In this issue

 

The 130-acre site of the Dominion Cove Point LNG terminal in Lusby, Maryland, is undergoing a significant transformation. Built in 1978 as a regas terminal, the site is now integrating liquefaction capabilities that will produce more than 5 mtpa. IHI/Kiewit, a joint venture of IHI E&C and Kiewit Energy Company, carries out EPC works for the project, which are on track for completion in late 2017. As of March 2016, the project is more than 60% ready.

A 20-year gas sales agreement with the world’s largest gas buyer JERA, a joint venture of Chubu and Tokyo Electric, is likely to help remove a regulatory stumbling for the Jordan Cove LNG project on the coat of Oregon. Federal Energy Regulatory Commission (FERC) on March 11 rejected the application for the $7.5 billion project, stating that public benefits from the proposed Pacific Connector pipeline are less than its potential for adverse impacts on landowners and communities.

Jamaica’s leading energy company, JPS, has now several critical elements in place to proceed with a 190 MW power project in Old Harbour Bay, St Catherine. JPS chief executive Kelly Tomblin said the project is about to reach financial close and an EPC contract with Power China will be finalised within the next two weeks.

Painting a bleak picture for US LNG exports over the next 5 years, Wood Mackenzie’s sensitivity analysis suggests that rising domestic gas prices in the US, gas vs coal competition in power markets and “Russian action to protect market share” are likely to see half of America’s liquefaction capacity shut in the near future.

A Canadian LNG export project, controlled by Indonesian billionaire Sukanto Tanoto and his Pacific Oil and Gas company, has taken the lead as the first venture in British Columbia is likely to be developed after years of stalemate. Woodfibre LNG received environmental approval from the federal ministry in Ottawa in late March, paving the way for the liquefaction plant and export terminal to be planned and built near the town of Squamish, north of Vancouver.

AES’ integrated LNG-to-power project at the entrance of the Panama Canal is set to come onstream in 2018. The French multinational Engie just signed a 10-year LNG supply accord with the US-headquartered AES, covering the entire fuel needs of the latter’s 350 MW combined-cycle power plant.

“Keep your eyes on the stars, and your feet on the ground,” said Teddy Roosevelt and US shale gas driller would be well advised to do just that. Headline-grabbing figures forecasting oil back over $100/bbl by 2030 have been touted by BP Group, in an effort to look beyond the current slump. Realities today are far different: Brent is forecast to average $38/bbl in 2016, while Henry Hub spot gas prices keep dropping below $2/mmBtu threshold. Worse still, a flurry of profit warnings from oil and gas majors is getting banks worried about debt repayments. 

Recipient of ‘Asia Vision’ - the landmark first shipment form Cheniere’s Sabine Pass Terminal - will be Petrobras of Brazil, rather than buyer in far-flung Asian markets. Netback calculations have singled out Brazil as the highest-yielding choice for shipments from the US Gulf Coast. 

Ottawa and Calgary seem not in sync these days. Pending changes to Canada’s federal environmental approval process risk to delay the beleaguered Pacific NorthWest LNG export terminal, off Lelu Island. Christi Clark has rushed to the capital to seek assurances that the timeline stays in place.

‘Hope dies last’, they say, and the International Energy Agency’s Fatih Birol has helped the LNG industry in British Columbia to keep up just that. “I am sure and our numbers show,” he stressed “that there is room for Canadian LNG after 2020. Especially, if pressure continues to keep the cost of production low. 

Another blow has been dealt to British Columbia’s LNG ambitions by AltaGas’ decision to halt works for its 0.55 mtpa liquefaction project on the Douglas Channel.

Short-cycle and flexible nature of US shale gas operations has made its economics more competitive than many conventional assets. In the face of depressed oil and gas prices, wildcat drillers from North Dakota to Texas have emerged as the swing producer. Fresh rumours of OPEC production cuts give some respite. 

US LNG exports, pushed back to early March, will come more dearly for European buyers than purchasing the gas on the spot market, Gazprom claimed, insisting that import volumes to the EU would be “limited”. 

Keen to maintain market share in oversupplied LNG markets with record low prices, Qatar now lures leading buyers by offering short duration cheap ‘teaser deals’ as it seeks to open opportunities for more strategic 20-year sales. After RasGas conceded to contract renegotiations with Petronet, Asian buyers are now mounting pressure on Woodside Petroleum which will see major long-term supply contracts expiring over the next few years. 

News Nudges

Rio Grande LNG gears up for stock market listing

Next Decade is following the trend of US Gulf Coast liquefaction projects to get their project companies listed on the stock exchange. Kathleen Eisbrenner’s NextDecade has signed a letter of intent for a business combination transaction that will allow the privately-held company to become a publicly-listed company. To that end, Eisbrenner is using the services of Harmony Merger Corp. The listing is meant to ease the fund-raising process for Next Decade’s 27 mpta Rio Grande LNG project that is currently advancing through the FERC permitting process. Tellurian Inc., meanwhile, recently completed a reverse takeover of a small oil and gas exploration firm to gain a Nasdaq-listing that is meant to boost the prospects for Driftwood LNG.


Driftwood LNG aims to raise $200m in Nasdaq listing

Preparing a first share offering, Tellurian in mid-March issued a prospectus proposing to sell shares valued up to $200 million on the Nasdaq Capital Markets stock exchange. Tellurian Inc., developer of the Driftwood LNG project in Louisiana, recently chose SG Americas Securities to provide a financial strategy for the venture. SG Americas is the US broker-dealer subsidiary of France's Societe Generale. Charif Souki, Tellurian founder and ex-Cheniere Energy chairman, completed a reverse takeover in February 2017 to get Tellurian listed in a move to efforts of ease fund-raising. Meg Gentle, president and CEO, said that with SG’s expertise at hand, financial structuring of Driftwood LNG would advance swiftly, hence “we anticipate construction in 2018 and first LNG from Driftwood in 2022.”


CB&I ‘optimistic’ for growth

Philip K. Asherman, President and CEO of US engineering and construction company Chicago Bridge and Iron (CB&I) said he was “optimistic” that stability in commodity prices and major capital programs, particularly in North America and the Middle East, “will result in resumption of substantial backlog growth by mid-year of 2017.” CB&I posted an operating loss of $665.6 million last year but Asherman stressed that all proceeds from the divestiture of the company’s Capital Services business will be spent to reduce debt to optimize the balance sheet. The firms Engineering& Construction (E&C) backlog was $9.9 billion in December 2016 versus $12.8 billion at the end of the previous year.


First gas for Kosmos-BP FLNG Train 1 eyed in 2021

Kosmos Energy is drilling an exploration well with total discovered resource of 25 Tcf of feed-gas. The US firm cooperates with BP on plans to produce LNG floating hulls offshore Senegal and Mauritania; to that end it successfully drilled the Teranga-1 exploration well in 2016. First gas from Kosmos-BP FLNG Train 1 is scheduled for 2021, the company said, and the start of FLNG Train 2 is set for 2023.


Sabine Pass Train 3&4 to come onstream in 2017

Cheniere Energy, owner of the Sabine Pass liquefaction plant in Louisiana, the first US LNG export facility, said transition and execution will remain central themes for Cheniere in 2017. “We expect Trains 3 and 4 at Sabine Pass to begin commercial operations, with Train 3 having produced its first commissioning cargo in January,” Jack Fusco, Cheniere's President and CEO stated when presenting the company’s annual report. Once all six Trains come on stream, Sabine Pass will have a have nameplate capacity of 27 mtpa. Corpus Christi LNG, Cheniere’s second venture on the Texas Gulf Coast, is designed to produce an initial 13.5 mtpa, with Trains 1 and 2 expected “to reach substantial completion in 2019.”