With the LNG overcapacity forecast to wane in the mid-2020s, IEA analysts say that timely investment in new gas supply projects is needed to pre-empt price volatility. Inter-regional natural gas and LNG trade is set to grow by 45% over the next 10 years and by 70% through 2040 as overcapacity is gradually absorbed and the market rebalances.
PetroChina recently commissioned new storage and regasification facilities at its Rudong terminal in Jiangsu province. Rudong could be the only Chinese import terminal to handle regasified Canadian LNG in 2020 – as 35% in the terminal is held by Woodfibre, the developer of an export plant at Squamish, north of Vancouver.
Carib Energy, a subsidiary of US shipping line Crowley Maritime Corp., is gearing up to export LNG in containers to Latin America after it was given a 20-year permit by the US Department of Energy (DoE) to export around 1.3 Bcf of natural gas.
Green light to ship US LNG to all destinations has been granted to the Elba Island LNG export project, where Shell is waiting in the wings as the main offtaker.
Exploration is gradually returning to profitability after five years of only single-digit returns. Dr Andrew Latham, VP of exploration at Wood Mackenzie commented: "The industry has a good chance of achieving double digit returns in 2017.
Cheniere Energy second liquefaction and export plant at Corpus Christi that will add to volumes from the Sabine Pass terminal is 47.1% complete, the Houston-based company told FERC in a project update report just prior to the festive season.
Natural-gas futures hit a 22-month high in October which ushers in the start of a “multiyear bull market,” as analysts at Seaport Global Securities see it. The US Energy Information Administration (EIA) raised its 2017 forecast on spot natural gas by 7.1% – sparking concerns that US LNG will lose some of its attractiveness for oversea buyers, given that basis prices for cargoes shipped from Sabine Pass are formulated on the Henry Hub plus a 15% premium.
Portfolio LNG buyers in Japan are closely observing the ramp up of US LNG exports over the past six month. The first spot cargo will head from the US Gulf Coast to Japanese shores this winter – if and when price differentials between Henry Hub and METI’s spot LNG price for Japan gain attractiveness.
Though Asian LNG prices for November delivery rebounded slightly over the past ten days, the oversupply persists and helps open new markets: Indonesia and Jamaica have chartered floating storage units (FSUs) to underpin power plant projects. Puerto Rico, Ghana, Bahrain and Bangladesh are tipped as the ‘next round of new importers.’
Expansion of the Panama Canal – a strategic shortcut for sea voyages between the Atlantic and Pacific oceans – has so far not sparked a significant rise in LNG tanker traffic. Less than 20 carries are understood to have transited the waterway by the end of October 2016.
Crowley LNG Alaska, a unit of the shipping company Crowley Maritime, has won a contract to supply the fuel to a small dual-fuel power plant near Fairbanks in Alaska. The LNG will be procured from the Point Mackenzie small-scale liquefaction facility and transported by road to the power plant in the remote town of Tok.
Completing its LNG trucking fuel chain along the US Pacific Coast, Clean Energy Fuels Corp has opened its first public liquefied natural gas station in Washington State. The fuel supply is aimed at the trucking industry from southern California, through Oregon to the Canadian border.
Anticipating that South Africa’s proposed LNG-to-power projects will cost up to $3.7 billion, the Department of Energy (DoE) announced it will reveal a list of preferred bidders for the projects by the end of March 2017. DoE had issued an Independent Power Producer (IPP) program as the basis for the procurement of two projects totalling 3,000 MW.
Cheniere’s Sabine Pass LNG facility, the first new US export facility, has been given the regulatory green light to start commercial operations on the second liquefaction train. FERC authorized the commencement of service for liquefaction and export activities from Train-2 at the plant, located in Cameron Parish.
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.”