Inappropriately Exuberant Update On US LNG Export Terminals -- June 18, 2015

The other day I made this catty remark in response to some new energy project in the US:

Just one more example of the "stuff" going on in the oil and gas industry in the United States while France bans fracking; Germany returns to coal; Spain asks "WTF" happened to solar; the Mideast blows itself up; and, Russia can't get anything going.  It's not even going well for the Norwegians.

Maybe I'm making too much of this, but Cheniere Energy's Sabine Pass story is absolutely incredible -- at least it seems to me -- by the way, with the market up 160 points today in early trading, what is SRE doing? Not much, up a little.

Okay, back to the Sabine, from RBN Energy (link here, but it will be archived), look at this:

The six liquefaction “trains” under development at Cheniere Energy’s Sabine Pass liquefied natural gas (LNG) terminal will demand nearly 4 Bcf/d of natural gas on average, the first 650 MMcf/d of that starting within a few months. And the five trains now planned at Cheniere’s Corpus Christi site—yes, now five, not three—will require another 3.2 Bcf/d. Taken together, that’s about 10% of current daily gas production in the U.S.; in other words, a monumental logistical task.

The development of the initial quartet of LNG export facilities on the Gulf Coast and East Coast continues.

Construction of the first project out of the gate—Train 1 at Cheniere’s Sabine Pass terminal in Cameron Parish, LA—is nearing completion, with initial LNG production likely by the end of 2015 and the first shipments in early 2016. Meanwhile, work on three other trains at Sabine is well along (they’ll start operating in 2016-17), and Cheniere is closing in on final investment decisions (FIDs) on two more trains at the same site (for a total of six).

A few miles to the east, Cameron LNG is building three liquefaction trains in Hackberry, LA, and in Freeport, TX, Freeport LNG is building two trains of its own.

On the East Coast, Dominion is building a one-train liquefaction plant at Cove Point, MD.

All four projects have something big going for them—namely, each is at the site of an existing LNG import terminal (developed before the shale era), so a lot of the docking and other infrastructure is already in place. That’s given what we’ve been calling these “First Four” LNG export projects a capital-cost edge that, in turn, has enabled them to offer attractively low liquefaction tolling fees and to reach long-term deals with a long list of international off-takers.

[On a side note, I was cleaning up the blog a little bit the other night and noticed I had a post "IN PROGRESS" from several years ago regarding LNG IMPORT terminals in the US. It looks like I quit updating that post literally as news came in that IMPORT terminals were going to turn the pumps around and become EXPORT terminals.

I cannot believe how fast this all happened.

So, four (4) sites above. But there's more:

Cheniere—a gutsy pioneer in the LNG-export business—remains decidedly upbeat. In mid-May (2015), the company gave its contractor the go-ahead to start building two liquefaction trains at a site in Corpus Christi; the final investment decision—on a third train is expected later this year).

Corpus will be the first “greenfield” LNG export project in the Lower 48 states (a small LNG export terminal near Kenai, AK came online in 1969 and is still operating).

And on June 10 (2015), Cheniere announced that it hopes to build two more trains at Corpus and—as if that weren’t enough—that it’s partnering with Parallax Enterprises on two somewhat smaller LNG export projects in Louisiana.

Cheniere estimates that each of the now 11 trains planned at Sabine and Corpus will demand 650 MMcf/d of natural gas, or a total of more than 7.1 Bcf/d. 

Meanwhile France bans fracking, Germany turns to coal, Spain asks WTF happened to solar, and Putin looks to Greece to save his country as he knows it. Think of all the jobs these LNG export terminals jobs are providing. 

Related:

From ArgusMedia, January 2, 2015:

The US has a much larger labor pool to draw from than Australia, which faced labor shortages for its LNG projects.

Expansions at existing US LNG terminals will have advantages over greenfield US LNG projects because of cost savings.

The Cameron LNG export project is being built at the site of an existing import facility and Sempra is considering adding two more liquefaction trains, in addition to the three already being built.

Labor pool issues, from wiki:

The construction cost of greenfield LNG projects started to skyrocket from 2004 afterward and has increased from about $400 per ton per year of capacity to $1,000 per ton per year of capacity in 2008.
The main reasons for skyrocketed costs in LNG industry can be described as follows:

1. Low availability of EPC contractors as result of extraordinary high level of ongoing petroleum projects world wide.
2. High raw material prices as result of surge in demand for raw materials.
3. Lack of skilled and experienced workforce in LNG industry.
4. Devaluation of US dollar.