LNG

Cheniere Energy, the operator of the US Sabine Pass and Corpus Christi LNG export plants, reported soaring revenues that more than doubled to $3.20 billion for the third quarter as natural gas market prices hit records worldwide.

Cheniere Energy, owner of the Sabine Pass export plant in Louisiana and the Corpus Christi facility in Texas, has signed a long-term feed-gas supply agreement with US exploration and production company Apache Corp. to underpin its expansion plans at the Texan plant.

The Houston, Texas-based company said its Cheniere Corpus Christi Liquefaction Stage III subsidiary signed an agreement with Apache for 140,000 million British thermal units per day of natural gas for a term of around 15 years.

The Apache feed-gas will come from the Permian Basin, the prolific shale production region in West Texas and southeast New Mexico.

The expected LNG output associated with this gas supply, approximately 0.85 million tonnes per annum, will be marketed by Cheniere to global LNG customers.

Apache will receive an LNG price, net of a fixed liquefaction fee and certain costs incurred by Cheniere, for the natural gas delivered to Corpus Christi Stage III under this agreement.

Cheniere said the LNG price was based on international LNG indices.

The company has already filed an application with the Federal Energy Regulatory Commission to site, construct and operate the Stage III Corpus Christi expansion.

Cheniere’s Stage III development is for up to seven mid-scale liquefaction Trains adjacent to the current Corpus Christi development of three large-scale Trains with output of 13.5 MTPA, with two Trains already completed.

The seven mid-scale Trains will each have nominal capacity of around 1.4 MTPA.

The total expected nominal production capacity of the mid-scale Trains is about 9.5 MTPA of LNG, taking total production at the Texas plant to 23 MTPA.

“This first-of-its-kind long-term agreement with Apache represents a commercial evolution in the US LNG industry, as it will ensure the continued reliable delivery of natural gas to Cheniere from one of the premier producers in the Permian Basin, while enabling Apache to access global LNG pricing and receive flow assurance for its gas,” said Jack Fusco, Cheniere’s President and Chief Executive.

“This commercial agreement, which is expected to support the Corpus Christi Stage III project, reinforces Cheniere’s track record of creating innovative, collaborative solutions to meet customers’ needs and support Cheniere’s growth,” added Fusco.

John J. Christmann, Apache’s CEO and President said Apache’s agreement with Cheniere was part of the company’s long-term strategy to leverage the scale of its Permian assets and diversify its customer base and cost structure.

“We are pleased to partner with Cheniere in this innovative marketing agreement,” added Christmann.

The Port of Corpus Christi in Texas, the site of an LNG export plant owned by Cheniere Energy and other oil and gas shipment facilities, said it was set to formally launch its Ship Channel Improvement project.

The Port authority said it planned a formal ceremony on May 29 attended by project partners.

The plans when completed will help turn Corpus Christi into one of the main US LNG and oil export hubs in the nation.

Strategically located on the western Gulf of Mexico with a 36-mile, 47 foot deep (Mean Lower Low Water) Channel, Corpus Christi is a growing gateway to international and domestic maritime commerce.

“The Ship Channel Improvement Project marks a significant milestone in the progress of the United States in becoming a net exporter of energy production,” said the Port authority.

The Cheniere Corpus Christi LNG plant exported its first cargo in December 2018 from the first Train with 4.5 million tonnes per annum of Capacity and will have 13.5 MTPA of exports when the two further Trains of the phase one development start commercial operations.

Cheniere is also developing up to seven mid-scale liquefaction Trains adjacent to the existing Corpus Christi project, each with an expected nominal production capacity of around 1.4 MTPA of LNG.

This would take total LNG shipments from the Port area to 23.3 MTPA.

However, the Corpus Christi LNG plant is located on the La Quinta Channel on the northeast side of Corpus Christi Bay, outwith the port itself and on a 1,000-acre site controlled by Cheniere.

“Following the 40-year ban on crude oil exports, the Port of Corpus Christi handled the first shipment of US crude oil abroad on December 31, 2015,” explained the Port.

“Its location on the Gulf of Mexico and proximity to the West Texas oil and gas boom has created a massive increase in demand and traffic for the Port of Corpus Christi,” it added.

Three years later, in 2018, Corpus Christi went from zero crude exports to exporting $10.8 billion worth of crude oil to US trading partners, contributing to the reduction of the US trade deficit.

As a leading US crude oil and LNG export centre, Corpus Christi noted that it was now ranked as the fourth-largest US port in terms of total tonnage.

The May 29 event will be attended by participants in the construction of the Ship Channel Improvement and its supporters, including R.D. James, Assistant Secretary of the Army Civil Works and US Republican congressmen for Texas, Kevin Brady and Michael Cloud.

Other officials in attendance will be Sean Strawbridge, the Port’s Chief Executive and Charles Zahn, the Commission Chairman of the Port.