US LNG exports rise on capacity expansions
As capacity and demand grow, the U.S. has moved up the ranks to become the third-largest producer of liquefied natural gas (LNG) in year-to-date exports starting in January 2019, according to ICIS.
The US was the fourth largest exporter of LNG in 2018, but it is now just behind Qatar and Australia, and U.S. exports are expected to more than double by 2025.
The U.S. produced 24.4 million tonnes of LNG for the first three quarter of the year 2019, behind Qatar’s 59.6 million tonnes and Australia’s 57 million tonnes for the same period, according to ICIS LNG Edge.
U.S. production has now edged out Russian and Malaysian exports, according to ICIS LNG Americas Editor Ruth Liao.
Capacity wise, the U.S. is expected to be the global leader in newly built LNG liquefaction capacity between 2019 and 2023, according to GlobalData.
The increase in the U.S. of 157 million tonnes/year of liquefaction capacity will account for more than 70% of total global LNG capacity growth through 2023, GlobalData said.
Canada and Russia are expected to be second and third for growth as Canadian capacity grows by 19 million tonnes/year, and Russian capacity grows by 15 million tonnes/year.
Over the next few years, the U.S., Australia and Qatar will compete to become the world's top LNG exporter.
Several LNG projects have come online in the U.S. this year or will come online soon.
“Cameron LNG in Hackberry, Louisiana, started production in May 2019 and has exported 10 cargoes to date. Freeport LNG started loading its first cargo at the end of August 2019 and has exported three cargoes so far,” Liao said.
In addition to the start-ups at Cameron and Freeport, there are now five trains producing at Sabine Pass, two trains at Corpus Christi LNG and one at Cove Point, she added.
The 2.5 million tonne/year Elba LNG plant in Georgia remains in commissioning, as operator Kinder Morgan has stated that start-up has been delayed due to the newer LNG technology being used at the facility, Liao said.
Indeed, the U.S. LNG sector has seen significant changes in the last year.
Production at Cheniere Energy’s Sabine Pass LNG in Louisiana and Corpus Christi LNG in Texas, along with Dominion Energy’s Cove Point in Maryland quickly turned the U.S. into the world's fourth largest LNG exporter by the end of 2018, behind Qatar, Australia and Malaysia.
And the first liquefaction train at the $10 billion Cameron LNG export terminal in Louisiana started producing LNG in May 2019.
The U.S. has now exported gas to more than 35 countries, the Center for Liquified Natural Gas (CLNG) said.
"U.S. LNG (production) is expected to more than double in the next few years, considering all the sanctioned projects due to come online between now and 2025,” Liao said.
Now, year to date, two natural gas export projects have been sanctioned in 2019, but there could be five (additional) gas export projects nearing a final investment decision in 2020, CLNG Executive Director Charlie Riedl said while speaking at an industry conference in New Orleans.
Two export projects have been sanctioned in 2019: Golden Pass by ExxonMobil and Qatar in Sabine Pass, Texas; and Venture Global’s Calcasieu Pass project in Louisiana.
Riedl said he expects the following additional projects to get the green light in 2020. If all five projects happen, then the U.S. would be exporting this gas by 2024.
Delfin, an offshore project in Louisiana which would be capable of exporting 13 million tonnes/year.
The 27 million tonne/year NextDecade Corp Rio Grande project in South Texas.
The 8 million tonne/year Magnolia project by LNG Ltd in Louisiana.
Tellurian’s Driftwood project which would move up to 27.6 million tonnes/year.
The Lake Charles project by Energy Transfer LP and Royal Dutch Shell which would move up to 16.45 million tonnes/year.
The U.S. is already expected to add another 157 million tonnes/year LNG capacity from 17 new build terminals, according to Global Data. Russia is second in terms of new build capacity, followed by Canada.
The Cameron LNG project in Louisiana achieved first LNG production from train 1 in May 2019 and began exporting soon after.
Construction is ongoing for trains 2 and 3 with first production expected by the turn of the year and mid-2020 respectively.
McDermott International and Chiyoda are the lead contractors on the Cameron project.
The project is operated by Cameron LNG LLC, jointly owned by Sempra Energy (50.2%), Total (16.6%), Mitsui & Co., Ltd. (16.6%) and Mitsubishi/NYK (16.6%).
Cheniere Energy Sabine Pass
Cheniere Energy Partners is developing, constructing and operating a liquefaction project at the Sabine Pass LNG terminal adjacent to the existing regasification facilities for up to six trains, with expected nominal production capacity of approximately 27.0 million tonne/year of LNG.
Trains 1-5 are operating now. All regulatory approvals have been received to construct and operate Train 6, and a final investment decision is expected to be reached upon obtaining commercial contracts and financing enough to support construction, the company said.
The Sabine Pass site can readily accommodate up to six liquefaction trains capable of processing over 3.5 billion cubic feet/day (bcfd) of natural gas. The production capacity of each LNG train is being designed for approximately 4.5 million tonnes/year.
Sabine Pass Liquefaction will have access to the existing infrastructure, including five storage tanks and two berths at the Sabine Pass terminal, as well as Cheniere Partner’s 94-mile Creole Trail Pipeline, which was reconfigured to reverse the flow of natural gas, making it a bi-directional pipeline.
Cheniere Energy Corpus Christi LNG
Cheniere Energy, Corpus Christi LNG, is developing and constructing an LNG export terminal at one of Cheniere's existing sites that was previously permitted for a regasification terminal. Two trains are operating currently.
The liquefaction project is being designed for three trains with expected aggregate nominal production capacity of up to 13.5 million tonne/year of LNG. Up to seven midscale liquefaction trains adjacent to the CCL Project (Corpus Christi Stage 3) are also being developed. The total expected nominal production capacity of the seven midscale trains is approximately 9.5 million tonne/year of LNG.
Cheniere made an FID and issued the notice to proceed to commence construction on the first two liquefaction trains on May 13, 2015 and is continuing to market nominal production capacity from Train 3.
To date, 8.42 million tonne/year has been contracted to third party, foundation customers on a long-term FOB basis under sale and purchase agreements (SPAs). Foundation customers include Pertamina, Endesa, Iberdrola, Gas Natural Fenosa, Woodside, EDF and EDP.
Trains 1 and 2 are fully contracted and Train 3 is partially contracted. Any excess capacity not sold under long-term SPAs to foundation customers is available for Cheniere Marketing.
The Corpus Christi site is located on the La Quinta Channel on the northeast side of Corpus Christi Bay in San Patricio County, Texas.
Unlike other U.S. LNG projects, Cheniere Energy will procure natural gas supply used for feedstock. Once the natural gas is liquefied, the customer takes delivery at the tailgate of the terminal.
As a result, Cheniere Energy is expected to become one of the largest buyers of natural gas in the U.S. once all the trains are operational.
Dominion Energy Cove Point in Maryland
Dominion Energy’s Cove Point LNG project in Maryland has one LNG train. Cove Point launched its first LNG export cargo in March 2016. That shipment, a commissioning cargo, eventually made its way to England.
The Cove Point LNG Terminal has a storage capacity of 14.6 bcf and a daily send-out capacity of 1.8 bcf. The terminal connects, via its own pipeline, to the major Mid-Atlantic gas transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission and Dominion Energy Transmission.
Dominion Energy Cove Point Terminal is located on the Chesapeake Bay in Lusby, Maryland, south of Baltimore.
Production from Freeport LNG’s first train started up during the third quarter of 2019. By August, the company started loading its first cargo and has exported three cargoes so far. Freeport LNG continues construction of its second and third trains and works to commercialize a proposed fourth train.
The group shipped its first commissioning cargo in September 2019 and expected commercial service startup during Q4 of 2019.
The primary long-term buyers of offtake from Freeport LNG Train 1 are Japanese utilities Osaka Gas and Chubu Electric Power, which each control 2.2 million tonnes/year of capacity.
The market has been watching Freeport LNG closely, as it has worked hard to move past several construction and weather-related delays.
Now, Freeport LNG Development has raised $1.025 billion to help finance a fourth train or unit at its $14 billion LNG/export facility in Texas, the company announced in a statement in September 2019.
Under the definitive agreements, its Australian partner Westbourne and its co-investors will provide up to $1.025 billion via a mezzanine loan to a Freeport LNG subsidiary to support Train 4.
That financing, plus a contemplated bank loan, will be enough to provide 100% of the capital needed for Train 4, the companies said, in a statement.
Freeport LNG has signed an EPC contract with KBR for Train 4, which would produce up to 5 million tonnes/year of LNG for export.
The plant, on Quintana Island near Freeport in Brazoria County, Texas, will have the capacity to produce up to 5 million tonnes/year of LNG from Train 1.
Four trains are planned at the facility. Each of the four trains is designed to produce up to 5 million tonnes/year of LNG. Train 2 is expected to begin initial production in January 2020, and Train 3 in May 2020. Train 4 is expected to begin operations in 2023.
Construction started in November 2014. The facility initially was built in 2008 as an LNG import complex.
KBR anticipates a full notice to proceed for the Train 4 project before the end of 2019.
Kinder Morgan's Elba Liquefaction in Georgia
Elba Liquefaction Company (ELC) and Southern LNG Company (SLNG) are constructing a two-phased project called the Elba Liquefaction Project, which will add liquefaction and export capability to SLNG’s existing LNG terminal located at Elba Island in Chatham County, Georgia (Elba Terminal).
On June 1, 2016, FERC granted the project authorizations. Construction on the $2 billion project began on November 1, 2016.
At press time, the 2.5 million tonne/year Elba LNG plant in Georgia remains in commissioning, as operator Kinder Morgan has stated that start-up has been delayed due to the newer LNG technology being used at the facility.
Under full development, the Elba Liquefaction Project is expected to have a total capacity of approximately 2.5 million tonnes/year of LNG for export, which is equivalent to approximately 350,000 Mcf per day of natural gas.
By Heather McGuire Doyle