In this issue


Against the run of play, LNG buyers are prepared to pay a premium for supply from Australia and the United States – described by Standard & Poor’s as “the swing”, meaning states with the highest cost production. Forward prices, notably for shipments to Asia, imply “LNG buyers are willing to pay above the variable cost of U.S. LNG production (delivered ex-ship),” which, according to S&P analysts “is not what you would expect in an oversupplied market.” 

The U.S. decision to leave the Iran nuclear deal and force the Middle East nation to cut its oil exports again keeps pushing up Brent, WTI and oil-linked LNG export contracts – creating a large gap between longterm LNG prices and spot LNG prices in the Northern Hemisphere summer. 

The tanker was carrying a cargo from the Sabine Pass plant in Louisiana owned by Cheniere Energy. According to shipping data, the cargo was lifted on May 3 from the US export plant on the Gulf Coast.

Mexico, the largest buyer of US pipeline gas and LNG, is preparing a tender for strategic storage at depleted oil and gas reservoirs. Cenagas, the Mexican National Natural Gas Control Centre, has already selected four underground sites – Acuyo, Brasil, Jaf and Saramako – from a list of 15 proposed sites. Registering strong bidding interest from foreign players, the Mexican Energy Secretariat (Sener) will hold the tender in September 2018. 

Advancing its capacity buildout, Cheniere Energy has taken a final investment decision (FID) on a third train at Corpus Christi LNG which will take the terminal’s liquefaction capacity to a total of 13.5 mtpa. “Moving forward with the construction of Train 3 at Corpus Christi reinforces our position as the leader in U.S. LNG,” said Cheniere President and CEO Jack Fusco.

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. 

News Nudges

FERC ends plans for Puerto Rico LNG expansion

“Aguirre Offshore GasPort requests that FERC vacate its 2015 order authorizing the construction and operation of LNG import terminal facilities along the southern shore of the Commonwealth of Puerto Rico near the municipality of Salinas,” FERC said, adding: “In its request to vacate, Aguirre stated that it no longer intends to proceed with the project, that no construction has been undertaken, and that no facilities are in service.” The Aguirre project company filed its last status report in June 2018 to the regulator to keep its permit process up to date, but later gave notice that the venture was not proceeding. The FERC notice has finally pulls the curtain down for now on plans for LNG expansion in Puerto Rico. Excelerate Energy had previously agreed to provide a floating storage and regasification unit (FSRU) for the Aguirre project in 2019, but was forced to cancel its contract with the bankrupt Puerto Rico Electric Power Authority. The FSRU was to have been deployed offshore Salinas and would also have had a 6.4 kilometres pipeline to provide regasified LNG to the Aguirre power station.