LNG

JERA Co. Inc., Japan’s biggest liquefied natural gas importer and utility company, has approved a deal to sell part of its stake in the Freeport LNG export plant in Texas to another Japanese company.

Excelerate Energy, the leading US provider of floating storage and regasification units (FSRUs) and an LNG trader with increased demand from Europe and Asia, has now completed two long-term LNG supply accords focused on delivering more cargoes to Bangladesh and to integrate its business in the South Asian nation.

Excelerate has just signed a 15-year Sales and Purchase Agreement (SPA) with QatarEnergy after signing a similar SPA in late 2023 with Bangladesh’s national energy company PetroBangla as the customer this time.

Excelerate said that under the QatarEnergy deal the Texas-based company would purchase up to 1 million tonnes per annum of LNG from Qatar on a delivered ex-ship basis in Bangladesh and beginning in January 2026.

The US company will purchase 850,000 tonnes per annum in 2026 and 2027 and 1.0 MTPA from 2028 to 2040.

Qatar deal

“This inaugural long-term supply agreement with the world’s largest LNG supplier marks a new milestone in our collaboration with QatarEnergy,” said Steven Kobos, President and Chief Executive of Excelerate.

“Qatar delivers approximately 10 percent of its current annual LNG production through Excelerate FSRUs and we are pleased to unlock further new demand in the markets where we operate,” Kobos explained.

“This agreement highlights our ability to secure critical and affordable LNG volumes for our customers with increasing natural gas demand, while driving stable, long-term economic uplift on our existing infrastructure,” he stated.

QatarEnergy President and CEO Saad Sherida Al-Kaabi said he was pleased to sign the Excelerate agreement focused on Bangladesh.

“This new agreement will further strengthen our relationship with Excelerate while also supporting the energy requirements of the People’s Republic of Bangladesh and its stride towards greater economic development,” added Al-Kaabi.

PetroBangla agreement

Excelerate in the third-quarter of 2023 had signed a long-term SPA contract with PetroBangla.

Under that deal the Bangladeshi company has agreed to purchase between 850,000 tonnes and 1.0 MTPA LNG from Excelerate for that 15-year term.

Excelerate first opened the Bangladesh market to LNG in 2018 with the development of its integrated Moheshkhali LNG FSRU terminal.

In the years since, the company deployed a second FSRU terminal to the Bay of Bengal and has utilised its infrastructure position to win spot LNG cargos sales into Bangladesh.

Excelerate's two FSRUs in Bangladesh deliver around 25 percent of the country’s natural gas supply.

European and Asian liquefied natural gas prices declined again for the front month though were mixed further out for Europe as warmer weather returned to key regional markets to exacerbate the gas glut with storage still at record levels for the winter season.

The United States said it exported more liquefied natural gas than any other country in the first half of 2023 with shipments averaging 11.6 billion cubic feet per day during the period, which was 4 percent more than in the same six months of the previous year.

Sempra, the US utility whose LNG unit Sempra Infrastructure owns Cameron LNG in Louisiana and other projects in Mexico, has taken a positive final investment decision to build the Port Arthur liquefaction and export plant in Texas.

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.

ČEZ Group, the national utility of the land-locked European Union member, the Czech Republic, said it received US LNG as its first shipment at the new Eemshaven LNG import hub in the Netherlands.

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.

Hurricane Ida has made landfall in the US LNG hub state of Louisiana and came ashore as a Category 4 storm at Port Fourchon, a seaport with significant oil and natural gas industry offshore vessel supply traffic for Gulf of Mexico oil and platforms and drilling rigs.

Tellurian Inc., the US company planning the Driftwood LNG export project at Lake Charles in Louisiana, posted a first-quarter loss as it focused on debt reduction and said market fundamentals may favour the signing soon of supply agreements.

The Houston, Texas-based company said it continued to build its integrated global natural gas business and concentrated on paying down debt.

“Subsequent to the quarter end, Tellurian made a voluntary $17M debt repayment on April 23, 2021, and has now paid off all borrowing obligations,” said the company.

President and Chief Executive Octávio Simões said Tellurian now had a much stronger balance sheet and global customers continue to be “very interested” in the integrated, market-based LNG product offering.

The overall project plan for Tellurian now is for the Driftwood liquefaction plant to have first-phase production of 16 million tonnes per annum, rising to 27 MPTA with expansions.

“Additionally, we are looking forward to expanding our drilling program in 2021, having recently spud a new well in the prolific Haynesville Shale, that we expect to provide valuable revenue,” stated the CEO.

Tellurian produced 3.3 billion cubic feet of natural gas for the quarter in the Haynesville basin in north Louisiana to the end of March compared with 3.9 Bcf for the previous quarter.

Tellurian’s upstream assets include 9,704 net acres and interests in 72 producing wells.

The company said it ended the first quarter of 2021 with around $58.7M of cash and cash equivalents and generated $8.7M in revenues from natural gas sales.

Tellurian added that it still had a strong balance sheet consisting of approximately $270.3M in total assets.

Charif Souki, the Executive Chairman of Tellurian, said in a presentation that the use of the gas-fired power option was growing in Asia and his company hoped to start finalising commercial agreements based on the current “very strong gas market fundamentals” in Asia and Europe.

“There is now a tremendous amount of demand for natural gas on a global basis and it's now demonstrated by the very high prices both in Asia and Europe at $9 per MMBtu in Asia and $8 per MMBtu in Europe,” said Souki.

“You also have to consider that 85 percent of the world is growing their demand for energy at 4 percent a year, while the other 15 percent of the market, the United Sates and Europe, is flat,” he added.

Souki stated that Asian countries only had two choices for electricity, either nuclear power or natural gas.

“You can do nuclear but only if you've done it a long time ago and it’s extremely expensive,” added Souki.

“You can do wind but that will not satisfy all your needs, just to a certain extent,” he said.