Petroleum News: LNG terminal gets FERC go-ahead:
"Besides Woodside, the partners are subsidiaries
of BHP Billiton, BP, Chevron and Shell, plus
Japan Australia LNG (Mitsui and Mitsubishi).":
Saturday 24 December 2005
Cheniere milestones come as
Trinidad adds big new production train in tight
world market for low-polluting fuel
News Contributing Writer
Another LNG terminal on the Gulf Coast has
received all its permits for construction just
as the huge liquefied natural gas complex in
Trinidad added production capacity.
Cheniere Energy Inc. announced Dec. 16 it
has received authorization from the Federal
Energy Regulatory Commission to build a terminal
at Corpus Christi, Texas, with a capacity of 2.6
billion cubic feet daily.
The company said the same day that FERC
has issued a draft Environmental Impact
Statement for the Creole Trail LNG terminal (3.3
bcf per day) in Cameron Parish, La. And three
days later, the company building the Freeport
LNG terminal (1.75 bcf per day initial capacity)
in Texas announced it has closed a $383 million
private financing deal for that terminal, where
Cheniere has a 30 percent interest and
ConocoPhillips is a partner.
Aside from Freeport, in Texas, Cheniere
has also begun construction at its Sabine Pass
terminal in Louisiana, with a capacity of 2.6
billion cubic feet.
Plainly speaking, the LNG terminals being
built around the country could be sitting on
loads of excess capacity as other nations speak
for the world’s LNG supply. The five existing
U.S. terminals are running at about 50 percent
of their capacity, and new supplies around the
world are being locked up by gas-hungry
utilities signing contracts stretching out a
quarter of a century.
For example, Chevron Corp. has long-term
contracts for its 50 percent share of the
planned Gorgon project off Australia. Three
Japanese utilities recently agreed to 25-year
contracts for Chevron’s 5 million tonnes of LNG
annually, the equivalent of about 660 million
cubic feet daily.
The Japanese companies were clearly
willing to pay a premium for the gas, which had
been destined for China. That country’s CNOOC
backed out due to price issues.
Atlantic LNG at Trinidad and Tobago is the
closest and biggest LNG supplier for the North
American market. The startup of Train 4 on Dec.
16 boosted capacity there by more than 50
percent to 15 million tonnes per year.
That amounts to just under 2 bcf per day,
so even if it all went to the four Gulf Coast
receiving terminals where Cheniere is involved,
it would amount to just a fifth of their
capacity. That’s before planned Phase 2
expansions, competing terminals, and so on.
Filling those capital-intensive projects, which
cost around $600 million each, could be a
New LNG supplies are being developed
around the world, from Nigeria to gas-rich Qatar
to Indonesia and Sakhalin Island. Billions of
dollars are going into gigantic chillers and
insulated tankers to carry the supercooled
Australia’s Woodside Energy Ltd. just
announced plans to spend more than $1 billion on
developing the Angel field, with projected
output of 800 million cubic feet of gas and up
to 50,000 barrels of condensate daily. That will
feed the North West Shelf venture, which made a
$1.5 billion financing commitment last summer
for a fifth liquefaction train there, raising
capacity to 16.3 million tonnes annually, or 2.1
bcf a day.
The six equal partners in that project
were so bullish on the market they didn’t wait
for customer commitments. Besides Woodside, the
partners are subsidiaries of BHP Billiton, BP,
Chevron and Shell, plus Japan Australia LNG
(Mitsui and Mitsubishi).
Woodside is also pushing ahead with its
fully owned Pluto project, where Tokyo Gas Co.
recently made a 20-year commitment.
Most U.S. LNG terminals are being financed
with long-term commitments for capacity from
major multinationals. At the Freeport project,
for example ConocoPhillips has bought a billion
cubic feet of daily capacity, which could come
from Qatar, Venezuela, or other sources. Dow
Chemical Co. has spoken for half a billion cubic
feet at Freeport. For a planned Phase 2, a
consortium of ConocoPhillips and Mitsubishi has
long-term contracts for half a billion cubic
For now, supply is tight and spot market
cargoes are rare. With growing demand from
Europe and Asia, it may take a long time for a
competitive spot market for LNG to develop. In
North America, finding adequate supply could be
a major issue in the next few decades. The
Energy Information Administration figures U.S.
consumption will rise by 20 percent by 2025,
while supplies from domestic wells are expected
to rise by only 10 percent.