LNG

Sempra Infrastructure, a subsidiary of California-based utility Sempra, has signed an engineering, procurement and construction contract with US firm Bechtel Energy for Phase II of the Port Arthur LNG export project in Texas.

Mach Natural Resources, the independent upstream oil and gas company focused on the development and production of oil, natural gas and natural gas liquids in the Anadarko Basin region of Western Oklahoma, Southern Kansas and the panhandle of Texas, has become the latest US company to acquire additional assets, paying $815 million.

Kinder Morgan Inc. (KMI), the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, reported lower second-quarter net profits amid steady cash flow as it responded to volatile market conditions.

The company said profits declined to $586 million during the three months to the end of June from $635M in the second quarter of 2022.

“The KMI board and management team are fully committed to the use of our strong cash flow to benefit our shareholders,” said Executive Chairman Richard D. Kinder.

“We focus on maintaining a strong balance sheet while internally funding capital projects that produce returns well in excess of our cost of capital - including projects that are part of the ongoing energy evolution,” the Chairman stated,

KMI’s distributable cash flow amounted to $1.07 billion compared with $1.17Bln in the prior-year quarter.

Asset values

“KMI once again saw the value of its existing natural gas transportation and storage assets that are able to respond to volatile market conditions caused by extreme weather events and an increasingly intermittent resource-based electric grid,” said Chief Executive Steve Kean.

“Our 700 billion cubic feet of operated natural gas storage capacity is particularly useful in back-stopping intermittent renewable electricity resources,” Kean explained.

“Financial contributions from the Natural Gas Pipeline business segment were up relative to the second quarter of 2022 and ahead of budget,” added the CEO.

“Our Terminals business segment also over-performed relative to both the second quarter of 2022 and budget,” stated Kean.

KMI President Kim Dang said that the performance of the Natural Gas Pipelines business improved in the second quarter of 2023 versus the prior-year quarter.

Dang cited higher contributions from Midcontinent Express Pipeline, the Texas Intrastate system, El Paso Natural Gas (EPNG), the Stagecoach asset and the Tennessee Gas Pipeline (TGP), partially offset by lower contributions from the company's Eagle Ford gathering system assets.

Natural gas transport volumes were up 5 percent year-over-year, primarily from increases on EPNG due to returning a pipeline to service and the retirement of a coal-fired power plant.

Texas Intrastate

KMI said that the Texas Intrastate system benefited from a variety of existing shippers and new contracts, partially offset by reduced volumes on the Tennessee Gas Pipeline.

“Natural gas gathering volumes were up 19 percent from the second quarter of 2022 across most of our systems,” Dang explained. 

Among several new projects, KMI said that the two-phase $678M Evangeline Pass venture will include modifications and enhancements to portions of the TGP and Southern Natural Gas systems in Mississippi and Louisiana, enabling the delivery of the full FERC-certificated project volumes to Venture Global’s proposed Plaquemines LNG facility.

“Construction activities are underway for phase 1 of the project, which includes general operational upgrades enabling TGP to provide approximately 900 million cubic feet per day of natural gas transportation capacity to Venture Global’s facility,” said KMI.

Dang added that contributions from the Products Pipelines business segment were down compared with the second quarter of 2022, saying this was largely due to the impact in the prior-year period of sharply rising commodity prices.

“The crude and condensate business was also impacted by lower re-contracting rates in the Eagle Ford. Total refined products volumes were relatively flat compared to the second quarter of 2022,” Dang said.

Equinor, the Norwegian oil and gas major and main pipeline natural gas supplier to Europe amid diminishing Russian deliveries from Gazprom, will be an LNG trader with additional volumes supplied by the largest US LNG exporter Cheniere Energy.

Under a planned 15-year agreement Equinor will purchase around 1.75 million tonnes of LNG per annum from Houston-based Cheniere from 2026.

“This new Sales and Purchase Agreement (SPA) will add new volumes to Equinor’s already significant gas portfolio of pipeline gas and LNG,” stated Equinor.

The Norwegian company also disclosed that the expansion at Corpus Christi to add 10 MTPA to the current nameplate capacity of 13.5 MTPA will likely be followed by another boost in output.

“With global energy demand growing and increased focus on energy security, the LNG market is expected to grow significantly. US LNG can supply the European markets as well as cover demand in other markets,” explained Equinor.

The Stavanger, Norway-based oil and gas major has recently shipped the first cargo from the repaired Hammerfest in Northern Norway to re-established seaborne LNG supply link Europe.

New US volumes

It was the first cargo to leave the Hammerfest liquefaction and export plant since the September 2020 fire.

Once the Hammerfest is ramped up to full production of 4.8 MTPA, a ship will leave the facility on Melkøya island every five or six days and over the year will deliver 5 percent of Norway’s natural gas exports while the other 95 percent is delivered by pipelines.

Norway’s role as a key supplier to Europe has taken on more importance because of the Russian invasion of Ukraine and Western sanctions against Russian oil and gas.

The Hammerfest project gave Europe its first large-scale LNG supply when it came on stream in 2007, though the facility was originally planned and built to supply the US before the shale-gas boom.

“I am very pleased that we have entered into a long-term agreement with Cheniere, the largest US producer of LNG,” said Helge Haugane, Equinor’s senior vice president Gas & Power.

“Based on our production in Norway, Equinor is the second-largest supplier of pipeline gas to Europe. The new LNG agreement is a major building block in Equinor’s ambition to further strengthen our global gas position by adding more LNG to the portfolio,” Haugane explained.

Crucial role

“LNG will play a crucial role in providing energy security. By increasing our position in this segment, we will be even better positioned as a long-term reliable supplier of energy’ he stated.

Under the SPA, Equinor has agreed to purchase the volumes from Cheniere Marketing on a free-on-board basis whereby the Norwegians send their own ships.

Equinor said the deliveries under the SPA would start in the second half of 2026 and reach the full 1.75 MTPA in the second half of 2027.

“Half of the volume, or about 900,000 tonnes, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-Train Corpus Christi Stage III Project,” stated Equinor.

This suggests that the Cheniere, which operates the Sabine Pass plant in Louisiana with 27 MTPA of production, is planning yet another expansion at the Texas facility.

Sempra Energy, operator of the Cameron LNG export plant in Louisiana and developer the Costa Azul venture in Mexico, has again delayed the final investment decision until 2022 on its third proposed export plant, the Port Arthur LNG project in Texas.

Sempra decided to delay the FID on the Port Arthur facility after originally scheduling the decision for around May 2020 until the market downturn pushed back the timetable and the signing of new customers.

“A final investment decision on Port Arthur LNG will likely move into next year, as we work with partners and customers to further reduce the greenhouse-gas emission profile of the project and evaluate the ongoing impacts of the Covid-19 pandemic on the global economy,” said Sempra.

“We remain confident in our view that the market will need additional supplies of LNG in the coming years and believe Sempra LNG projects are the leading candidates to supply this need,” added the San Diego, California-based company.

The project at Port Arthur in Jefferson County was authorized by the Federal Energy Regulatory Commission in April 2019 and involves the construction of two liquefaction Trains, each with capacity of 6.73 million tonnes per annum, the largest processing Trains among all the projects on the Gulf Coast.

Engineering and planning within the regulatory permitting process are continuing for the project.

Other Port Arthur facilities include two marine berths for LNG carriers with two LNG loading arms and two hybrid arms, condensate loading and truck facilities.

It additionally has permits for a construction and materials loading and unloading dock and three full-containment LNG storage tanks.

The Port Arthur LNG also has an expansion planned to include two additional Trains, each with its own gas treatment facilities and each capable of producing 6.73 MTPA, along with associated utilities and infrastructure.

All four Port Arthur Trains are expected to include one propane and one mixed refrigerant refrigeration GE Frame 7EA compressor turbine.

Each of the Trains will be equipped with an Acid Gas Removal Unit (AGRU) that utilizes an amine treatment process for acid gas removal.

Emissions from the AGRUs will be controlled using thermal oxidizers.

The Port Arthur project signed a fixed-price engineering, procurement and construction contract in March 2020 with US engineers Bechtel.

Sempra had also previously proposed to sell 5 MTPA of Port Arthur LNG to a unit of Saudi Aramco and take a 25 percent investment from the Saudis, while 2 MTPA has also been sold to the Polish Oil & Gas Company.

Cheniere Energy, the largest US LNG exporter with two plants in Louisiana and Texas, said it exported its 1,000th cargo within a four-year time period after the start-up Gulf Coast production.

Sempra Energy, the operator of the Cameron liquefied natural gas export plant in Louisiana and the developer of two other facilities in Texas and Mexico, said it was opening a new “Center of Excellence” in Houston to attract more LNG and utility sector personnel.

The US government has issued a presidential permit and granted authorization for the construction of the Valley Crossing Pipeline with capacity of 2.6 billion cubic feet per day on the Texas-Mexico border that will reduce Mexican LNG requirements.

Aug 24 (LNGJ) – The Texas Alliance of Energy Producers said natural gas prices in July averaged $2.84 per thousand feet, increasing the value of Texas-produced gas by 2.3 percent to nearly $1.9 billion. Sizeable year-on-year improvements in the rig count, drilling permits and the value of Texas-produced crude oil and natural gas combined to push the Texas Petro Index up in July to 176.9, the eighth straight monthly increase. However, it is in oil where Texas and the US are excelling. “OPEC production curtailments did not achieve the desired price outcome,” said spokesman Karr Ingham. “Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel (US) oil market provides more incentive than in the past,” added Ingham, referring to the West Texas Intermediate (WTI) US benchmark oil price.

June 28 (LNGJ) - Estimated natural gas output in Texas in May was about 721.4 billion cubic feet, a year-over-year monthly decline of about 3.1 percent, according to the Texas Petro Index of the Texas Alliance of Energy Producers. Texas producers will be among the main feed-gas suppliers for LNG plants being built along the US Gulf Coast. The data also showed that Texas natural gas prices in May averaged $1.76 per thousand feet, a decline compared with the year-ago month of 37.5 percent and valuing the gas at $1.27 billion. The number of original drilling permits issued in Texas in May was 606, which was 33.8 percent fewer than the 916 permits issued in May 2015.