LNG

The Nigeria LNG plant at Bonny Island in the Niger Delta is set for more feed gas from development of the onshore Ubeta gas field first discovered 60 years ago in the West African nation with world-class oil and gas untapped reserves.

Nigerian National Petroleum Corp., the state energy company, and French major TotalEnergies said they had agreed to develop the field at an initial cost of $550 million.

TotalEnergies is the operator of the onshore licence for the Nigerian Ubeta's gas field with a 40 percent while NNPC will own 60 percent.

The field is located about 80 kilometres northwest of Port Harcourt in Rivers state, and the current licence covers two fields currently in production, the Obagi oil field and the Ibewa gas and condensate field.

The Ubeta gas volumes will be processed at the nearby Obite gas treatment centre and supplied to both the Nigerian domestic gas market and to the Nigeria LNG plant.

Schedule

The production start-up is expected in 2027, with a plateau of 300 million cubic feet per day, or about 70,000 barrels of oil equivalent per day including condensates.

TotalEnergies, which has a 15 percent stake in the Bonny Island liquefaction and export project, said the Ubeta field would be part of and expansion of LNG output from 22 million tonnes per annum to 30 MTPA.

NNPC Chief Executive Mallam Mele Kyari said he appreciated the support from stakeholders as well as from the administration of Nigerian President Bola Tinubu.

“We appreciate presidential support for the fiscal terms of the agreement,” Kyari added.

The TotalEnergies Senior Vice President African Exploration and Production, Mike Sangster, said the Ubeta project is the latest in a series to tap associated gas from oil production.

“Ubeta fits perfectly with our strategy of developing low-cost and low emission projects, and will contribute to the Nigerian economy through higher LNG exports,’ Sangster added.

Train Seven

The Nigerian LNG plant has been in production since 1999 and the shareholders in addition to TotalEnergies are held by NNPC with 49 percent, Shell with 25.6 percent and Italy’s Eni with 10.4 percent.

The facility has capacity to producer 26 MTPA of LNG from six liquefaction Trains, though the development of a seventh LNG Train has suffered from delays.

Freeport LNG has updated the timing of the initial restart of its liquefaction facility on Quintana Island in Texas after repairs and refurbishment following the June 2022 fire.

“The company continues to make notable progress on its path towards the restart of liquefaction operations,” said Freeport.

“As of December 23rd, the reconstruction work necessary to commence initial operations is substantially complete, and the company is submitting responses to the last remaining questions included in the Federal Energy Regulatory Commission’s data request,” added the company.

Freeport explained that given the time needed for the regulatory agencies to review the company’s responses and to seek any necessary clarification, Freeport LNG now does not anticipate commencing the initial restart of its liquefaction facility until the second half of January 2023.

“The company continues to have close, collaborative engagement with the regulatory agencies and that engagement will continue as Freeport LNG works towards the safe restart of its facility,” stated Freeport.

When the explosion occurred, Freeport’s Chairman and Chief Executive Michael Smith and his team had been planning for an expansion from 15 million tonnes per annum of output from three Trains to 20 MTPA with the construction of a fourth Train.

Customers

Freeport LNG's main customers include Japan’s largest importer JERA Co. Inc., the Japanese utilities Kansai Electric and Osaka Gas as well as South Korean company SK E&S and buyers in Europe.

During the first quarter of 2022 before the accident, the Freeport plant exported 55 cargoes mainly to import terminals in Europe and North Asia

Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired by the company to review the incident and suggest action.

Even without Freeport volumes, the amount of gas flowing to US LNG export plants hit 13.0 billion cubic feet per day last week, the most since May 2022, 10 days before the Freeport shutdown.

The Freeport closure meant the nation’s other six large-scale export plants have been operating near full capacity.

Equinor, the Norwegian oil and gas company, is boosting the feed-gas supplies from another field in the Barents Sea to produce more LNG from the Hammerfest plant on Melkøya Island in northern Norway.

Australian and African LNG export plants operator, US major Chevron Corp., is increasing its LNG trading role after signing cargo supply agreements with the largest US exporter Cheniere Energy and newcomer Venture Global with one plant in operation in Louisiana and three others under development in the state.

Trinidad and Tobago, the Caribbean nation shipping cargoes from the Atlantic LNG facility at Point Fortin in Trinidad, will have access to more natural gas after UK major BP brought on stream the Matapal project.

Freeport LNG returned a liquefaction Train to service after a brief spell of maintenance, increasing feed-gas demand at the Quintana Island plant in Texas and guaranteeing cargoes for Asian and European buyers..

The ramp-up of the Train at the three-Train Freeport facility came as spot LNG prices for North Asia jumped to $18.46 per million British thermal units for October from $17.240 per MMBtu last week.

US Gulf Coast LNG last day futures prices also soared on the week with the October US GCL free-on-board (FOB) cargo quoted at $16.900 per MMBtu versus the previous week's $15.199 per MMBtu.

With the Freeport Train back on stream, data showed that feed-gas deliveries to the Texas plant increased to just over 2 billion cubic feet per day.

Analysts note that high demand for US LNG from nations like China, Japan and South Korea as well as Brazil in South America has meant very high utilization rates at all six US liquefaction terminals.

The Freeport operating company, whose Chief Executive is the energy entrepreneur Michael Smith, produces around 15 million tonnes per annum of LNG, the equivalent of 130 million barrels of oil.

The Freeport business is now estimated to be on track to book well over $2.5 billion in revenue in 2021 because of higher prices, including the US benchmark Henry Hub over $4 per million British thermal units.

It has use-or-pay liquefaction tolling agreements for most of the output from the three Trains with customers including European and Japanese contract holders, BP of the UK, Germany’s Uniper and Japan’s Jera Co. Inc. and Osaka Gas.

The Freeport plant, which is the only plant in the US that uses exclusively electric motors instead of natural gas turbines to drive the liquefaction compressors, also has permits to develop a fourth processing Train.

The first three Trains were built by a consortium including McDermott International and Zachry Construction Corp. of the US, along with Chiyoda Corp. of Japan.

Freeport only began commercial operations in May 2020 for its third Train with liquefaction services for French major TotalEnergies and South Korean utility and energy company SK E&S under their tolling agreements.

The original Freeport facility was completed as an import terminal in 2008 with one berth and two storage tanks, each of 160,000 cubic metres capacity.

A second loading berth and 165,000 cubic metres capacity of storage were added.

Cheniere Energy, the largest US liquefied natural gas exporter with two liquefaction plants in Louisiana and Texas, posted a 14 percent rise in first-quarter revenues to more than $3 billion as it shipped 133 cargoes.

Venture Global has told regulators it was making steady progress on the Calcasieu Pass LNG export plant in Louisiana, expected to come on stream in 2022 along with the TransCameron Pipeline, though recent work was hampered by the very active hurricane season on the Gulf Coast.

Venture Global, the US developer of three LNG export plants in Louisiana, has spoken at the Gastech Virtual Summit in favour of LNG in the energy transition as a counter to huge new coal power-generation plans in China and the power cuts in the US state of California, he referred to as “green-outs”.