LNG

Air Products, the LNG equipment-maker and industrial gases company now branching out with mega-projects in the Middle East linked to the NOEM smart city project in Saudi Arabia and with a gasification business in China, reported a 6 percent increase in fiscal first-quarter net income.

The company reported net income of $584 million compared with $549.6M in the same three months last year.

Air Products, which is a leader in the industrial gases sector, reported fiscal first-quarter sales of $3.2 billion, up 6 percent over the prior year’s $2.99Bln on 7 percent higher pricing, 3 percent higher energy cost pass-through and 2 percent higher volumes.

The LeHigh Valley, Pennsylvania-based company, also achieved the financial close and transfer of the second group of assets for the $12 billion gasification and power joint venture with Saudi Aramco, ACWA Power and the US firm’s Saudi unit, Air Products Qudra, in the Jazan Economic City in Saudi Arabia.

“Higher pricing across the largest segments drove the results, complemented by favorable volume growth, primarily in Asia and the Americas, from higher on-site and merchant demand,” said the company.

LNG projects

The US company is also the leading supplier of LNG equipment for the majority of plants operating worldwide,

Air Products equipment is lined up for several LNG projects under development, including Qatar’s LNG production expansion, Sempra Energy’s Costa Azul LNG export terminal project in Mexico and the currently delayed TotalEnergies-led Mozambique onshore project in Cabo Delgado province.

The company increased its quarterly dividend on its common stock by 13 cents per share to $1.75 per share.

“We continued to advance mega-scale hydrogen energy projects globally, including the joint venture with AES Corp. to invest about $4 billion to build, own and operate the US's largest green hydrogen facility in Wilbarger County in Texas,” explained Air Products.

The Canadian federal and provincial governments also announced C$475 million (US$357M) in project funding for the Air Products multi-billion-dollar landmark net-zero hydrogen energy complex in the oil and gas province of Alberta.

“The committed team at Air Products worked hard to deliver strong results this quarter, overcoming significant economic weakness, currency challenges and other headwinds,” said Chairman, President and Chief Executive Seifi Ghasemi.

“We are proud to have reached significant project milestones, including completing the second phase of the $12Bln Jazan gasification and power project, continuing to make good progress on the project financing for the NEOM (smart city) green hydrogen project, and announcing plans for the largest green hydrogen project in the US to be located in Texas,” added Ghasemi.

“Importantly, we again increased the dividend, as we have done for more than 40 consecutive years and expect to pay out more than $1.5 billion to our shareholders in 2023,” stated Ghasemi. 

Sempra Energy has completed its final move in making Mexican subsidiary Infraestructura Energética Nova (IEnova) a private company by buying up all its publicly-held shares and clearing the way for the creation of the new Sempra North American LNG and gas platform.

The United States expects dry natural gas production will be flat and average 92.9 billion cubic feet per day in the second half of 2021 before output rises in 2022 to underpin LNG exports and more gas use outside the electricity generating sector amid switching to less expensive US coal for power.

The US Department of Energy has just published its latest liquefied natural gas export data with the average overall price for the six plants declining to just over $6.00 per million British thermal units, though shipments were delivered to a total of 27 nations in the reporting month.

Natural gas storage in the United States has remained essentially unchanged in more than a year with underground working gas capacity in the Lower 48 states showing a small increase in design capacity and peak capacity having a small decrease.

Design capacity by state showed the largest is in Texas at 526 billion cubic feet followed by Louisiana at 451 Bcf then Pennsylvania in third place with 418 Bcf and California is in fourth with 374 Bcf. Illinois came fifth with 301 Bcf and sixth place was filled by Ohio with 253 Bcf.

“Design capacity, sometimes referred to as nameplate capacity, is based on the physical characteristics of the reservoir, installed equipment, and operating procedures on the site, which often must be certified by federal or state regulators,” explained a report on underground natural gas storage just published by the Energy Information Administration.

“We calculated design capacity as the sum of the reported working natural gas capacities of the 387 active storage fields in the Lower 48 states,” said the EIA.

“We excluded the 25 inactive fields in the Lower 48 states from the total. The design capacity metric is a theoretical limit on the total amount of natural gas that can be stored underground and withdrawn for use,” it added.

Demonstrated peak capacity, or total demonstrated maximum working natural gas capacity, represents the sum of the largest volume of working natural gas reported for each individual storage field during the most recent five-year period, regardless of when the individual peaks occurred.

Estimates

Natural gas design capacity was essentially unchanged in 2020. However, some operators revised earlier estimates, increasing working gas capacity.

Design capacity of underground natural gas storage facilities in the Lower 48 states increased by 4 Bcf, or 0.1 percent, in the November 2020 report period compared with the November 2019 period.

A couple of notable revisions increased working gas capacity reported for 2019 in the Mountain and Pacific regions, which reflects the operators’ reassessments of the operational characteristics of the affected fields.

Increasing exports of natural gas also could increase natural gas storage capacity in the Gulf Coast region to support pipeline exports of natural gas to Mexico and LNG exports.

“Working gas stocks ended the November 2020 report period at its highest level since 2016, despite decreased natural gas production and continued high demand for natural gas in electricity generation and for export,” said the US report.

“The higher natural gas storage level was partly because working gas entered the refill season, in April, at 2,006 Bcf, ts highest level since 2017, following a relatively mild winter.

In the Mountain region, Spire Storage West revised the working gas capacity at the Belle Butte field (formerly Ryckman Creek) up by 16 Bcf to 35 Bcf.

South Central

Working natural gas design capacity increased by 5 Bcf in the South Central region. The most notable increase in the region was the 4.2 Bcf gain reported for the Egan Storage Dome by Egan Hub Partners.

Dewatering the salt cavern raised the capacity of this field.

In the Pacific region, the Northwest Natural Gas Company revised the working gas capacity for the Mist field in Oregon, increasing capacity by 1.5 Bcf to 4 Bcf for 2019.

The North Mist capacity expansion came online in May 2019.

Northwest Natural revised its early estimates of the design capacity of the Mist field, the only new natural gas storage reservoir to come online in 2019, based on the observed operational characteristics of the facility. Working gas capacity remained unchanged at the facility in 2020.

Demonstrated peak capacity decreased in 2020 as the decline in the Pacific region more than offset gains reported in other regions.

Overall, demonstrated peak capacity declined by 8 Bcf, despite reported increases in five of six regions in the Lower 48 states as of the November 2020 report period compared with the November 2019.

“Despite the net decline in demonstrated peak capacity for the Lower 48 states, the overall trend was toward increased usage of natural gas storage and higher working natural gas storage levels for the second year in a row,” said the report.

Peak capacity

Demonstrated peak capacity declined by 34 Bcf in the Pacific region because previous peak levels, predating the 2015 natural gas leak at the Aliso Canyon natural gas storage facility in California, are no longer included in the five-year range (December 2015-November 2020).

The Aliso Canyon field has operated at reduced levels since coming back online following the leak. Despite the decline in demonstrated peak capacity for the region, natural storage facilities in the Pacific region also saw increased usage during 2020 as in the other regions.

The South Central region reported the biggest increase in demonstrated peak capacity in 2020, increasing 10 Bcf (0.7 percent) over the previous year.

Salt facilities accounted for 8 Bcf of this year-over year increase. The Midwest had the next largest increase at 7 Bcf, followed by the Mountain region at 7 Bcf and the East region at 3 Bcf.

In recent years, several offsetting trends have affected the industry’s decisions about changes to underground storage capacity levels. Several recent trends may have reduced the need for investment in additional underground storage.

Although natural gas production declined in 2020, overall higher levels of natural gas production compared with a few years ago may have reduced some customers’ need to withdraw from storage to meet their natural gas needs.

The EIA stated that increased output in the Appalachian Basin, the Permian Basin and the Haynesville shale formation had driven production growth.

“In recent years, natural gas prices have fallen and become less volatile,” it also noted.

The seasonal spread between summer and winter natural gas prices has become increasingly smaller, reducing economic incentives to inject natural gas into reservoir and aquifer storage.

New plans

Among new storage plans on the Gulf Coast Sempra Energy’s storage unit in February 2021 gave more details of plans to construct and operate a “high-deliverability” salt-dome natural gas storage facility in Louisiana for existing and proposed LNG export plants with interconnections to key pipelines.

The applicant-prepared environmental assessment for the Hackberry Storage Project submitted to the Federal Energy Regulatory Commission gives full details of the storage facilities in Cameron Parish capable of providing 20.03 Bcf of working gas capacity and 1.5 Bcf per day of LNG feed gas.

LA Storage is leading the project and is a wholly-owned subsidiary of Liberty Gas Storage, ultimately held by Sempra LNG, operator of the Cameron LNG export plant, and parent Sempra Energy.

The storage facility would interconnect with infrastructure operated by Cameron Interstate Pipeline and the certificated Port Arthur Pipeline Louisiana Connector to be operated by Port Arthur Pipeline in Cameron and Calcasieu Parishes in Louisiana.

The interconnection of the Hackberry Storage Project with these pipelines would in turn provide customer access among interstate pipelines serving the Gulf Coast market and natural gas markets along the Southeast and East Coasts.

LA Storage proposes to construct a new natural gas storage facility by converting three existing salt-dome caverns to natural gas storage service and developing one new salt-dome cavern for additional natural gas storage service.

Sempra’s Energy’s Cameron LNG export plant in Louisiana said it was shutting down ahead of the arrival of Hurricane Delta on the US Gulf Coast after just resuming operations in the past week.

“We have decided to implement a controlled shutdown of the facility this morning with a safely sequestered ride-out team until Hurricane Delta passes, at which point, we will recommence LNG production,” Said a statement from the Cameron plant.

Cheniere Energy reduced the amount of natural gas flowing to its Sabine Pass plant, though didn't say of it was moving to a complete shut down.

The last major storm, Hurricane Laura, passed close to the Cameron and Sabine Pass facilities at the end of August and both companies evacuated personnel and shut the plants  before the storm made landfall.

The amount of pipeline gas flowing to Sabine fell from a five-month high of 4.0 billion cubic feet per day on October 6 to 3.5 bcf per day on October 7, according to energy data.

Sempra previously shut the Cameron plant located on the Calcasieu Ship Channel on August 26 and had to wait until September 27 to begin the re-start after a power outage suffered because of damage to the transmision lines of the local utility Entergy Corp.

The Cameron management said they had also worked with the US Army Corp. of Engineers and Lake Charles Pilots on their progress towards reopening the Calcasieu Ship Channel to deep draft vessel traffic.

It then shipped its first cargo on October 5 on the 180,000 cubic metres capacity “SK Audace”, only to shut operations again as Hurricane Delta approached.

Sempra’s third Train only came on stream in May 2020 after achieving commercial operations with Train 1 and Train 2 in August 2019 and February 2020 respectively.

Sempra is still on track to be a premier North American LNG infrastructure company, with two other export projects being developed at Port Arthur in Texas and Costa Azul on the Pacific Coast of Mexico.

The company owns a 50.2 percent interest in Cameron LNG, and output is now being ramped to a nameplate of 12 million tonnes per annum, or 1.7 billion cubic feet per day of natural gas.

The other shareholders are French major Total, Japanese trading house Mitsui & Co. and Japan LNG Investment, a joint venture involving Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha (NYK Line).

Japanese trading houses Mitsubishi and Mitsui are also off-takers at the plant, while other Asian term customers include Japanese utility companies JERA Co. Inc., Tokyo Gas and Kansai Electric. 

The Cheniere Energy-owned Corpus Christi LNG export plant in Texas is the first of the four US Gulf Coast-based facilities to recommence cargo liftings since activities were temporarily halted as Hurricane Laura approached last week, while seven LNG carriers are standing by in the Gulf to load.

The Corpus Christi plant began loading cargoes again just two days after the hurricane made landfall farther north in the Gulf of Mexico near Lake Charles on the Louisiana-Texas border.

The first cargo was loaded on August 30 onto the 177,200 cubic metres capacity “Sohshu Maru”, with another cargo being taken by the 140,645 cubic metres capacity “Golar Arctic” and a third on August 31 by the 155,000 cubic metres capacity “Gaslog Shanghai”, according to shipping data.

Renewed cargo liftings helped to boost Gulf Coast LNG cargo futures to their highest levels in 2020. These are settled derivatives contracts available through to October 2022 and based on the average free-on-board (FOB) cargo prices.

The value of a US GCL cargo for October 2020 rose to $3.600, up from $3.250 per MMBtu on August 31, while November jumped to $4.486 from $4.347 per MMBtu.

The December GCL contract increased to $4.973 per MMBtu from $4.905 per MMBtu on August 31.

Before the Corpus Christi plant began cargo liftings the last cargo loaded in the GoM had been on August 23, the shipping data showed.

There were also seven unladen LNG carriers on September 2 either in a holding pattern offshore or entering the Gulf.

Other plants were also on the way back. Cheniere said that a comprehensive facility and operational assessment of its Sabine Pass plant in Louisiana, the largest facility in the US with 22.5 MTPA of nameplate capacity, had revealed no significant damage as a result of the hurricane.

“Cheniere has started to execute on its plan to restart LNG production at Sabine Pass,” said the company.

Sempra Energy, the owner of the Cameron LNG export plant in Louisiana, said its teams had been able to conduct preliminary visual inspections of the Cameron facility and the site of the proposed Port Arthur LNG project in Texas and of other infrastructure in the region.

“The initial evaluation indicates minimal flooding and no catastrophic wind damage,” said Sempra.

“Thorough inspections are planned pending confirmation of sufficient site safety and security. The team at Cameron LNG is committed to the restoration of full operations as soon as safely practicable,” added the company.

Venture Global, the Virginia-based company developing three liquefaction and export plants in Louisiana, said its Calcasieu Pass facility under construction in Cameron Parish had sustained minimal impacts from the hurricane, which passed directly over the project site.

“A walk-through inspection of most areas of the site following the storm confirmed that the project site’s robust storm protection system, including a perimeter wall and storm water pumping system, performed as designed,” said Venture Global.

“While we are relieved by the minimal impacts to Calcasieu Pass LNG, we are mindful that the surrounding communities of Cameron and Lake Charles have suffered significant damage from this powerful and historic storm,” the company added.

Origin Energy, the Australian utility and shareholder with China’s Sinopec and ConocoPhillips in the Australia-Pacific LNG plant in Queensland, will log asset impairments of about US$840 million, including on a US contract with Cameron LNG in Louisiana.