LNG

The United States forecasts that the nation’s natural gas supply will increase to meet growing demand for domestic pipeline gas and liquefied natural gas exports, though benchmark Henry Hub prices are expected to remain subdued as US oil and gas production increases to new record levels.

Dec 19 (LNGJ) - Vitol, the global commodities firm and LNG player, has completed an inaugural biofuel delivery in the United Arab Emirates. The delivery took place in Fujairah in the northeast of the UAE and the only one of seven emirates with a coastline solely on the Gulf of Oman. “Vitol has successfully completed its first biofuel deliveries in Fujairah, demonstrating its ongoing commitment to sustainable fuel solutions,” said Vitol.

   “Through its wholly-owned bunker arm, Vitol Bunkers, two vessels received B24 VLSFO on December 8 and December 14,” said Vitol. The fuel was sourced from its Fujairah-based refinery FRL and blended with regionally-sourced biofuel at storage facilities. “Certified biofuels are expected to play a key role in helping the hard-to-abate maritime sector to decarbonise and reduce greenhouse gas emissions on a well-to-wake basis,” added Vitol.

The United States has been exporting more liquefied natural gas than any other country and LNG shipments were expected to surge through the next 12 months while deliveries were also increasing of pipeline natural gas to both Mexico and Canada.

Tellurian Inc., the developer of the Driftwood liquefied natural gas export plant near Lake Charles in Louisiana, has signed an agreement for the supply of eight main refrigerant compression packages for the Phase One development of the Driftwood project.

QatarEnergy has selected UK major Shell as the second international partner for the LNG expansion known as the North Field South (NFS) liquefaction and export joint venture.

Cheniere Energy, the largest US LNG exporter from the Sabine Pass plant in Louisiana and Corpus Christi in Texas, said it had the long-term potential to reach 90 million tonnes per annum of production using brownfield sites at both facilities as it raised its 2022 and future earnings forecasts.

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, has purchased more assets in the Haynesville Shale to boost feed gas resources when the plant comes on stream.

The Houston, Texas-based company entered into an agreement to purchase natural gas assets from the privately held companies EnSight IV Energy Partners LLC and EnSight Haynesville Partners LLC.

The purchase price was $125 million, subject to customary closing adjustments, and a contingent payment of $7.5M based on the price of natural gas and which may be payable in March 2023 under certain conditions.

Tellurian said it would fund the purchase with cash on hand and anticipates finalizing the acquisition of the EnSight assets in the third quarter of 2022.

Driftwood project owner Tellurian has existing gas field assets in the Haynesville Shale which extends through areas located in East Texas and Western Louisiana.

Tellurian produced 6.1 billion cubic feet of natural gas in the first quarter of 2022 compared with 4.9 Bcf for the previous quarter.

Its existing upstream assets in the Basin include 13,521 net acres and interests in 82 producing wells as of March 2022.

Export project

The Driftwood LNG export plant has permits to produce 27.6 million tonnes per annum of LNG and has 10-year offtake agreements with the likes of Shell North America and global commodities firms Vitol and Gunvor.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity, and built as five blocks of four Trains.

The Phase One development would include the first two of these blocks with 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.

On its new Haynesville assets, Tellurian said current net production was 45 million cubic feet of natural gas per day with the fields having 100 percent natural gas.

The purchase covers around 5,000 net acres in the core of the Haynesville Shale in DeSoto, Bossier, Caddo, and Webster Parishes and with 44 producing wells and five wells in progress.

With this deal Tellurian said that its Haynesville Shale acreage increased to 20,000 net acres, with 275 gross drilling locations and a net resource expected at 2 trillion cubic feet.

“We have been diligently growing our natural gas production and reserves in the Haynesville,” said John Howie, head of Tellurian’s natural gas fields.

“These assets provide Tellurian with both cash flow and a physical hedge for Driftwood LNG,” added Howie.

“The EnSight asset is a great fit with Tellurian’s existing position in the Haynesville Shale and allows us to step into an ongoing development program and bring on-line significant additional natural gas volumes in the fourth quarter of 2022,” he stated.

The global LNG fleet is heading for the 800 vessels mark from the current 700 ships with South Korean shipyard Daewoo Shipbuilding and Marine Engineering (DSME) being the latest to receive a $850 million order for four newbuilds from Qatar.

The orders are increasing to keep pace with LNG and demand liquefaction plant expansion by nations such as Qatar and the US.

DSME, the world's No. 4 shipbuilder by order backlog, said it would build the vessels with 174,000 cubic metres of capacity at the Okpo shipyard on the south coast and deliver them by the first half of 2025.

The order is the first result of a $19 billion contract that DSME and two other Korean shipbuilders, Hyundai Heavy Industries and Samsung Heavy Industries, have signed with QatarEnergy to construct scores of LNG vessels through 2027.

The contract is in line with Qatar's plan to boost its LNG production capacity to 126 million tonnes per annum by 2027 from the current 77 million tons.

Analysts said that DSME's order is widely expected to lead to the securing of more orders for LNG carriers by the three major Korean shipbuilders.

DSME won $4 billion in orders in the first quarter of 2022, including eight LNG carriers, six containerships, one offshore platform and one depot maintenance order.

The six containerships ordered had a specification for dual-fuel capability.

Among the LNG shipping companies ordering the newbuilds in the first quarter was GasLog Ltd, the Greek LNG shipping firm.

GasLog is currently expanding its fleet ordered four newbuild 174,000 cubic metres capacity vessels for delivery in 2024 and 2025.

The yard added that the GasLog ships would also be equipped with the latest generation M-type Electronically Controlled, Gas Injection (ME-GI) propulsion system.

They would also fitting a more advanced re-liquefaction system.

Last year 68 LNG newbuilds were delivered compared with 47 LNG ships in 2020.

The global LNG fleet consisted of 700 vessels at the start of 2022 and is now headed for 800 in the next two or three years.

The current total includes 48 floating storage and regasification units that can act as import terminals. Total cargo capacity in 2022 was more than 105 million cubic metres.

The average spot charter rate for a 160,000 cubic metres LNG carrier stood at around $89,200 per day last year compared with $59,300 per day in the previous year.

The United States Government forecasts that liquefied natural gas exports would hit an all-time high through the normally quieter Northern Hemisphere summer from May to August and even amid higher benchmark Henry Hub prices.

Energy consumption will increase in the United States over the next 30 years across a variety of economic scenarios as population and economic growth outpace energy efficiency gains, though natural gas and LNG will retain their starring roles.