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LNG World Shipping

Predicting North America's second wave of LNG-export projects

Mon 16 Oct 2017 by Karen Thomas

Predicting North America's second wave of LNG-export projects
Which will be the winners and the losers among the many proposed North American LNG-export projects?

Riding the new wave of US LNG

After an uncertain start, Donald Trump’s administration looks set to ramp up US exports. The US Department of Energy (DoE) is planning to speed up approvals for small-scale LNG exports to non-free trade agreement (FTA) countries in Latin America and the Caribbean.

Energy secretary Rick Perry has pledged “to unleash American energy”, despite an oversupply of LNG that looks set to stretch into the 2020s. Here, LNG World Shipping weighs up the strengths and weaknesses of the proposed second wave of LNG-export projects and looks at how the first wave is shaping up.

 

Proposed North American LNG-export projects

New wave, 2020-2025

 

Calcasieu Pass, Louisiana, US

Start date: TBC

Volumes: 10 mta

Michael Sabel-led Venture Global LNG plans to export 10 mta from Calcasieu Pass and up to 20 mta from Plaquemines LNG, also in Louisiana. A midscale LNG production project, Calcasieu Pass will comprise up to nine 1.2 mta liquefaction blocks and a jetty for LNG carriers up to 185,000mᶾ. In July, Venture Global headhunted former Total vice-president development Tom Earl as chief commercial officer.

Outlook: no word yet on offtake deals, a final investment decision or construction contracts.

 

Commonwealth LNG, Louisiana, US

Start date: 2022

Volumes: 9 mta

FERC has accepted the final application from Paul Varello-led Commonwealth LNG. The project aims to reach an FID in Q2 2019 and to start construction by the end of that year, starting commercial operations in Q2 2022. The DoE has approved shipments to FTA countries.

Outlook: a dark horse. Where will it find takers?

 

Delfin LNG, Louisiana, US

Start date: 2021-2022

Volumes: 13 mta

Delfin Midstream is positioning its Cameron Parish, Louisiana project as the first floating LNG (FLNG) scheme in the Americas. This year, it signed a deal with shipowner Golar LNG to supply FLNG expertise. Golar is becoming a midstream LNG player, taking equity stakes in floating production projects and supplying them with converted vessels. Golar plans up to four FLNG vessels to deliver “the lowest-cost liquefaction solution in North America”, producing around 3 mta apiece. The partners aim to reach FID on Delfin LNG next year.

Outlook: the pace of progress will reflect the success – or otherwise – of Golar’s first two FLNG projects off West Africa.

 

Driftwood LNG, Louisiana, US

Start date: 2022

Volumes: 26 mta

Backer Tellurian Investments aims to finalise sales and purchase agreements for Louisiana-based Driftwood LNG. Tellurian is led by Cheniere founder Charif Souki. He says Driftwood LNG will shatter a business model based on long-term, fixed-rate contracts. Driftwood LNG will offer cargoes at US$8/mBtu “for an initial 7 million tonnes a year, for contracts of up to eight years, from 2023”, he told Gastech this year.

Outlook: Souki quit Cheniere because his bullish perspective clashed with the energy company’s bearish demand expectations. Team Tellurian has experience and a point to prove.

 

Fourchon LNG, Louisiana, US

Start date: 2022

Volumes: 5 mta

Fourchon LNG plans to export up to 5 mta from Port Fourchon, near Belle Pass in Louisiana, completing the US$888M project in two phases, starting at 2 mta. Owner Energy World is seeking offtake agreements in Asia, but will reserve 500,000 tonnes for domestic use, providing LNG as marine fuel to offshore supply vessels in the Gulf of Mexico via a dedicated berth loading LNG onto carriers of size 180,000m3. This could position Port Fourchon as an LNG supply hub serving the Caribbean. It hopes to start construction late in 2019.

Outlook: a sophisticated business plan positions Port Fourchon as a hub for LNG-fuelled vessels for the Americas.

 

G2 LNG, Louisiana, US

Start date: TBC

Volumes: 15.4 mta

Backed by a former state governor, this US$11Bn project is Louisiana’s fourth-largest capital investment scheme. FERC terminated its application for permits earlier this year, after G2 scaled up its proposal, adding 200 hectaresand plans for small-scale exports to Latin America and the Caribbean. G2 intends to apply again.

Outlook: despite powerful backers, this Port Fourchon-like project still has ground to make up.

 

Golden Pass LNG, Texas, US

Start date: TBC

Volumes: 15.6 mta

Jefferson County-based Golden Pass has powerful backers in energy giants Qatar Petroleum, ConocoPhillips and ExxonMobil. This US$10Bn project is the cornerstone of Qatar’s plan to build a global LNG portfolio, split between domestic and international production. FERC approved the Golden Pass Products venture in January.

Outlook: this project may lead the pack, given its energy industry backing and strategic importance..

 

Jordan Cove, Oregon, US

Start date: 2024

Volumes: 7.8 mta

Veresen-backed Jordan Cove LNG is gathering momentum. In July, it awarded the EPC contract to KBJ – a joint venture between Kiewit Energy, Black & Veatch Construction and JGC US Projects. It also announced that the deepwater terminal at Coos Bay on the US west coast will use B&V’s Prico technology. Expect the US$10Bn project to reach an FID in 2019, if discussions with prospective offtakers go to plan.

Outlook: Jordan Cove should become the first LNG-export project on the US west coast. The question is, how soon?

 

Lake Charles LNG, Louisiana, US

LNG Canada, British Columbia, Canada

Start date: on hold

Volumes: 16.45 mta/24 mta

Having taken over BG last year, Shell is focusing on cutting costs as it absorbs the business. Shell has halted new LNG FIDs. When that changes, it plans to reach FID on Sakhalin III in eastern Russia first. North America export projects Lake Charles LNG and LNG Canada have slipped down Shell’s list of priorities.

Outlook: expect a much tighter market before Shell fires up these two projects.

 

Magnolia LNG, Louisiana, US

Start date: TBC

Volumes: 8 mta

LNG Ltd-backed Magnolia LNG is a midscale project based at Lake Charles in Louisiana, comprising four trains producing up to 2 mta each. It has a 20-year agreement to source feed gas using the Kinder Morgan Louisiana pipeline. Meridian LNG has agreed capacity rights for up to 2 mta, but Magnolia needs additional 20-year offtake agreements to reach an FID.

Outlook: an FID may be some way off.

 

Monkey Island LNG, Louisiana, US

Start date: 2022

Volumes: 15.75 mta

Southern California Telephone Co subsidiary Monkey Island LNG hopes to reach an FID on its Cameron Parish project in Louisiana by year-end 2020. The company has agreed a 20-year, fixed-price agreement to source natural gas and has secured export approval to ship LNG to FTA countries. The proposed project comprises three trains of 4 mta each. Monkey Island LNG claims to have agreements for a third of its output, from interests including China-based terminal owner the Jovo Group.

Outlook: China presents an intriguing angle for the second wave of US export projects. China didn’t back or buy from the first wave.

 

Port Arthur LNG, Texas, US

Start date: TBC

Volumes: 13.5 mta

The FERC has approved LNG exports from Port Arthur LNG to FTA countries. Owners Sempra Energy and Woodside Petroleum signed a non-binding memorandum of understanding this year with LNG buyer Kogas for this Texas-based project. Sempra hinted that Kogas may also take an equity stake.

Outlook: analysts tip Woodside to press ahead with mid-term LNG projects. Buy-in from Kogas could clinch this deal.

 

Rio Grande LNG, Texas, US

Start date: 2020

Volumes: 27 mta

Texas-based NextDecade claims to have contracted non-binding sales agreements for 30 mta with buyers in Asia and Europe. One prospective taker is Ireland, where Kathleen Eisbrenner-led NextDecade is working on an LNG-import project with John Frederiksen-backed Flex LNG and the port of Cork. Innisfree LNG aims to position a floating storage and regasification unit (FSRU) in Ireland’s southern port. In September, the US$20Bn Rio Grande project at Brownsville in Texas won approval from the US DoE to export to FTA countries.

Outlook: NextDecade has a powerful shipping partner that can help prospective buyers with their import infrastructure.

 

Woodfibre LNG, British Columbia, Canada

Start date: 2020

Volumes: 2.1 mta

Singapore-based RGE has had protracted discussions with the Squamish Nation over its proposed British Columbia LNG-export project. In July it won approval for revised designs for the project. Now that Shell has halted LNG Canada, above, and Petronas axed its US$32Bn, 12.8 mta Pacific Northwest project, Woodfibre LNG may well become Canada’s first live LNG-export project. It hopes to start construction in the new year.

Outlook: Woodfibre will pioneer Canadian exports. A lot stands or falls on this project’s success.

 

North American LNG-export projects under construction

First wave, 2017-2019

 

Sabine Pass LNG, Louisiana, US

Start date: February 2017-2019

Volumes: 24 mta

As the first LNG-export project off the blocks in the lower 48 states of the US, Sabine Pass has blazed a trail for its rivals, completing its first four of six construction phases in record time. Owner Cheniere will complete the project’s fourth 4.5 mta train by year-end. Train three started production in March and the fifth is under construction. Cheniere has contracted six deals, covering 19.75 mta from trains one to five. It has not yet reached an FID on number six. By the end of July, Sabine Pass had loaded more than 160 cargoes.

 

Cameron LNG, Louisiana, US

Start date: 2019

Volumes: 15 mta

In August, Sempra announced that it will delay the start date of Cameron LNG to 2019. Sempra LNG & Midstream owns the three-train, US$10Bn project with Mitsubishi/NYK Lines joint venture Japan LNG and Engie.

 

Cove Point, Maryland, US

Start date: commissioning cargoes by year-end

Volumes: 5.25 mta

Dominion Energy expects the US$3.8Bn Cove Point LNG project to start production in the new year, on schedule. All cargoes from the Maryland-based project are contracted under 20-year supply deals to an affiliate of India-based GAIL and to Japan’s Sumitomo and Tokyo Gas.

 

Elba Island LNG, Georgia, US

Start date: 2019

Volumes: 2.5 mta

Construction started a year ago on Elba Island, Georgia, a project that aims to start production in 2019. In March, infrastructure giant Kinder Morgan sold its 49% stake in Elba Liquefaction Co to investment funds managed by EIG Global Energy Partners, forming a joint venture to drive the US$1.3Bn project. Elba Island has contracted its entire output to Shell.

 

Corpus Christi LNG, Texas, US

Start date: 2019

Volumes: 22.5 mta

Cheniere-backed Corpus Christi LNG is due to launch its first 4.5 mta train in 2019 and its second in 2020. Cheniere plans up to five trains, but has yet to reach an FID on number three. However, its first two trains are fully contracted to buyers including Pertamina, Gas Natural Fenosa, Endesa, Iberdrola, Woodside, EDF and Portuguese energy firm EDP.

 

Freeport LNG, Texas, US

Start date: 2019

Volumes: 13.2 mta

Freeport LNG Development partners CB&I, Zachry and Chiyoda are investing some US$14Bn in this three-train project at Quintana Island. They have also applied to the FERC to build a fourth train to produce 5.1 mta. Freeport LNG has contracted 13.4 mta under use-or-pay liquefaction tolling agreements with Japan-based JERA, Osaka Gas and Toshiba, with BP Energy and with SK E&S LNG of South Korea.