LNG OUTLOOK! One Done, One Going Up, Eight Others in the Works

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If you’ve been in Southwest Louisiana any length of time, you’ve undoubtedly heard the term “LNG,” which is short for liquefied natural gas.

Once natural gas is extracted from the ground it’s piped into pressurized trains, cooled to a liquid and shipped around the world in LNG tankers. Once a tanker arrives at its destination, the LNG is regasified and used in manufacturing, as well as in homes for cooking and heating.

Southwest Louisiana was for years an import site for LNG, but a turn in the market several years ago made exporting more profitable. Seeing the opportunity for large returns, companies began announcing plans to build multibillion-dollar export facilities in the region — an industrial hub with ready access to pipelines, workers and the Gulf of Mexico.

One of these companies, Cheniere Energy’s Sabine Pass LNG, has achieved its goal of becoming an exporter, and it’s now the only operating export terminal in the contiguous U.S. Another, Sempra’s Cameron LNG in Hackberry, is expected to start operating in 2019.

Eight others are still in the planning stages. Some, like Magnolia LNG and Lake Charles LNG, have received permits and are waiting on buyers before making a final investment decision. Others are tied up in federal permitting, a lengthy process that includes an in-depth look at each company’s viability and its impact on the environment.

Many are having trouble securing buyers because global demand — although expected to spike in the early 2020s — is still not where it needs to be, resulting in project delays. The current glut, coupled with the low price of oil, has led to lethargy in the market, an attitude these LNG companies hope will soon change.

The American Press reached out to the planned LNG companies for an update on their progress. Contact information for two of them, Louisiana LNG and Live Oak LNG, couldn’t be found. Both were once projects of Parallax Energy — a company led by Martin Houston, who’s now heading up another local project, Driftwood LNG.

The following 10 companies affirmed their commitment to exporting from Southwest Louisiana:

Cameron LNG

Construction on the Hackberry project began in 2014 and is set to wrap up in 2018.

Besides its forerunner, Cheniere, which is already operating, it’s the only local LNG project underway. One reason the two companies have outpaced their competitors is that they already had import facilities, which they continue to maintain.

The only other LNG export company that was an importer was Lake Charles LNG, formerly Trunkline LNG.

Commonwealth LNG

Commonwealth LNG, formerly Waller LNG, is planned for the mouth of the Calcasieu Ship Channel down in Cameron Parish.

It started the prefiling phase with FERC this year and has Department of Energy approval to ship to countries with free-trade agreements, but is still awaiting approval to ship to non-FTA countries.

It expects to start operating in the second quarter of 2022.

Delfin LNG

Delfin LNG — the first offshore LNG project in North America — will set up 45 miles off the Cameron coast, feed gas in from existing pipelines and liquefy it in floating trains.

William Daughdrill, the company’s health and safety director, said the company has an advantage over its competitors because it won’t have the high overhead of maintaining a dredged berth and is more easily accessible to ships.

Additionally, it won’t depend on the ship channel being properly dredged, a costly necessity that doesn’t have a secure source of funding, he said.

Delfin expects to operate in 2021 or 2022 and has signed a joint development agreement with Golar LNG to build and operate the project. Delfin falls under other federal regulators besides FERC. But Daughdrill said the company is nearing the end of the process and expects to reach final investment decision in 2018.

Driftwood LNG

Driftwood LNG might be the newest project, but it’s certainly one of the fastest growing.

The Calcasieu Parish project was founded in 2016 by Martin Houston and Charif Souki after Souki was ousted from his top position at Cheniere. Souki guided Cheniere’s transition from an import to an export company, so he comes with experience.

Driftwood has gotten DOE approval to export to FTA countries and is awaiting non-FTA approval. It finished the prefiling phase and is now going through the FERC process while courting buyers for the offtake.

A merger between parent company Tellurian Investment and Magellan Petroleum made Driftwood a public company earlier this year. It plans to start operating by 2022.

G2 LNG

G2 LNG stands out from the others as the only company based in Louisiana, with offices in Baton Rouge.

It received DOE approval to export to FTA countries and is awaiting non-FTA approval, which CEO Tom Hudson said he expects later this year. It’s undergoing the FERC process and expects to start operating by 2021.

G2 will occupy about 1,250 acres near the mouth of the ship channel, after a 500-acre expansion in March.

Lake Charles LNG

Shell delayed final investment on Lake Charles LNG in August 2016, although the project has gotten approval from both FERC and DOE.

Spokesman Ray Fisher told the American Press that the move was part of a larger decision by Shell to reassess its capital projects.

Shell recently increased the terminal’s export capacity after updating its design. A review of the project is underway by Shell and other industry specialists.

Magnolia LNG

Magnolia LNG is the only project among its peers that’s “shovel ready,” as COO John Baguley put it.

The only thing standing in its way is financing. It has all its permitting from DOE and FERC, as well as a lease on the Calcasieu Ship Channel and an environmental procurement contract. The only other company that hasn’t broken ground yet that has an EPC is Venture Global, which still has to complete the permitting process.

Magnolia’s parent company, LNG Limited, is based in Australia, another global leader in natural gas. Magnolia has a buyer for a quarter of its offtake and is busy trying to persuade global buyers to commit.

Monkey Island LNG

Monkey Island LNG recently changed its name from SCT&E LNG because of how well-received the unique name of its location, Monkey Island, has been worldwide, according to a statement sent to the American Press.

The facility is planned for about 766 acres. It hasn’t started the FERC process, but does have approval from DOE to export to FTA countries. It expects to begin operating in 2023.

Sabine Pass LNG

Cheniere Energy has shipped more than 140 cargoes to 23 countries out of its Sabine Pass facility since it began operating in 2016, putting the U.S. back on the map as an LNG export nation.

Three of its liquefaction trains are operational, with a fourth expected to reach substantial completion in the second half of 2017 and a fifth on track for the second half of 2019.

The company expects a final investment decision on a sixth and final train once it obtains an engineering, procurement and construction contract.

Venture Global

Venture Global’s Calcasieu Pass facility is still waiting on permit approvals from DOE and FERC, but, like Magnolia, it does have an EPC contract in place for construction and a buyer for part of its offtake.

Spokeswoman Jessica Wickett said construction should start in 2018 and that operations should begin in the early 2020s.

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Source: American Press

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