In this issue


California-based Sempra Energy has settled a dispute with Chicago Bridge & Iron (CB&I), the contractors working on transforming the Cameron LNG facility at Hackberry in Louisiana from an import to an export plant. After resolving scheduling issues with the contractors, Sempra now expects to have three processing Trains in operation before the end of 2019. 

Alaska LNG has reached an agreement with BP and Alaska Gasline Development Corp (AGDC) on feed-gas supplies, including price and volume. The parties aim to finalize a long-term gas sales agreement before the end of 2018 that will see AGDC purchase BP Alaska’s share of 30 trillion cubic feet of gas produced at the Prudhoe Bay and Point Thomson reservoirs.

Dry natural gas production in the United States is forecast to reach a new record of 80.5 billion cubic feet per day (Bcf/d) in 2018, up from 73.6 Bcf/d in the previous year. According to the EIA’s latest Short-term Energy Outlook (STEO), the rise in US natural gas production will help replenish storage levels from current lows and support increasing natural gas exports, both via pipeline to Mexico and in the form of LNG.

U.S. pipeline company Energy Transfer Partners has received approval from the Federal Energy Regulatory Commission (FERC) to place additional Phase-2 facilities into service. The $4.3 billion pipeline project will allow moving natural gas from the Appalachian, notably the Marcellus and Utica Shale, to domestic and Canadian markets. Construction of the entire pipeline is due for completion in Q2-2018.

Chicago-based Exelon has approached the U.S. Federal Energy Regulatory Commission (FERC), suggesting it would keep operating two gas-fired power plants and the LNG import facility in Everett between 2022 and 2024, if it gets permission to collect about $1 per month from all electricity customers in New England. The Mystic gas-fired power plants are some of the largest generators in New England, but they are not economical in the current market environment.

Where no pipeline or electrical grid exists, Chart offers solutions enabling clients to access natural gas, through LNG for on-site power generation. For a Canadian client, the operator of a diamond mine, six of Chart’s horizontal regas tanks provide almost half a million of LNG storage for seven 2.1 MW gas-fuelled power generator sets and despite the extreme climatic conditions, the project in Canada was completed on schedule.

Air Products, the US maker of equipment for LNG production and for industrial gas plants, said it had completed the acquisition of the Coal Gasification Technology licensing business from Shell Global Solutions. The US company said it also formed a strategic alliance with Shell for residue gasification technology to refinery complexes. 

Orka Energy, through its Peruvian subsidiary Lantera Energy, has entered a power purchase agreement (PPA) with Flesan Enregia of Chile that will see the provision of gas generator sets for Peru’s first small-scale gas liquefaction facility. The LNG export facility is under construction in the northern town of Pirua, slated to start up by July 1. 

Use of combustible, or fossil fuels, for power generation has fallen by 1% in OECD countries over the course of 2017, according to a monthly assessment compiled by the International Energy Agency (IEA). In the Americas, the contribution of fossil fuelled power plants decreased 144TWh amid greater renewables deployment. In Europe, by contrast, the use of fossil fuels grew by 80TWh, as natural gas and coal-fired power plants had to compensate for a low-hydro-year and falling nuclear power supply. 

About 21 GW of natural gas-fired generators are scheduled to come online in the United States this year out of a total 32 GW of new-built electric capacity. “If these gas generators come online based on their reported timelines, 2018 will be the first year since 2013 in which renewables did not make up a majority of added capacity,” the U.S. Energy Information Administration (EIA) commented. 

Challenges in securing long-term offtake agreements, as well as rising construction cost, have made the second wave of US LNG projects difficult to finance. Developers have to get creative, if not rather desperate, to raise financing and agree to shorter-term deals with smaller quantities on more flexible terms. 

Dry natural gas production in the United States will keep growing over the next three decades, driven by demand from the industrial and electric power sectors. Beyond 2020, production is likely to grow faster than consumption, according to the EIA’s Annual Energy Outlook 2018, with excess volumes to be exported to Mexico or sold on global LNG markets. 

Dresser-Rand, part of Siemens Group, has commissioned an LNGo-HP (high-pressure) micro-scale natural gas liquefaction system for Altagas Ltd. in Dawson Creek, British Columbia, Canada. Producing approximately 30,000 gallons of LNG per day since January 25, 2018, the Dawson Creek facility allows Altagas to scale production in line with demand. The LNGo-HP system converts diesel and other fuels to natural gas, enabling users to monetize stranded gas deposits.

Initial optimism of global LNG suppliers that South Korea’s new electricity policy might lead to higher demand growth has been replaced by the recognition that more needs to be done for natural gas to replace coal and nuclear in Korea's power generation mix. The 13th Long-term Natural Gas Supply Plan for 2018 to 2031, released by the Government on April 5, anticipates LNG demand to reach 40.5 million tons (Mt) by the end of the forecast period, up just 3 Mt from 2017-levels.

News Nudges

Commissioning cargo departs from Corpus Christi Train-1

The first commissioning cargo has loaded and departed from Train-1 at Cheniere Energy’s Corpus Christi LNG export terminal in Texas. The LNG was loaded onto the 174,000 cubic metres capacity carrier “Maria Energy”, charted by Houston, Cheniere’s marketing unit. Start-up of Train-1 marks the first export of LNG from the state and from a greenfield liquefaction facility in the lower 48 states. All three Corpus Christi trains combined will produce up to 13.5 mtpa. The first two Trains are fully contracted and Train 3 is mostly contracted. Any excess capacity will be available for Cheniere Marketing to sell. Corpus Christi is being constructed at a cost of $15 billion.