As discussed in last month’s CEEP Report, the United States has five LNG export projects that are already under construction, which could produce 68.4 million tonnes per annum (mtpa) of LNG when all 14 “trains” come online before the end of 2019. (Currently, only two trains are operational.) In this second of our threepart series, we discuss the U.S. LNG export projects which are at or near the end of their U.S. governmental reviews, and thus, can be characterised as “near development.”
- Elba Island. Kinder Morgan—one of North America’s premiere midstream oil and gas companies—is adding liquefaction capabilities to an existing modest-scale LNG import terminal, located in Savannah, Georgia. This project will have the capacity to create up to 2.5 million tonnes per annum (mtpa) of LNG, and has received initial approval to proceed from the U.S. Federal Energy Regulatory Commission (FERC), one of the U.S. agencies that regulates LNG projects. In a news release (Oct. the 19th, 2016), Kinder Morgan stated that construction on the liquefaction facility would begin on Nov. the 1st, 2016, even though the FERC order remains under appeal, and a licence which has not yet been obtained (but is expected) from the U.S. Department of Energy (DOE), to allow the export of LNG to nations that do not have free trade agreements (FTAs) with the United States. Construction is expected to be complete by the end of 2018, when all 10 of Shell’s Moveable Modular Liquefaction Systems are online.
- Lake Charles LNG. Another large U.S. midstream player—Energy Transfer—also has plans to convert an existing LNG import terminal to a bi-directional facility by adding three liquefaction trains, with total nameplate capacity of 16.2 mtpa. The Lake Charles (Louisiana) project has received its final FERC and DOE non-FTA permits, but the project has not yet taken a final investment decision (FID). Under a contract dating back to 2011, “Energy Transfer will own and finance the… liquefaction facility and Shell will oversee the engineering, design and construction management, as well as operate the facility, once complete.” Thus, the terms of the agreement require both companies to take a FID, and Shell announced in July of this year, that the FID was “being delayed out of 2016.” No timetable was given by Shell for re-consideration.
- Magnolia LNG. This “greenfield” LNG export project is being developed by LNG Limited (a Perth, Australia-based company) at a site on the Port of Lake Charles, Louisiana. The project will use a proprietary liquefaction technology pioneered by LNG Ltd. to produce 8 mtpa from four trains. A portion of the project’s liquefaction capacity (up to 2 mtpa) has been purchased by Meridian LNG Holdings Corp. which aims to transport to “Port Meridian,” a Höegh LNGoperated floating storage and regasification unit (FSRU), with the gas delivered to Uniper (formerly E.ON Global Commodities), under a 20-year gas sales agreement, carried out and announced by Meridian in April, 2015. Earlier this year, LNG Ltd. and Meridian agreed to extend the financial closing date on the deal until Dec. the 31st, 2016. Once the project takes on a FID, the first LNG shipments from Magnolia LNG would occur—the company estimates—within “42 to 48 months.”
- Jordan Cove. The only LNG export terminal currently proposed for the U.S. West Coast, Jordan Cove would be a “greenfield” project located at the Port of Coos Bay (Oregon), capable of producing 6 mtpa. Unfortunately, the project application was originally denied by FERC (March the 11th, 2016), due to issues involving the associated pipeline needed to transport natural gas to Jordan Cove. The project sponsor, Veresen (a Canadian company), has asked FERC for a “re-hearing” on the March 11th decision, but no timeline has yet been set for re-consideration. Although the project does not have any binding LNG offtake agreements, advanced MOUs have been signed with JERA (a joint venture of Tokyo Electric Power Co. and Chubu Electric Power Co.) and ITOCHU Corp. (a trading company).
- Golden Pass Products. Located just up the channel from Cheniere Energy’s Sabine Pass project—but on the Texas side—Golden Pass Products (GPP) is an existing LNG import terminal, which is a joint venture between Qatar Petroleum (70%) and ExxonMobil (30%). The GPP liquefaction project, would involve the construction of three liquefaction trains, each with a capacity of 5.2 mtpa for a combined output of 15.6 mtpa. Golden Pass is expected to receive its final environmental impact statement (EIS) from FERC any day, a FERC order to “proceed with construction,” within a few months, after release of the EIS, and a DOE non-FTA licence shortly after that. Although no offtake agreements have been made public, it is widely expected that the two project sponsors will market the LNG that is produced. Golden Pass states that “ the project would invest approximately $10 billion over five years, to build liquefaction facilities to supply the project’s global customers.”
- Delfin LNG. Unique among the proposed U.S. LNG export projects, the Delfin facility is to be located some 50 miles offshore of Louisiana. Sponsored by Fairwood LNG, Delfin’s deepwater port would consist of an offshore mooring system, and up to four floating liquefaction (FLNG) vessels. Natural gas would be pre-treated at an existing onshore facility, and then delivered to the deepwater port via two re-designated pipelines, that had previously been used to bring gas inland from offshore wells. As it is located offshore, the project falls under the jurisdiction of the U.S. Maritime Administration (MARAD), and the U.S. Coast Guard. Those two agencies released a draft EIS on the Delfin project on July the 11th, 2016, and a final EIS is expected shortly. The four FLNG vessels would each be capable of producing more than 3 mtpa, or 13 mtpa in total, and Fairwood estimates that the first LNG cargoes could ship from Port Delfin within the 2022 timeframe.