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

Tellurian to start works on Driftwood LNG in H1-2019

Tellurian Inc., developer of the Driftwood LNG export project in Louisiana, seeks to start construction near the Lake Charles site in the first half of 2019 after regulators issued a final environmental impact statement (EIS). The final EIS was issued by the Federal Energy Regulatory Commission (FERC) to develop the 27.6 mtpa liquefaction plant and its associated 96-mile pipeline. Meg Gentle, Tellurian President and CEO, thanked the FERC for remaining on schedule with the approval and now awaits the agency’s order granting authorization to site, construct and operate the Driftwood project. “Tellurian will then stand ready to make a final investment decision and begin construction in the first half of 2019,” Gentle stated, suggesting “the first LNG [is] expected in 2023.” Striving to bring LNG to market, Tellurian signed a preliminary accord with the Swiss trading house Vitoal to supply 1.5 mtpa of LNG cargoes for 15 years. The deal is based on the Japan Korea Marker (JKM) price and cargoes on a free-on-board (FOB) basis whereby Vitol provides its own shipping.