LNG

Chart Industries, the US equipment-maker for liquefied natural gas and other clean energy and industrial gases markets, said its technology enabled the delivery of first LNG to the New Fortress Energy production project offshore Altamira in the Gulf of Mexico.

New Fortress Energy, the US integrated LNG and power company that owns, operates or provides natural gas to 30 facilities in five countries has been awarded a new gas supply contract in Puerto Rico.

NFE said the Puerto Rico gas contract more than doubles the volumes of gas it currently provides to power plants in the US territory in the Caribbean.

The New York-based company additionally sold two operating power plants to the Puerto Rico Electric Power Authority (PREPA).

NFE explained that it sold the emergency power plants it constructed on behalf of the US Army Corps of Engineers in San Juan and Palo Seco in Puerto Rico to PREPA for $373 million in cash, subject to certain items and conditions.

Power security

“These plants were developed by the company in 2023 in rapid response to a competitive bid by the US Army Corps of Engineers to provide emergency power in order to stabilize the power grid in Puerto Rico,” explained NFE.

“They have become a cornerstone of Puerto Rico's energy portfolio, delivering critical baseload power to stabilize the grid in the aftermath of recent natural disasters, and as contemplated, their ownership has been transferred to PREPA,” NFE added.

Following a competitive bid process, NFE was awarded and has entered into a new island-wide gas supply contract with PREPA, ensuring continued gas supply to these power plants for up to four years.

“The expanded volumes under the contract will enable conversion of other plants on the island from diesel to gas, providing lower cost, cleaner energy to Puerto Rico,” NFE stated.

As a result of the early termination of the contracts that have governed the construction, operations and associated costs of the two power plants, NFE said that it expected to negotiate a mutually beneficial settlement of all outstanding obligations in the near future.

“We entered the Puerto Rico market in 2017 based on the island’s emergency need for natural gas and power,” said Wes Edens, Chairman and Chief Executive of NFE.

“The transactions mark a significant milestone in our continued commitment to Puerto Rico's energy security and cost reduction efforts while significantly increasing our business in the region,” Edens added.

LNG projects

In its most recently earnings, NFE reported net income for 2023 of $547.88M, an almost three-fold increase from the $194.48M achieved in 2022.

After the end of the financial year NFE noted that in February 2024 it completed the Brazilian Barcarena and Santa Catarina LNG import terminals and placed them into service.

In NFE’s “Fast LNG” operation whereby it produces LNG from feed gas, it placed into service its first unit offshore the Gulf of Mexico and is now expecting first LNG in March and the first cargo in April 2024.

Saudi Arabia, which is buying LNG assets for the first time through Saudi Aramco, said that recent multi-billion dollar agreed acquisitions during October by US oil majors ExxonMobil Corp. and Chevron Corp. for Pioneer Natural Resources and Hess Corp. respectively for combined sums of more than $112 billion in stock proved that hydrocarbons were “here to stay” in the global energy future.

“Exxon and Chevron didn't buy because they want to have stranded assets,” said Saudi Energy Minister Prince Abdulaziz bin Salman at Riyadh's annual Future Investment Initiative (FII) conference and added that the US combinations for oil and gas could not have come at a “better time” for the industry.

The US takeover deals have drawn criticism from environmentalist activists who regard the merger and acquisition activities as undermining ambitious climate change aims that are increasingly costly and are beginning to affect energy security requirements of nations.

Aramco LNG

Saudi Aramco, the world’s largest oil production group, has signed definitive agreements to acquire a strategic minority stake in a company called MidOcean, a unit of Washington DC-based equity fund EIG for $500 million and thus entering the LNG sector initially in Australia.

Prince Abdulaziz said in the Riyadh's speech that the energy transition would require hydrocarbons including petrochemicals which are vital for sectors such as pharmaceuticals and industry manufacturing.

The International Energy Agency (IEA) argued in its World Energy Outlook issued on October 24 that world fossil fuel demand was set to peak by 2030 as more electric cars were being purchased and China's economy was forced to grow more slowly amid changes centred on renewable energy.

The IEA's forecasts run counter to those of the Organization of the Petroleum Exporting Countries (OPEC), which sees oil demand rising long after 2030 and which would require trillions in new oil sector investment.

Saudi Arabia is the world's biggest oil exporter and intends to increase its oil production capacity by 1 million barrels per day to 13 million barrels per day by 2027 to meet increasing global demand.

Future oil demand

“We are investing not to create a stranded asset. Saudi Arabia would not be investing in raising its capacity if there was not sufficient demand for additional production,” he added.

Analysts noted that the US takeovers by ExxonMobil and Chevron have also focused on US shale oil and natural gas assets and have re-evaluated them upwards.

The Chevron and ExxonMobil deals have increased portfolio assets in premier US shale basins like the Bakken in North Dakota and the Permian in Texas

Other assets that will be acquired when the deals are approved include oil and gas blocks in South America and the Gulf of Mexico.

Hess’s Bakken assets added another leading US shale position to Chevron’s DJ basin and Permian basin operations and will further strengthen US domestic energy security.

In ExxonMobil’s case it agreed to pay an 18 percent premium for Pioneer’s prized assets relative to its share price.

The acquisition of Permian acreage by ExxonMobil provides shale oil, natural gas and liquids for the global and US markets as well as growing LNG feed-gas volumes from associated gas.

New Fortress Energy, the US developer of floating LNG production and import terminal and power projects, reported higher first-quarter revenues as “Fast LNG” projects advance along with regasification and power ventures in Brazil and Ireland.

The New York-based firm’s revenues jumped to $579.1M from $505.1M in the same three months of 2022 and were also up from the $546.4M logged in the previous quarter.

However, NFE’s net income dropped to $151.6M from $241.2M in the same three months of 2022.

The company explained that the construction of its first “Fast LNG” unit was 90 percent complete and deployment to Altamira on the Gulf Coast of Mexico was expected in the months ahead. 

NFE’s “Fast LNG” pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure to enable lower-cost and faster deployment schedules.

“We expect to complete commissioning of our first ‘Fast LNG’ unit in the shipyard and on-location at the Altamira site and continue to anticipate first gas in July 2023,” said NFE.

The company noted that its FLNG 2 and FLNG 3 were already under construction and all long-lead items have been procured.

Brazil projects

NFE has also completed the Barcarena import terminal in Brazil and expects first gas deliveries to industrial customer Norsk Hydro in late 2023.

“We remain on schedule and also in 2023 expect to commence operations at our Santa Catarina terminal in Brazil,” NFE added.

NFE explained that construction of the 630 megawatts power plant at Barcarena is underway pursuant to a fixed-price, date-certain engineering, procurement and construction contract with Mitsubishi and Toyo Setal of Japan.

Operations at the plant are expected to commence in July 2025 pursuant to 25-year power purchase agreement with Brazilian distribution companies.

NFE is also selling a power plant in Mexico and was finalizing the sale of the 135-MW La Paz facility to Mexico’s Comisión Federal de Electricidad for around $180M. The transaction was expected to close in the third quarter.

The US company has also been awarded a 353 MW of capacity contract with a 10-year duration from the Single Electricity Market Operator (SEMO), the operator of the Republic of Ireland's electric grid.

NFE is also expecting to finalize a permitting and construction contract for a 600 MW combined-cycle, gas-fired power plant beginning operations in 2026 and to be supplied by a proposed Shannon LNG terminal project in Ballylongford in County Kerry, southwest Ireland.

New Fortress Energy, the developer of LNG production, regasification and electricity projects and with a small shipping fleet, said its Genera subsidiary was selected by Puerto Rico to manage the US Caribbean territory’s power generation system.

CFEnergía SA, a subsidiary of the Mexican Federal Electricity Commission (CFE), has closed a four-day window for pre-registration of expressions of interest from companies and investors to join an onshore LNG export project planned for the port of Coatzacoalcos in the state of Veracruz on the southern coast of the Gulf of Mexico.

New Fortress Energy has filed applications with three US regulatory agencies to deploy its “Fast LNG” production system in the US Gulf of Mexico offshore Louisiana with start-up planned by 2023.

US company Pilot LNG, the developer of the Galveston LNG Bunker Port (GLBP) project in Texas, awarded the front-end engineering and design contract for marine infrastructure to W.F. Baird Associates.

“It was imperative that the company selected to carry out the FEED works for the Galveston LNG Bunker Port has an excellent track record of successfully executing marine terminal projects,” said Pilot Chief Executive Jonathan Cook.

“Our selection of Baird is in recognition of their unparalleled expertise and commitment to engineering and designing safe, reliable and efficient projects and we are happy to continue to work with Baird as a preferred partner in GLBP,” added Cook.

Pilot has already filed regulatory applications with the US Army Corps of Engineers (USACE) and other relevant regulatory agencies, possibly paving the way for a final investment decision in 2022.

According to the company, the main LNG storage facilities are expected to be located on Pelican Island in Galveston County in Texas.

Regulations

As international regulators tighten emissions standards, the maritime industry is increasingly turning towards LNG as the marine fuel of choice due to its significantly lower emissions profile and cost competitiveness.

Analysts said the Galveston Bay area was an ideal location to add LNG bunkering infrastructure.

It has more than 10,500 deep-water vessel visits per annum and over 133,000 tug/tow movements on the Houston Ship Channel, as well as being the nation’s fourth busiest cruise terminal.

“To further mitigate operational impacts, Pilot has chosen to utilize electric drives powered by electricity sourced 100 percent from Texas renewable energy, eliminating virtually all operating emissions related to the facility and likely making the GLBP project one of the greenest facilities of its type anywhere in the world,” explained Pilot LNG.

Baird will provide a variety of services to Pilot LNG, including design of marine structures, metocean modelling including storm surge and tidal currents, dredging design and dredged material placement analysis.

Pilot LNG said that Baird’s Houston office would lead the assessment with support from the company’s other North American and international offices.

“The GLBP project will provide one of the US’s largest industrial port complexes, comprising the ports of Houston, Galveston, and Texas City, with the infrastructure needed to supply clean fuel to the growing global LNG bunker market,” added Pilot LNG.

Kosmos Energy, the US partner of BP in the Mauritania-Senegal floating LNG projects, has completed its acquisition for more than $1.22 billion of Deep Gulf Energy as it keeps faith in the deepwater Gulf of Mexico as other operators retreat to the US onshore shale basins.

Kosmos, based in Dallas, said it purchased Deep Gulf Energy to expand its assets in the Atlantic Margin exploration area of the most distant parts of the Gulf that can have similar deepwater challenges to offshore West Africa.

“By acquiring DGE, Kosmos adds to its deepwater Atlantic Margin portfolio an established business with attractive assets and a strong record of growing production and reserves through infrastructure-led exploration,” said Kosmos.

“This immediately accretive acquisition enhances the scale of the company and is expected to generate significant free cash flow,” added Kosmos.

Houston, Texas-based DGE was founded in 2005. The company has drilled 20 wells, 16 of which have been completed. The company achieved its first production in 2007 and the acquisition would add around 25,000 barrels of oil equivalent per day of production for Kosmos.

Kosmos notes that while many competitors have been leaving the Gulf of Mexico to pursue onshore shale plays, their departures have created an opportunity to further open up the Gulf.

“The best deepwater assets can compete with the best of shale, and now is a good time to enter the Gulf of Mexico,” said Kosmos.

The completion of the DGE deal comes as Kosmos and BP are moving forward with contract awards for the Tortue-Ahmeyim natural gas project in the Atlantic Margin of Mauritania and Senegal that will underpin several FLNG ventures.

The Tortue-Ahmeyim project will produce gas from a deepwater subsea system and transfer it to an FLNG production facility at a nearshore hub located on the Mauritania and Senegal maritime border.

The FLNG facility for Phase 1 is expected to deliver about 2.5 million tonnes per annum of LNG on average.

The full project will target 10 MTPA of LNG output as well as making gas available for domestic use in both Mauritania and Senegal.

First gas from the African project is expected in the first half of 2022.

Construction of a final subsea section of a natural gas pipeline that goes under the US-Mexico border in the Gulf of Mexico has begun and when completed will enable more pipeline gas to be transported to the current largest recipient of US LNG cargoes.