Two more US Gulf coast LNG projects get FTA licenses

The US Department of Energy (DOE) has authorized two more proposed LNG export projects along the US Gulf coast to send supplies to countries that have free trade agreements (FTAs) with the US.

One of the planned projects is large and the other is small.

The DOE issued a 20-year license to the Galveston Bay LNG, which would be located in Texas City, Texas, southeast of Houston, to export up to 16.5mn t/yr, equivalent to 2.15 Bcf/d (22.2bn m³/yr) of gas. LNG exports to FTA nations are presumed to be in the national interest so the DOE must quickly authorize applications for such exports without modification.

Non-FTA licenses are essential for large projects such as Galveston Bay as most LNG-consuming nations do not have FTAs with the US. The DOE must evaluate whether such exports are in the national interest before issuing non-FTA licenses, but studies commissioned by the agency have said that non-FTA exports at any level would benefit the US.

The DOE will consider Galveston Bay's application to export up to the same volume to non-FTA nations if the project gets environmental clearance from the US Federal Energy Regulatory Commission (FERC), but it has not yet applied for FERC construction approval.

Galveston Bay is being developed by The Woodlands, Texas-based NextDecade, which is also developing the proposed 27mn t/yr Rio Grande LNG export project near Brownsville, Texas, scheduled to come on line in the early to mid-2020s. The Rio Grande terminal would cost about $13.8bn, excluding financing, contingencies and the associated 130-mile (209km) Rio Bravo pipeline.

Galveston Bay would include three 5.5mn t/yr liquefaction trains, four 200,000m³ (4.1 Bcf) storage tanks and an 85-mile pipeline to the Katy Hub west of Houston that could supply gas from producing basins throughout the country. A cost estimate or timeline for the project was not provided.

The DOE also authorized the small Blue Water Fuels project to export for up to 25 years up to a gas equivalent of 2.715 Bcf/yr, or about 7mn cf/d, of LNG in ISO containers to FTA nations. The project, which is owned by Center, Texas-based HR Nu Blu Energy, did not apply for a non-FTA license.

The LNG would come from a liquefaction unit that Nu Blu completed last year in Port Allen, Louisiana, with production capacity of 30,000 USG/d, equivalent to about 2.5mn cf/d (71,000m³/d) of gas and storage capacity of 120,000 USG. ISO tanks would be filled with LNG at the facility and trucked to various ports in Louisiana, Mississippi or other states, where they would be loaded on vessels for export.

Nu Blu does not have long-term supply contracts and built the plant on a speculative basis, with the goal of primarily exporting LNG to the nearby Caribbean market. It would buy gas from Enterprise Products' Acadia pipeline at a delivery point in Port Allen.

The DOE has now approved FTA exports of up to a gas equivalent of 57.1 Bcf/d from dozens of projects, far more than the LNG export capacity that would likely be built in the US. It has issued 28 non-FTA licenses with a combined volume equivalent to 21.3 Bcf/d of gas. A number of the licenses are for small projects or larger projects with multiple licenses.

Six large LNG projects are being completed in the contiguous US with combined baseload capacity of about 60mn t/yr and combined peak capacity of about 70mn t/yr.