Cheniere Energy, owner of the Sabine Pass export plant in Louisiana and the Corpus Christi facility in Texas, has signed a long-term feed-gas supply agreement with US exploration and production company Apache Corp. to underpin its expansion plans at the Texan plant.
The Houston, Texas-based company said its Cheniere Corpus Christi Liquefaction Stage III subsidiary signed an agreement with Apache for 140,000 million British thermal units per day of natural gas for a term of around 15 years.
The Apache feed-gas will come from the Permian Basin, the prolific shale production region in West Texas and southeast New Mexico.
The expected LNG output associated with this gas supply, approximately 0.85 million tonnes per annum, will be marketed by Cheniere to global LNG customers.
Apache will receive an LNG price, net of a fixed liquefaction fee and certain costs incurred by Cheniere, for the natural gas delivered to Corpus Christi Stage III under this agreement.
Cheniere said the LNG price was based on international LNG indices.
The company has already filed an application with the Federal Energy Regulatory Commission to site, construct and operate the Stage III Corpus Christi expansion.
Cheniere’s Stage III development is for up to seven mid-scale liquefaction Trains adjacent to the current Corpus Christi development of three large-scale Trains with output of 13.5 MTPA, with two Trains already completed.
The seven mid-scale Trains will each have nominal capacity of around 1.4 MTPA.
The total expected nominal production capacity of the mid-scale Trains is about 9.5 MTPA of LNG, taking total production at the Texas plant to 23 MTPA.
“This first-of-its-kind long-term agreement with Apache represents a commercial evolution in the US LNG industry, as it will ensure the continued reliable delivery of natural gas to Cheniere from one of the premier producers in the Permian Basin, while enabling Apache to access global LNG pricing and receive flow assurance for its gas,” said Jack Fusco, Cheniere’s President and Chief Executive.
“This commercial agreement, which is expected to support the Corpus Christi Stage III project, reinforces Cheniere’s track record of creating innovative, collaborative solutions to meet customers’ needs and support Cheniere’s growth,” added Fusco.
John J. Christmann, Apache’s CEO and President said Apache’s agreement with Cheniere was part of the company’s long-term strategy to leverage the scale of its Permian assets and diversify its customer base and cost structure.
“We are pleased to partner with Cheniere in this innovative marketing agreement,” added Christmann.