In this issue


Though Canada and more recently Argentina and China are producing commercial volumes of gas from shale formations or crude oil from tight rock, EIA analysts see additional gas supplies impact global LNG prices, but don't see any serious challenge for the predominant stance of US shale gas drillers anytime soon.

Antero Resources, with stakes in the Marcellus and Utica Shales, said it signed a 10-year agreement with the US unit of Japanese utility Chubu Electric Power to provide 70,000 MMBtu/day of feed-gas for processing and export from the Freeport liquefaction plant in Texas.

Two Houston-based companies, Targa Resources Partners and Sanchez Energy Corp., are planning to build a liquefied natural gas processing plant and feed-gas pipelines in the first LNG project targeting resources in the Eagle Ford Shale of South Texas.

Tuesday, 01 December 2015

Gloomy predictions by Moody’s low global LNG prices anticipate that most of the 30 proposed liquefaction projects in North America will be cancelled. The collapse in oil prices narrows the price advantage of Henry Hub linked US LNG to long-term contracts indexed to the Japanese Crude Cocktail (JCC).

Collapsing Henry Hub gas prices have shed 30% since recent high, making the US LNG exports more attractive. According to Morgan Stanley analysis, the US LNG price still shows a differential of more than $0.50 versus East Asian LNG prices on a delivered basis.

Though Shell's acquisition of BG is creating the world's largest LNG seller, Wood Mackenzie believes that regardless of the Tepco/Chubu merger, the buy-side is getting more fragmented.

ConocoPhillips, operator of the small-scale Kenai LNG export plant in Alaska, has filed an application with the US Department of Energy for authority to export cargoes to Free Trade Agreement Nations and Non-FTA countries. The permit would extend the current export license that expires in March 2016.

Despite the fall in global oil and gas prices, growth of LNG use in Asia's power sector is limited by coal. "Only very competitively priced LNG has a chance to beat coal in Asia," the International Energy Agency's (IEA) executive director Dr Fatih Birol told the Singapore Energy Week today.

Gas Natural Fenosa has increased its interest in Metrogas of Chile, lifting its shareholding to more than 60% in the utility that also holds 20% of the South American country's Quintero LNG import terminal.

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.”