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.
Driftwood LNG has applied to the US Department of Energy for authorization to export up to 26 mtpa from a proposed plant on the Gulf Coast of Louisiana. Driftwood has asked the DoE for a long-term, multi-contract permit to export up to the equivalent of 1,496.5 Bcf/y for 30 years of domestically produced natural gas to nations with and without a Free Trade Agreement with the US.
Kuwait became LNG importer in 2009 by adding an FSRU and new onshore LNG terminal is on its way; Bahrain is all set to join LNG importers group in 2018, with an FSRU as their first import terminal. Gulf Region is buying LNG from well beyond the region, with the US entering a brave new world, delivering LNG cargoes from Sabine Pass to Kuwait and the UAE; more expected to come amid surging local demand.
Over four years of regulatory review and quarrels about environmental credentials of the Pacific NorthWest LNG project have now ended in a conditional approval. Now, Petronas – the main project sponsor – has to decide on whether to take FID.
Much-delayed Alaska LNG, a 20 mtpa project pushed by the state’s Governor Bill Walker, has received support from North Slope gas producer BP. Together with project partner ConocoPhillips, BP has given assurances for the state to take the lead on the project in the coming months.
US to stay ‘net exporter’ past 2018
The United States’ status as a net exporter is expected to continue for the rest of this year and past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing LNG exports the US Energy Administration (EIA) forecasts. Meanwhile, Wood Mackenzie principal analyst, Patrick Kirby forecasts oil pricing dynamics will increase, through near-term $50-60 range.
Texas oil and gas boost
The Texas Alliance of Energy Producers said natural gas prices in July averaged $2.84 per thousand feet, increasing the value of Texas-produced gas by 2.3 percent to nearly $1.9 billion. Sizeable year-on-year improvements in the rig count, drilling permits and the value of Texas-produced crude oil and natural gas combined to push the Texas Petro Index up in July to 176.9, the eighth straight monthly increase. However, it is in oil where Texas and the US are excelling. “OPEC production curtailments did not achieve the desired price outcome,” said spokesman Karr Ingham. “Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel (US) oil market provides more incentive than in the past,” added Ingham, referring to the West Texas Intermediate (WTI) US benchmark oil price.
Florida LNG bunkering
Jax LNG, the port bunkering project in Jacksonville in Florida, has received a Letter of Acceptance (LOA) for the facility from the United States Coast Guard and approval to conduct ship-to-ship LNG fuel operations with the LNG barge “Clean Jacksonville”. The expectation is that ship-to-ship LNG bunkering will start in early 2018. Jax LNG already supplies fuel for the LNG-fueled container ships of US shipping line TOTE Maritime. The fuel is supplied by Pivotal LNG.