Stakes are high in Australia’s energy policy: Faced with spiralling electricity prices and a domestic gas shortage, Prime Minister Malcolm Turnbull is threatening to cap gas exports. Santos’s Gorgon LNG project is likely to be hit first, but critics warn that in the absence of a Trans-Australian pipeline any export restrictions will play in the hands of US LNG exporters, notably Cheniere Energy.
As the second wave of U.S. LNG projects is gathering speed, the shift to short-term offtake agreements which already account for 25% of global trade requires a radically different approach on how large-scale liquefaction projects are being financed.
Strikingly, South Korea’s year-to-date LNG demand has risen by over 4 million tons – contrary to expectations it would fall. Price sensitive Korean buyers got really interested in US shale gas and have already bought eight cargos from Cheniere Energy’s Sabine Pass terminal; now Korea Gas Corp. (KOGAS) is also considering investing in LNG projects in Alaska, Texas and Louisiana.
Mexico and South Korea each received four cargoes and China took delivery of two as a total of 16 shipments were delivered from the Sabine Pass plant in Louisiana at lower average prices compared with 15 loaded in the previous month, according to the latest data released by the Department of Energy (DoE).
Tellurian Inc., developer of the Driftwood LNG project on the Gulf Coast of Louisiana, said it had agreed to acquire acreage in Haynesville Shale play in the northwest of the state to add potential gas assets to its portfolio for future export.
Drilling activity and production of crude oil and natural gas is picking up in Oklahoma’s Anadarko Region, notably in two areas commonly known as the STACK (Sooner Trend Anadarko Canadian and Kingfisher) and the SCOOP (South Central Oklahoma Oil Province) plays.
Despite the havoc causes by recent hurricanes along the Gulf Coast of Texas and Louisiana, US dry gas production is set to rise to an average of 73.7 billion cubic feet per day in 2017. This year’s output is a 1.4 Bcf/d increase from the 2016 level, and the EIA says 2018 output is also likely to surge.
Only after 2030, pipeline gas and LNG is seen regain market share in Europe, displacing nuclear power and lignite coal. Before that time, strong renewable energy expansion is forecast to eradicate the growth of gas use in the power sector, according to the EIA’s just-released International Energy Outlook 2017 (IEO2017).
As Brexit unfolds, the premium on Britain’s National Balancing Point (NBP) and the price volatility in relation with the Dutch Title Transfer Facility (TTF) is likely to play into the hands of LNG sellers and trading houses who are seeking to take advantage of the widening NBP-TTF spread.
Having moved to a competitive market, Mexico’s Energy Regulatory Commission (CRE) released its first monthly price report in late August which shows that Mexican marketers sold gas at $4.10/mmBtu on average in July. CENAGAS, Mexico’s pipeline system operator also launched its natural gas capacity reservation system with electronic bulletin boards for posting natural gas flows.
The US Federal Energy Regulatory Commission (FERC) has granted a permit to Delfin LNG – the most advanced US floating export development – that will allow developers to transport gas to its proposed deepwater port terminal to be located 30 miles offshore Louisiana in the Gulf of Mexico.
Edison, capacity holder in the Adriatic LNG import terminal, has signed an agreement to receive 1 mtpa of shipments from Calcasieu Pass liquefaction and export plant, developed Venture Global.
The Atlantic LNG production plant at Point Fortin, Trinidad, has been shut and evacuated after a fire flared up at one of its power generating units. The company said it contained and extinguished the fire, with no injuries reported.
Although global markets are awash with Although global markets are awash with new LNG supply from Australia and the United States, key buyers in India have been courting the incumbent seller Qatar to invest in stranded gas-fired power station as a precondition for new long-term LNG purchase agreements. Reliance Industries, India’s most price-sensitive buyer, is scanning spot markets for US LNG cargoes.
Veresen pushes ahead with Jordan Cove LNG
The Canadian energy company Veresen, purchased by Pembina Pipeline in an agreed US$7.5 billion takeover, has re-applied to develop an LNG export plant across the border in the American state of Oregon. The new Jordon Cove venture includes a liquefaction plant in Coos Bay and a 370-km pipeline that will bring feed gas from British Columbia. Veresen CEO Don Althoff pointed out the new proposal submitted to FERC had addressed the regulator’s earlier objections, notably that demand for the project had not been adequately demonstrated. The new project plan makes over 50 pipeline route adjustments and drops the construction of an affiliated 420 MW power plant. If approved, Jordan Cove would be the first LNG export terminal on the US West Coast.
Eagle Maxville LNG gets permit for exports to the Caribbean
The US Eagle Maxville small-scale LNG plant near the port of Jacksonville, Florida, has been permitted to export the equivalent of 2.8 Bcf/y of LNG in ISO containers to the Caribbean market and Puerto Rico. Eagle Maxville LNG will also supply fuel to Crowley Maritime Corp. LNG-powered Commitment Class ships for mainland trade with the US territory of Puerto Rico. “Eagle Maxville is in the final stages of completing the facility, with commissioning activities underway,” the Department of Energy (DoE) stated when granting the permit. Commercial operations are expected to commence in the first week of October 2017.
Fourchon LNG seeks FTA permit
Fourchon LNG, developed by Hong Kong-based Energy World. and planned for Belle Pass in Louisiana, has applied to regulators for multi-year export permits. Developers seek to ship cargoes for 30 years to countries with a Free Trade Agreement (FTA) with the US and for 20 years to any countries without an FTA. The application with the Department of Energy (DoE) for multi-contract authorization to export up to 260 Bcf/y of natural gas follows the Fourchon project’s recent receipt of a letter from FERC giving permission to start its pre-filing environmental review process.