA guidance updated in 2021, and as such was still assigning its flaring and venting according to previous guidance. Neo becomes the fourth company to be fined by the NSTA over breaches relating to flaring and venting consents. The regulator in 2022 sanctioned Equinor and EnQuest and last year fined Spanish utility Repsol for consent breaches. The four companies have been fined a total of £475,000 for the breaches. And the regulator in February had four more investigations under way for breaches of vent consents. Neo Energy's fine is equivalent to £2.98/t of CO2e emitted, assuming a global warming potential of methane that is 28 times that of CO2 on a 100-year time scale, compared with a UK emissions trading system price of £34.40/t of CO2e on 17 April. The UK offshore industry targets a 50pc reduction in production emissions of greenhouse gases by 2030, from a 2018 baseline. And it intends to end all routine venting and flaring by that year. The regulator last year warned that "further, sustained action" would be needed to reach the 2030 emissions reduction goal. Methane emissions from offshore gas fell in recent years, to 1mn t in 2022 from 1.6mn t in 2018, according to NSTA data. Roughly half of methane emissions in the sector in recent years has been produced by venting, while flaring makes up about a quarter of the emissions. The UK government is a member of the Global Methane Pledge group of countries that aims to reduce methane emissions by 30pc by 2030 from a 2020 baseline. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US LNG growth seen stoking price volatility
US LNG growth seen stoking price volatility
Ponte Vedra Beach, 17 April (Argus) — Natural gas prices in the US and globally will face greater volatility because of LNG export expansions along the US Gulf Coast, according to speakers at the Southeast LDC Gas Forum in Ponte Vedra Beach, Florida. LNG export capacity from the US, already the largest provider of LNG into the global market, is set to expand in the coming years, putting an important source of global supply in the path of hurricanes and exposed to pipeline disruptions from key supply areas such as the Permian basin in west Texas and southeastern New Mexico. US baseload LNG export capacity was forecast to increase by the end of 2025 to about 16.7 Bcf/d (473mn m³/d), up by 46pc from the 11.4 Bcf/d of capacity at the end of 2023, according to the US Energy Information Administration (EIA). US LNG production by 2030 will meet about 5pc of global gas demand and 30pc of global LNG demand, Jill Davies, general manager of North America LNG Trading at Shell Energy, told attendees today at the conference. Most of those supplies will depart the US from the Gulf coast. That means a disruption in US exports could cause global prices to rise or domestic prices to crater. More pipelines and storage would allow LNG export terminals to access supply from different regions, defraying some of the price risk, according to speakers at the conference. The potential price volatility highlights the need for greater US political support for new gas infrastructure, Davies said on the sidelines of the conference. Pipeline projects aiming to connect key producing areas to growing demand centers have failed to clear regulatory hurdles in recent years, raising concerns about the potential for supply growth from prolific fields such as the Marcellus and Utica shales. Prices in the US market can also soar on supply disruptions or plunge on downtime at LNG export terminals. Prices have faced downward pressure this spring from ongoing maintenance at the 2.1 Bcf/d Freeport LNG export terminal in Texas. An extended, eight-month-long shutdown of that terminal that began in the summer of 2022 caused prices to fall by backing up supply into the US market. Producers that gain more exposure to exports and, in turn, the global market could "face a tenuous situation when a hurricane stirs up in the Gulf," Zach Inman, vice president of origination for BP said during a panel discussion Wednesday. By Jason Womack Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Permian gas pipes will shift lower prices east: Panel
Permian gas pipes will shift lower prices east: Panel
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BHP to expand gas-fired West Australia power station
BHP to expand gas-fired West Australia power station
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