LNG

US Natural gas futures on the New York Mercantile Exchange hit a 14-year high of almost $9.400 per million British thermal units amid optimism on future demand for LNG exports as Venture Global took a final investment decision on its Plaquemines LNG project on the banks of Mississippi River in Louisiana.

The US Federal Energy Regulatory Commission has finally approved permits for the construction and operation of the Alaska LNG project and the State-backed Alaska Gasline Development Corp. (AGDC)  will now decide if the economics can attract investors and allow the long-awaited venture to go ahead.

“FERC’s authorization validates that the Alaska LNG project can be safely built and operated, delivering numerous potential benefits with manageable environmental impacts,” said AGDC President Frank Richards.

“This approval signifies the completion of a rigorous and comprehensive evaluation that has engaged environmental and energy experts at dozens of federal and state regulatory agencies,” added Richards.

Analysts noted that obtaining FERC approval significantly de-risked the project execution with defined environmental stipulations.

The project was launched almost 10 years ago and there is still some hope that LNG would be produced and exported by 2026 after engineering, construction and production costs were estimated at around $43 billion.

However, the timing could not be worse for seeking investors amid the oil price slump and only a partially recovery at present above $30 per barrel.

Chinese energy companies and banks had previously expressed interest in taking part in the Alaska venture, though they disappeared from the picture when the US-China trade dispute broke out.

The FERC permit grants building consent for a liquefaction facility on the Kenai Peninsula designed to produce up to 20 million tonnes per annum of LNG for export.

It also include permission to construct and operate a pipeline of 807 miles in length and capable of transporting up to 3.9 billion cubic feet of gas per day to the liquefaction facility from a gas treatment plant located at Prudhoe Bay in the North Slope, as well as two additional natural gas pipelines connecting production units to the gas treatment plant.

The Department of Energy has also authorized export permits for 20 MTPA to be supplied to nations with or without a Free Trade Agreement with the US.

“The Alaska LNG project is the last remaining LNG project before FERC covered by the Fixing America’s Surface Transportation Act (FAST-41 Act),” said the regulator in reference to a fast-track measure required by Congress.

“The Commission took action today ahead of the scheduled June 4, 2020, final decision set by the statute,” the FERC explained.

“The federal authorization is a key step in determining if Alaska LNG is competitive and economically beneficial for Alaska,” said Alaska Governor Mike Dunleavy.

“I commend the AGDC team for their diligence. The ongoing project economic review and discussions with potential partners will determine the next steps for this project,” added Dunleavy.

Alaska’s Congressional delegation, Senator Lisa Murkowski, Senator Dan Sullivan and Representative Don Young welcomed the FERC decision and issued a joint statement.

“We commend the continued work by both FERC and AGDC to advance the Alaska LNG project to this key point,” they said.

“The certificate issued by FERC is the culmination of years of work and will be a major asset for both investment in Alaska and our nation’s long-term energy security,” they added.

“Development of our vast natural gas resources will further expand North Slope opportunities and could be a game-changer for our state economy,” the three politicians stated.

The biggest commercial advantage of adding a major liquefaction facility in Alaska is the shorter shipping route to Asia than from the Gulf Coast, where four of the six US LNG export facilities currently in operation are located.

The AGDC, along with energy companies such as ExxonMobil with North Slope assets and who will supply the feed-gas, has given a contract to engineering company Fluor Corp. to update the 2015 estimate that the project would still cost $43Bln to complete. 

Exmar, the Belgian shipping and projects company with more than 40 vessels in its fleet and now mostly focused on the liquefied petroleum gas business and LNG shipment management, said the Bank of China had finally released financing for the “Tango FLNG” production barge deployed in Argentina while the vessel itself was earning income as it liquefied shale gas from the Vaca Meurta Basin.

Exmar, the Belgian shipping company with more than 40 vessels in its fleet now mostly focused on the liquefied petroleum gas business, said the outbreak of the coronavirus in China has caused further delays in the release by the Bank of China of $40 million under the “Tango FLNG” loan facility. 

Exmar, which has undergone financial troubles over the past couple of years, had previously said the China Export Credit Insurance Corp. had approved the release of around $40 million from a debt service reserve account under the “Tango FLNG” loan conditions.

The “Tango FLNG” vessel is chartered to Argentina and has exported three cargoes from the port of Bahia Blanca where it produces LNG from pipeline feed-gas.

The vessel was built at the Chinese Wison shipyard in Nantong and delivered to Exmar in 2017. It had initially been destined for a project in Colombia in South America that was cancelled.

Exmar said it was awaiting for the offices of the Chinese authorities to officially re-open and the tranche of money to be paid.

The vessel, chartered by Argentine energy company YPF, formally started its operations in June 2019 and the 10-year charter term began in September 2019.

The “Tango FLNG” production barge can produce around 500,000 tonnes per annum of LNG for domestic sale or export.

Exmar continues to manage 10 LNG floating storage and regasification units, though is not directly involved in regasification projects with former partner Excelerate Energy of the US.

Exmar added in its financial update that under the ongoing arbitration procedure on an FSRU barge with commodities group Gunvor, the financing of the asset could not be completed.

“Meanwhile Exmar obtained a further extension of its bridge loans until the end of February and of certain other capital expenditure until mid-March,” explained the Antwerp-based company.

Exmar is still caught up in a legal dispute with Gunvor over an FSRU barge that was also delivered from the Wison Nantong shipyard in China in 2017.

The Exmar barge with 25,000 cubic metres capacity was the subject of a 10-year Charter to Gunvor signed in October 2018.

Gunvor had been expecting to deploy the barge in Bangladesh. Then the Asian nation cancelled planned small-scale projects to concentrate on a larger venture.

Exmar has also made executive changes in January 2020 as it tries to improve finances after several setbacks to meet the challenges of the year ahead.

Among the changes, it has named Francis Mottrie in the new position of Deputy Chief Executive to work along Nicolas Saverys, the Group CEO.

Alaska Gasline Development Corp. the developer of the Alaska LNG project, has scheduled a board meeting in Anchorage for May 22 when future key decisions on the venture will be discussed and cost-reduction and other reports considered.

Alaska Gasline Development Corp., the state-owned company developing the Alaska LNG project, is expected to sign a final joint development agreement with Chinese companies and banks by the end of the first quarter of 2019.

ExxonMobil has signed a preliminary accord for the sale of its 13.8 trillion cubic feet of natural gas resources in the Prudhoe Bay and Point Thomson fields of Alaska's North Slope to Alaska Gasline Development Corp., the state-owned body leading the development of Alaska LNG.

June 29 (LNGJ) - Alaska Gasline Development Corp (AGDC), the state-owned developer of the Alaska LNG export project, is preparing an equity offering and said it was open to engaging with joint venture partners, including international energy companies. Alaska LNG involves an 800-mile pipeline built from the North Slope in Northern Alaska to the site of a proposed liquefaction plant on the Kenai Peninsula with an initial 20 million tonnes per annum of output. The LNG project has informal accords with three potential customers and investors in China. They are China Petroleum and Chemical Corp., known as Sinopec, as an LNG purchaser, Bank of China as a financier and China Investment Corp. as an equity investor.

Alaska LNG, the project to export the state’s North Slope natural gas resources to Asia, has reached an agreement with BP of the UK and Alaska Gasline Development Corp. on feed-gas supplies, including price and volume.

Corpus Christi LNG, the project being developed in South Texas by Cheniere Energy, has hired a group of more than 25 banks from the US, Europe and Asia to restructure $6.4 billion of credit facilities as part of the financing of the third processing Train, demonstrating the viability of the emerging US export industry.