LNG

Energy Transfer, the US company with natural gas midstream, intrastate and interstate transport and storage assets as well as owning the Lake Charles LNG export project, has received permission from regulators to put the Gulf Run pipeline in service as a provider of LNG feed gas and volumes for the domestic market.

The newly constructed 135-mile, 42-inch natural gas pipeline in Louisiana has a capacity of 1.65 billion cubic feet per day with potential growth opportunities.

The pipeline is owned by Gulf Run Transmission LLC, a subsidiary of Dallas, Texas-based Energy Transfer,

“The pipeline will deliver domestically produced natural gas from key US producing regions to meet the rapidly growing demand along the Gulf Coast and international markets,” said Energy Transfer.

Gulf Run receives natural gas from Energy Transfer’s extensive intrastate and interstate pipeline network, including production directly from the Haynesville Shale.

The company noted that volumes originating from all the major natural gas basins in the US have access to the Gulf Run pipeline, including the Permian Basin, the Barnett Shale, the Marcellus and Utica shales, East Texas, the Arkoma and the Anadarko basins.

Two zones

The pipeline consists of two zones for connections. They are Zone 1 connecting the Carthage Hub to the Perryville markets and Zone 2 extending south and connecting to the Golden Pass Pipeline and to Energy Transfer’s Trunkline system.

The Golden Pass Pipeline is 69 miles in length and is a central part of Golden Pass joint venture LNG project between QatarEnergy and ExxonMobil and with the first liquefaction Train scheduled to come on stream by 2024.

The three-Train plant is on the Sabine-Neches Waterway in Texas and will have around 16 million tonnes per annum of LNG output.

“The Zone 1 segment has bi-directional flow capabilities, providing the ability to deliver significant volumes to Perryville as well as to the Golden Pass and Trunkline systems,” explained Energy Transfer.

At Lake Charles in Louisiana, Energy Transfer is itself developing the Lake Charles LNG plant on the Calcasieu Ship Channel.

The project will convert Energy Transfer’s existing Lake Charles import and regasification terminal into a liquefaction facility with 16.45 MTPA of exports.

Energy Transfer has signed significant long term LNG offtake contracts and with more in preparation.

The company operates more than 8,800 miles of pipeline in Louisiana and owns and operates more than 110,000 miles of pipeline and related infrastructure across 40 other states transporting natural gas, crude oil, natural gas liquids and refined products.

Venture Global LNG, owner of the newest US export plant at Calcasieu Pass in Louisiana and with three other projects in development, has signed two long-term supply agreements with a German utility with cargo deliveries starting in 2026.

Energy Transfer LP, the owner of assets in the Permian Basin and Haynesville Shale as well as the Cushing crude oil delivery system, has signed two LNG sale and purchase agreements with ENN Group for its almost forgotten Lake Charles LNG export project in Louisiana.

Under the two SPAs, Energy Transfer is expected to supply 1.8 million tonnes of LNG to ENN's natural gas subsidiary and 900,000 tonnes of LNG to the ENN Energy unit per annum on a free-on-board (FOB) basis.

Energy Transfer said the purchase price was indexed to the Henry Hub benchmark plus a fixed liquefaction charge.

Both SPAs are for a term of 20 years and first deliveries are expected to commence as early as 2026.

China’s ENN has an annual LNG distribution capacity of over 10 billion cubic metres of natural gas and runs the first large-scale private LNG terminal in China, the Zhoushan LNG facility in eastern Zheijang province south of Shanghai.

The SPAs will become fully effective upon the satisfaction of the conditions precedent by Energy Transfer’s plan and final investment decision to transform the existing Lake Charles LNG import terminal into an export plant.

Almost forgotten

The Lake Charles LNG import terminal once had BG Group of the UK as a main customer. Shell then become a terminal partner before later withdrawing from the export plant joint venture.

The Federal Energy Regulatory Commission has issued permits for the Lake Charles transformation and to produce 16.5 million tonnes per annum of LNG.

Energy Transfer had acquired the Lake Charles terminal in mid-2011 with the takeover of Southern Union Co. for $7.9 billion.

“The signing of these long-term SPAs will further enrich ENN’s LNG resources, expand resource supply channels, and improve ENN’s natural gas supply capacity to meet the rapidly growing natural gas demand in the domestic market,” said Zheng Hongtao, President of ENN’s natural gas unit and Vice Chairman of the Board.

Tom Mason, President of Energy Transfer LNG, said the Dallas, Texas-based company was pleased to have ENN Energy onboard.

“The execution of these two SPAs represents a significant event in moving the Lake Charles LNG project towards FID,” he explained.

“We are experiencing strong demand for long-term offtake contracts for Lake Charles LNG and we are optimistic that we will be in a position to take a positive FID by year-end,” stated Mason.

“The Lake Charles LNG project is expected to be financed primarily through infrastructure funds and strategic partners, with Lake Charles LNG retaining an equity stake and operatorship of the liquefaction facility,” he added.

Lake Charles LNG will be constructed with the existing brownfield site of regasification facility and will capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure.

“Lake Charles LNG will also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines,” said Energy Transfer.

“These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale,” the company declared.