LNG

Texas LNG, the liquefied natural gas export plant to be constructed by New York-based Glenfarne Group in the Port of Brownsville, has received its last regulatory clearances opening the way for a final investment decision.

KBR, the US energy and civil engineering company, has been awarded an engineering, procurement and construction management contract by Australia’s Woodside Energy for the Pluto LNG project in Western Australia.

The task of KBR will be to undertake modifications to Train 1 of Woodside's Pluto liquefaction facility.

The Houston-based company explained that modifications will enable the processing of up to three million tonnes per annum of offshore Scarborough gas field through Train 1, while Pluto Train 2 is built in a separate project.

“KBR is pleased to support Woodside in the modification of the Pluto Train 1 LNG facility to enable processing of Scarborough gas, and in turn provide opportunity to extend the life of the plant,” said Jay Ibrahim, President at KBR of Sustainable Technology Solutions.

More jobs

“We are also excited to focus on engaging local and Indigenous businesses to support the project and proud to be creating jobs and opportunities within Western Australia,” Ibrahim stated.

KBR has nearly 50 years of experience in designing, developing and supporting LNG facilities. The company has overhauled existing liquefaction Trains at LNG plants worldwide.

The Pluto LNG onshore processing facility is located near Karratha in the northwest of Western Australia and the first cargo from the single-Train facility was delivered in 2012.

Woodside’s Pluto feed-gas supplies come from the Pluto and Xena gas fields. However, the additional Scarborough field will provide Train 1 with a longer lifespan as well as enabling the building of second liquefaction Train at the Pluto facility.

The second Train will have 5 million tonnes per annum of output and take total nameplate capacity of both Trains to at least 8.2 MTPA.

The Scarborough field is located about 375 kilometres off the coast of Western Australia and is estimated to contain 11.1 trillion cubic feet of dry gas.

Development of Scarborough includes the installation of a floating production unit (FPU) with eight wells drilled in the initial phase and 13 wells drilled over the life of the Scarborough field.

Equity sale

Woodside announced in August 2023 that it was selling equity in the Scarborough joint venture to LNG Japan Corp.

The Japanese company will also import LNG from the Scarborough volumes and collaborate in new energy opportunities. 

A sale and purchase agreement was signed with the LNG Japan entity for the sale of a 10 percent non-operating participating interest in the joint venture for $500 million, subject to adjustments. 

The Japanese venture will additionally reimburse Woodside for its share of expenditure for the Scarborough project, effective from 1st January, 2022.

LNG Japan is a 50-50 joint venture between Sumitomo Corp and Sojitz Corp., two of Japan’s seven largest general trading companies who are known in Japanese as the “sogo shosha”.

Chart Industries, the US LNG equipment-maker and industrial gases and clean energy company, reported soaring sales and earnings as well as record orders and a vibrant LNG market as it prepared to close the $4.4 billion take-over of UK engineering company Howden.

A US federal judge in Louisiana, one of the centres with Texas of the LNG industry, has blocked the Biden Administration’s planned suspension of oil and gas leases on public lands and waters in a legal setback for unilateral actions by Biden against the hydrocarbons industry.

Air Products, the largest US LNG and industrial gas company, said fiscal third-quarter net income declined by 9 percent to $457 million, primarily reflecting the negative impacts from Covid-19.

The company also attributed the fall to a prior year gain, partially offset by pricing actions and charges as well as LNG project execution.

Third-quarter sales were 7 percent lower than a year ago at $2.1 billion due to 4 percent lower energy pass-through, 3 percent lower volumes and 2 percent unfavorable currency, partially offset by 2 percent higher pricing.

The LeHigh Valley, Pennsylvania-based company said the estimated Covid-19 impact on sales was 9 percent, primarily due to volume impacts in the Americas and European merchant businesses.

The company said the impact was partially offset by positive volume contributions from new plants and LNG activities without giving details.

Air Products conducts its industrial gases business alongside its provision of LNG equipment products such as the main cryogenic heat exchangers for plants and its proprietary propane pre-cooled mixed refrigerant liquefaction process.

Most of the worldwide LNG production comes from Air Products technology. The company provides key equipment for the natural gas liquefaction process for large export plants, small and mid-sized plants and floating LNG facilities.

“As the world continues to navigate challenging conditions related to Covid-19, I am very proud of the Air Products team who have demonstrated their true character and commitment in keeping our plants running and our customers supplied with essential products,” said Chairman, President and Chief Executive Seifi Ghasemi.

“Meanwhile our onsite business - which represents more than half of our sales - remains stable, and we continued to execute on our growth strategy, announcing two new mega-projects in Saudi Arabia and Indonesia which together represent planned Air Products investment of approximately $5.7Bln,” stated Ghasemi.

The sales in the Industrial Gases-Americas division fell by 11 percent to $850 million. This was due to 6 percent lower energy pass-through and 5 percent lower volumes.
Operating income of $248M was down 5 percent, primarily due to the lower volumes.

In Industrial Gases-Europe, the Middle East and Africa sales were posted of $430M, a fall of 13 percent in the same prior-year quarter.

This was mainly due to 7 percent lower volumes and lower merchant demand impacts. Operating income came to $105M, down 15 percent.

Industrial Gases-Asia reported sales of $652M, down 4 percent, driven in part by 3 percent unfavorable currency. The division’s operating income came to $222M. down 4 percent.

Chairman Ghasemi said that there was still significant uncertainty in the global economy and the Covid-19 recovery was showing mixed results around the world.

“Despite these challenges, we have shown that with our stable business model, financial position, significant growth opportunities and the total commitment of our people, we can and will continue creating value for shareholders over the long term,” he concluded.

Air Products, the US global leader in the supply of liquefied natural gas process technology and equipment and the owner and operator of industrial gases projects, has extended the term in office of Chairman, President and Chief Executive Seifi Ghasemi through to September 30, 2025.

Cheniere Energy, the leading US LNG export company through its Sabine Pass plant in Louisiana and the Corpus Christi facility in Texas, reported annual revenues approaching $10 billion and more than 400 cargo shipments even amid the industry’s current short-term headwinds.

Freeport LNG Chief Executive Michael Smith said he was hopeful of signing sufficient deals with buyers as the Quintana Island facility in Texas slowly expands, though suggested the second wave of plants may face difficulties 

However, Smith stated in an interview with pricing agency S&P Global Platts that the market had completely changed in 2019.

The Freeport project comprises four Train in all and the plant shipped its first cargo from the second liquefaction Train in mid-December 2019.

The cited a list of challenges, including record low prices and weaker than expected demand in Asia, oversupply concerns and the recent coronavirus outbreak in China.

He said this had created a perfect storm of headwinds for producers looking to construct new liquefaction plants or additional processing Trains.

“I don't think there's going to be a lot,” Smith said of additional sanctioned US capacity. 

“The margins for everyone have come down,” he stated.

More than a dozen US developers are pursuing projects for new plants or additional production capacity and have yet to announce positive final investment decisions.

The first phase construction at Freeport will see the building of one more Train, bringing to total to three and 15 million tonnes per annum of output.

The original Freeport terminal was completed in 2008 as an import facility with one berth and two storage tanks, each of 160,000 cubic metres capacity.

A second loading berth and a 165,000 cubic metres capacity full containment LNG storage tank have been added. The Train 4 project will be the second phase of construction.

“We don't have anything signed up. Until we do have something signed, no one is going to hear from us,” said Smith about the Train 4 project at his Texas plant.

Freeport's current target is for a final investment decision on Train 4 by mid-2020 and a start-up scheduled for 2024.

“We believe once we have the requisite capacity sold to reach our financing hurdles, we can close a transaction within a six-week time period, eight on the outside,” explained the CEO.

Smith declined in the interview with S&P Global to specify what range of prices Freeport was discussing with prospective buyers, though he said it was similar to the deals announced by other developers.

“We don't believe we are wasting our time,” said Smith. However, he stated that circumstances had changed since the first wave buildout of the six US plants currently operating. 

The Elba Island LNG liquefaction plant in the state of Georgia, the sixth US export facility to start up, was expected to load its first cargo after coming on stream in October.

Lake Charles LNG, the export project being pursued by pipeline and midstream company Energy Transfer and Royal Dutch Shell, has filed with regulators for an extension to mid-December 2025 for the venture to be completed and a final decision to go-ahead is expected by year-end.