U.S. LNG Export Projects On A Bullish Track!

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  • LNG export projects are advancing at a rapid pace with higher volumes from the United States due to shipping demand and long-distance ventures.
  • Cheniere Energy has made a final investment decision (FID) on the construction of the sixth liquefaction ‘train’ at its Sabine Pass export facility in Louisiana.
  • Cameron LNG has confirmed that the first commissioning cargo had been loaded on a ship from Train 1 of its new liquefaction facility in Louisiana.
  • Venture Global disclosed a $1.3 billion equity investment for its proposed Calcasieu Pass project.
  • The multiplier for U.S. LNG exports has been 1.8 ships equating to 38 percent shipping demand due to longer average voyage distance.

According to an article published in Freight Waves, the U.S. continues to solidify its role as a major player in the global liquefied natural gas (LNG) arena though the project continues to tread through the bullish track.

Increase in export projects

Export projects are advancing at a rapid clip – and the higher the volumes from the United States, the better for shipping demand, given longer distances traveled by U.S. cargoes versus those of Australia and Qatar.

FID on liquefaction initiated

On June 3, Cheniere Energy confirmed that it had made a final investment decision (FID) on construction of the sixth liquefaction ‘train’ at its Sabine Pass export facility in Louisiana, with completion slated for 2023 (export project facilities, which liquefy the natural gas for transport by ship in the form of LNG, are constructed in distinct units known as trains).

Cheniere also confirmed funding progress for Train 3 at its facility in Corpus Christi, Texas; FID is expected in 2020.

Maiden cargo commissioning facility

On May 31, Cameron LNG confirmed that the first commissioning cargo had been loaded on a ship from Train 1 of its new liquefaction facility in Louisiana. Cameron is a joint venture between Sempra Energy, Total, Mitsui & Co. and Japan LNG Investment (a company jointly owned by Mitsubishi Corporation and NYK).

NextDecade, which has proposed the Rio Grande LNG export project in Brownsville, Texas, announced on May 28 that it had signed engineering, procurement, and construction contracts with Bechtel for Trains 1-3, and said that an FID is expected by the end of September, with a targeted start-up of 2023.

The U.S. continues to solidify its position

The U.S. continues to solidify its role as a major player in the global liquefied natural gas (LNG) arena. Export projects are advancing at a rapid clip – and the higher the volumes from the United States, the better for shipping demand, given longer distances traveled by U.S. cargoes versus those of Australia and Qatar.

On June 3, Cheniere Energy confirmed that it had made a final investment decision (FID) on construction of the sixth liquefaction ‘train’ at its Sabine Pass export facility in Louisiana, with completion slated for 2023 (export project facilities, which liquefy the natural gas for transport by ship in the form of LNG, are constructed in distinct units known as trains).

Cheniere also confirmed funding progress for Train 3 at its facility in Corpus Christi, Texas; FID is expected in 2020.

Joint ventures on the rise

On May 31, Cameron LNG confirmed that the first commissioning cargo had been loaded on a ship from Train 1 of its new liquefaction facility in Louisiana. Cameron is a joint venture between Sempra Energy, Total, Mitsui & Co. and Japan LNG Investment (a company jointly owned by Mitsubishi Corporation and NYK).

NextDecade, which has proposed the Rio Grande LNG export project in Brownsville, Texas, announced on May 28 that it had signed engineering, procurement, and construction contracts with Bechtel for Trains 1-3, and said that an FID is expected by the end of September, with a targeted start-up of 2023.

Calcasieu Pass project

Also on May 28, Freeport LNG announced it had received the necessary export authorization for its fourth train from the U.S. Department of Energy. In yet another announcement that same day, Venture Global disclosed a $1.3 billion equity investment in its proposed Calcasieu Pass project.

Randy Giveans, the shipping analyst at investment bank Jefferies, highlighted the multiple positive developments for U.S. LNG projects in a new client note, adding, We remain bullish on LNG shipping rates for the remainder of 2019 and 2020 as several new liquefaction facilities come online.”

Currently active U.S. projects

U.S. projects presently have a total LNG export capacity in operation of 31.75 million metric tons per annum (mtpa):

  • Sabine Pass Trains 1-4 (4.5 mtpa each);
  • the 5.25 mtpa Cove Point terminal operated by Dominion Energy in Maryland;
  • Corpus Christi Train 1 (4.5 mtpa); and
  • Train 1 at Cameron LNG (4 mtpa).

An additional 54.6 mtpa of capacity has already reached FID and is or will soon be under construction:

  • Sabine Pass Trains 5-6 (4.5 mtpa each);
  • Corpus Christi Train 2 (4.5 mtpa);
  • Elba Island in Georgia (2.5 mtpa);
  • Cameron LNG Trains 2-3 (4 mtpa each);
  • Freeport LNG Trains 1-3 (5 mtpa each); and
  • Golden Pass in Texas (15.6 mtpa).

A joint venture between ExxonMobil and Qatar Petroleum that got the green light in February.

Of the projects that have reached FID, 34.5 mtpa of aggregate capacity is scheduled to come online in 2019 or 2020. In other words, U.S. export capacity is virtually guaranteed to more than double over the next two years.

Even more projects could reach FID by the end of 2019, which could promise a further surge in future capacity. The projects seen as most likely to move ahead are NextDecade, which is proposing three initial trains with a capacity of 4.5 mtpa each; Venture Global’s 10 mtpa Calcasieu Pass project in Louisiana; Tellurian, with its 27.6 mtpa Driftwood project in Louisiana; and Train 4 of Freeport LNG (5 mtpa).

If all of those went forward, it would add another 56.1 mtpa in export capacity. And on top of that, there are numerous additional projects on the drawing board behind those front-runners.

Positive ventures for LNG shipping

The recent flurry of activity on the U.S. LNG export front implies positive future momentum for LNG shipping demand.

U.S. exports are an important demand driver for publicly listed ship owners that have exposure to LNG shipping spot rates, including GasLog Ltd, GasLog Partners, Golar LNG Ltd, and Flex LNG, which is expected to debut on NYSE through a direct listing this month.

Because a considerable proportion of U.S. exports go to buyers in Asia, requiring a very long-haul voyage transiting the Panama Canal, U.S. outbound volumes soak up more ship capacity than exports from other sources.

During his company’s first-quarter conference call with analysts, GasLog Partners’ chief executive officer Andrew Orekar pointed out that the historical global multiplier is 1.3 ships of demand per ton of exports per year. Since LNG exports began from the U.S. Gulf coast in 2016, the multiplier for U.S. LNG exports has been 1.8 ships, said Orekar. That equates to 38 percent more shipping demand due to the longer average voyage distance.

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Source: FreightWaves

1 COMMENT

  1. NextDecade will be lucky to survive into 2020 (the next Decade)

    It has been accused of lying to FERC about the amount of LNG of LN it plans to produce at its proposed Rio Grande LNG project because the amount stipulated on its April 2019 Final Environmental Impact Statement is significantly less than the amount its Corporate Presentations are telling investors the project will produce.

    On 05-31-2019, the Sierra Club and others asked FERC to prepare a Supplemental Environmental Impact Statement on the project because the significantly higher production will significantly increase the environmental impact of the project. NextDecade submitted a 06-03-2019 response to the charge, but its present Corporate Presentation is still telling investors the project will be producing a larger amount — making its future Rio Grande LNG production, combined with its future Galveston Bay LNG production, will be greater than and more profitable than Chenier’s presently operating projects.

    Which add a second question to the first: Has NextDecade been deceiving investors with over-inflated promises as well as trying to pull a fast one on FERC.

    On 07-17-2019, the Town of Laguna Vista TX also asked FERC to do a Supplemental on the project.

    NextDecade can’t afford the delay the Supplemental would entail. It was incorporated in November 2010. Back in March 2015, it said it expected FERC approval of the project in February 2017, expected to start construction in June 2017, and expected to be operational by the 4th Quarter of 2020 with 6 liquefaction production trains.

    On 11-27-2017, NextDecade announced that it expected to receive final FERC authorization to start construction “in the second half of 2018.”

    Now its Corporate Presentation says the FERC “Federal Authorization Deadline is Feb 25,” that it will make its Final Investment Decision “End 3Q 2019, and that it will start commercial operation with 2 and possibly 3 trains “in 2023.” So far, it has only one solid customer for 2 mtpa — less than half the output of a single train.

    Back in July 2017 when NextDecade first got on the Nasdaq exchange, it’s NEXT stock was going for $8.50 a share and had a 1 year target price of up to $12.00. Now it has a 1 yr target of $5.875 (lower than its 52 week high of $6.86).

    Check out SAVE RGV from LNG on Facebook.

    — John Young, MS (Psychology), MSW (Social Work), Retired
    San Benito TX
    Member of SAVE RGV from LNG since May 2014

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