LNG

TC Energy, the North American natural gas and energy pipelines company constructing pipeline links from British Columbia's shale basin to LNG projects on the coast, reported a surge in net income of more than three-fold as projects progressed from Canada to Mexico.

Williams, the US pipelines company and growing LNG sector participant, has closed the acquisition of MountainWest Pipelines Holding Company from Southwest Gas Holdings in a deal worth $1.5 billion and for a network covering three states.

Williams paid $1.07Bln in cash and $430 million of assumed debt for the MountainWest system

It comprises around 2,000-miles of interstate natural gas pipelines primarily located across Utah, Wyoming and Colorado.

The MountainWest pipelines carry 8 billion cubic feet per day of transmission capacity.

MountainWest also operates 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir, providing working gas to Western markets.

With the acquisition of MountainWest, Williams expands its infrastructure network and increases its business mix of Federal Energy Regulatory Commission-regulated natural gas transmission and storage.

Williams said the acquisition starts up the company’s services in the key Rockies gas markets, including natural gas delivery into Salt Lake City and other demand markets not previously served by Williams.

Natural gas focus

“Our natural gas focused strategy is anchored in having the right assets in the right places to serve our nation’s growing demand for clean, affordable and abundant natural gas,” said Alan Armstrong, the President and Chief Executive of Tulsa, Oklahoma-based Williams.

“This acquisition enhances our position in the Western US and is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets,” explained Armstrong.

“With the acquisition now complete, we look forward to welcoming MountainWest employees to Williams and bringing value to our shareholders by delivering safe and reliable services to both Williams and MountainWest customers as we increase the utilization of our existing large-scale platforms,” added the CEO.

Williams is also expanding its LNG activities and in mid-November 2022 said it had entered into a non-binding heads of agreement with Sempra Infrastructure, a subsidiary of California utility Sempra, to further connect the Haynesville shale basin to growing LNG export demand along the Gulf Coast .

The accord contemplates long-term gas sales of about 0.5 billion cubic feet per day delivered to near Gillis, Louisiana, and two LNG offtake agreements for around 3 million tonnes per annum in the aggregate from Sempra Infrastructure’s proposed Cameron LNG expansion and Port Arthur LNG project in Texas.

Williams said these proposed Sempra transactions complement the recently sanctioned low-carbon Louisiana Energy Gateway gathering project.

The US Potential Gas Committee (PGC) has released its two-yearly report showing that the LNG exporting nation has record natural gas resources in the prime basins in terms of recoverable gas and reserves.

The Atlantic Area has the largest reserves following by the Mid-Continent, the Rocky Mountains and the Gulf Coast, where most liquefaction and export plants are located, including the offshore Gulf of Mexico.

“Technically recoverable resources, those in the ground but not yet recovered, total 3,368 trillion cubic feet, “ said the PCC report.

“When you add in the recovered gas, the total gas (resources plus reserves) rises to a record 3,863 Tcf, up slightly from the comparable year-end 2018 assessment,” it stated.

The PCC year-end assessment of the nation’s estimated natural gas resource base was released at a virtual event hosted by the American Gas Association.

“This report affirms that Americans will have the clean natural gas that they need now and well into the future,” said Richard Meyer, Vice President, Energy Markets, Analysis and Standards for the AGA.

“The Covid-19 pandemic has temporarily slowed drilling activity, but the US continues robust natural gas production relative to history,” explained Meyer.

“Our total gas account as a measure of future supplies is as high as ever and, with supportive policies in place to ensure reliable supply, this vast energy resource is available to meet our energy needs and to support US and global commitments to lowering emissions,” he added.

The PGC’s year-end 2020 resource-specific assessment of 3,368 Tcf includes 3,212 Tcf of gas potentially recoverable from “traditional” reservoirs (conventional, tight sands, carbonates, and shales) and 157 Tcf in coalbed gas reservoirs.

The PGC consists of approximately 80 knowledgeable and highly experienced volunteer members who work in the natural gas exploration, production, transportation, and distribution industries and the technical services and consulting sectors.

The PGC biennial assessment is regarded as the most comprehensive report of the potential for future natural gas supplies in the US.

Since its founding in the early 1960s, the sole purpose of the PGC has been to organize and train geoscientists, engineers and others for the timely preparation and dissemination of the two-yearly assessments of the natural gas resource base.

According to the report, the Atlantic Area contains 39 percent of total US gas resources, followed by the Mid-Continent with 18 percent.

The Rocky Mountains has 17 percent of the potential future supply, while the Gulf Coast (including the Gulf of Mexico) contains 16 percent.

“Changes in the total assessment from year-end 2018 to year-end 2020 arose primarily from the evaluation of recent drilling, well tests, and subsequent production data from these four areas.” said the report.

The PGC pointed out that it also benefits from the input of respected technical advisors (most of whom are former active members), together with representatives of the gas pipeline and gas distribution industries and a professionally diverse group of observers representing federal and state government agencies, academia, industry and research organizations, and commercial firms in both the US and Canada.

In 1984 the PGC was incorporated as a non-profit, tax-exempt entity in the State of Colorado.

The PGC reports its assessments of potential resources in three categories of decreasing geological certainty:

1)Probable resources (discovered but unconfirmed resources associated with known fields and field extensions; also undiscovered resources in new pools in both productive and non-productive areas of known fields);

2) Possible resources (undiscovered resources associated with new field/pool discoveries in known productive formations in known productive areas); and

3) Speculative resources (undiscovered resources associated with new field/pool discoveries in as-yet non-productive areas). 

Sempra Energy’s Mexican subsidiary IEnova said objections had been formally lodged against its Pacific Coast Costa Azul liquefied natural gas export plant in the nearby city of Ensenada.

Sempra plans to have two more North American export plants in addition to its existing Cameron LNG facility at Hackberry in Louisiana and these include a Texas project at Port Arthur and at Costa Azul in the Mexican state of Baja California.

Now IEnova has just announced that objections have been raised before the Office of Urban Management, Ecology and Environment of Ensenada’s city council.

IEnova said in a statement that the objections are against certain municipal permits granted in favor of the Costa Azul liquefaction project that is being developed on land adjacent to the existing LNG import terminal.

“IEnova considers that these claims are unfounded and inadmissible and will enforce their rights in the corresponding procedure, seeking to dismiss the claims of the plaintiffs,” said the company.

The objectors are two real estate companies named by IEnova as Inmuebles y Fraccionamientos Peninsulares SA and Inmobiliaria Aquino SA.

The Sempra subsidiary, whose official name is Infraestructura Energetica Nova SA , is overseeing the whole LNG project in addition to its growing Mexican business in the natural gas pipeline and energy and power sectors.

Under Sempra’s plan for the Costa Azul export plant, the facility will be constructed in two phases. 

The first part of the transformation of the plant will see the building of a single liquefaction Train to be located adjacent to the existing terminal and with capacity for 2.4 MTPA of exports.

The Mexican project has already signed three accords with French major Total and Japanese companies Mitsui & Co. and Tokyo Gas for the full export capacity of Phase 1 development at Costa Azul.

The Costa Azul venture has additionally received US authorizations for natural gas to be exported to Mexico and re-exported to Non-Free Trade Agreement countries. 

Costa Azul was the first LNG import terminal on North America's West Coast and was built in 2008. It is located 15 miles north of Ensenada and with bi-directional pipeline connections to the US.

The Costa Azul facility previously benefited from south-to-north flows on the North Baja pipeline. However, north-to-south flows on the West Coast now predominate.

Sempra’s IEnova unit continues to be a main natural gas pipeline developer in Mexico.

Among its assets are its stake in the South Texas-Tuxpan pipeline bringing US natural gas to the southern Gulf Coast side of the country.

This pipeline is seen as fundamental to maintaining a reliable gas service in the southeast of Mexico with 2.6 billion cubic feet per day of capacity.

The pipeline crosses part of the Gulf of Mexico from Texas and was built at a cost of $2.5 billion. It is owned by IEnova and Canadian pipeline company TC Energy.

The South Texas-Tuxpan pipeline is inter-connected to the Valley Crossing Pipeline in Texas completed by Enbridge Inc., another Canadian company like TC Energy and based in Calgary.

The 168-mile Valley Crossing pipeline runs from the Agua Dulce hub in Texas to the Gulf of Mexico east of the port of Brownsville. 

The US Delta LNG project, the third of three export plants being development in Louisiana by the company Venture Global, has slightly delayed filing for its regulatory permits to allow more time to address some issues raised.