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LNG project tracker: Headway and headwinds as exports continue

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LNG project tracker: Headway and headwinds as exports continue

To view acomplete list of LNG projects in development, visit our NaturalGas Projects page.

AsCheniere EnergyInc.'s Sabine Pass terminal continues to export LNG from Louisiana,other large-scale project developers in the U.S. are making headway onregulatory issues and construction.

Withlanded LNG prices still at multiyear lows amid a global supply glut, however,U.S. LNG export projects face headwinds beyond federal regulations in the raceto reach major milestones.

Belowis an assessment of LNG project developers' recent first-quarter earningspresentations and statements to gauge their progress.

Lake Charles: Finalinvestment decision nears

EnergyTransfer group CFO Thomas Long said the company expects to reach a positive finalinvestment decision on the Lake Charles LNG project in the fourth quarter of2016.

"Progresscontinues to be made during the first quarter, and we are currently engaged invarious early works projects," he said during a May 5 earnings call."[T]he first LNG exports are anticipated mid-2021."

Longadded that "project financing efforts remain on track, and preliminaryresponses from lenders have been positive."

LakeCharles LNG, owned 60% by EnergyTransfer Equity LP and 40% by Energy Transfer Partners LP, received finalauthorization from FERC in December 2015 for the approximately 2-Bcf/d, $10.9billion project. Lake Charles is slated to include three new natural gasliquefaction trains; modifications to the Trunkline LNG terminal in CalcasieuParish, La.; and new pipeline facilities in Louisiana, Arkansas and Mississippi.

FERCgave Lake Charles LNG the go-ahead Feb. 23 to begin tree clearing to preparethe way for construction, despite the Sierra Club's Jan. 19 request forrehearing of the project's FERC authorization. (CP14-120)

Elba Island: Hoping for FERCauthorization in May

's Elba IslandLNG liquefaction and export project in Chatham County, Ga., is also makingprogress toward a final investment decision.

"Thebig upcoming milestone is [in] May we expect to get our FERC certificate,"Kinder Morgan President and CEO Steven Kean said during an April 20 conferencecall. "What they're doing right now is they're getting interagencycommentary. We've spent a lot of time with those agencies. We think … that theconcerns are largely addressed."

FinalFERC authorization for the $2 billion, 0.35-Bcf/d project, which a positiveenvironmental assessment from commission staff in February, would come afternumerous delays in the EA process. Kinder Morgan subsidiaries andSouthern LNG Co. LLChad asked FERC in March 2014 for full authorization no later than March 1,2015. (CP14-103, CP14-115, CP14-493)

KinderMorgan is also preparing its post-authorization logistics. In April, ElbaLiquefaction and Southern LNG awardeda contract to IHI Corp.'s IHI E&C for the engineering, procurement,construction, commissioning and startup of the proposed liquefaction project.

Jordan Cove: A'Japan project'

VeresenInc. officials sounded an optimistic note about 's LNGliquefaction and export terminal in the port of Coos Bay, Ore., and thePacific Connector GasPipeline that would serve it, despite further obstacles in the FERCprocess.

Jordan Cove LNG President and CEO Elizabeth Spomerhighlighted the preliminary commercial agreements the project has signed sinceFERC rejected the terminal and pipeline in March.

"JERA Co. Inc. is the largest LNG buyer in the world,[it] definitely serves as a kind of seal of approval," she said during aMay 5 conference call. "So we see strong commercial support for theproject continuing and a great momentum coming out of the JERA and announcements. …[W]e would like to think of ourselves as kind of a Japan project."

Veresen CEO Donald Althoff added that Pacific Connector hasentered into "binding transportation service precedent agreements …representing more than 75% of the pipeline's capacity," and that Veresenhas budgeted $100 million for Jordan Cove for 2016.

Jordan Cove and Pacific Connector filed an April request forrehearing of FERC's certificate authority denial, but the commission May 9issued a tollingorder to give it more time to consider the request beyond the 30-day deadline.(CP13-483, CP13-492)

Pacific Connector is owned by a subsidiary of Veresen and asubsidiary of Williams PartnersLP.

Cove Point: 64% complete

Constructionat Dominion ResourcesInc.'s $3.4 billion to $3.8 billion, 750-MMcf/d Cove Point LNGexport facility on the Chesapeake Bay in Maryland continues to progress despitesignificant opposition from environmental groups.

"OurCove Point liquefaction project is approximately 64% complete," DominionChairman, President and CEO Thomas Farrell II said during a May 4 conferencecall. "The project continues on time and on budget for a late 2017in-service date."

Environmentalgroups on April 19took FERC to task for failing to analyze the indirect environmental effectsspurred by Cove Point. Earthjustice managing attorney Deborah Goldberg,representing the EarthReports Inc.-led coalition suing FERC over its approvalof the terminal, told a three-judge panel of the U.S. Court of Appeals for theDistrict of Columbia Circuit that "there are large gaps in theanalyses" because the commission has refused to use available modelingtools.

CatherineStetson, the Hogan Lovells U.S. LLP partner who represented at oralarguments, reiterated that FERC confined itself to the NEPA question at hand."EarthReports in this case is attempting to have NEPA do something thatNEPA isn't designed to do," she said. "NEPA is not some kind of apolicymaking statute. … This facility did not cause anything to happen in theMarcellus Shale."

Industryadvocates, meanwhile, remain confident the court will rule in FERC's favor.

Cameron LNG: Ahead of schedule

Construction on the first three trains at Cameron LNG LLC'sexport facility is slightly ahead of schedule, Chairman and CEO DebraReed said during a May 4 conference call.

"[For] Cameron's 1 through 3, we are 43%complete," she said. "We're still expecting Train 1 to come on inMarch of 2018; Train 2 to come on in July of 2018; and 3 in November 2018."

The Sempra-backed joint venture FERC authorization May 5 forits proposed two-train, 1.41-Bcf/d expansion at the $10 billion terminal.Cameron LNG plans to begin construction in June and to place the project inservice by the end of 2019. (CP15-560)

"I think the … point to keep in mind is, as far as U.S.LNG exports go, we believe train 4 will be one of the least expensive optionsavailable," Sempra President Mark Snell said during the call. "Sothat's why we continue to have pretty good interest from people looking atsecuring that option early, and maybe even in advance of when world demand mayrequire it."

Sempra is also developing the proposed export facility in PortArthur, Texas, which would initially be designed to include two natural gasliquefaction trains with a total export capability of about 10 million tonnesper annum.

Sabine Pass, Corpus Christi:Low-cost LNG

Cheniere,which has exported seven LNG cargos so far from Sabine Pass, reported May 5that the first and second liquefaction trains at the terminal were approximately98.3% complete as of March 31, 2016. Trains 3 and 4, meanwhile, wereapproximately 83.8% complete, and all four were ahead of contractual schedule.

Thesecond train at Sabine Pass is expected to begin production this month.Cheniere said it will make a final investment decision on Train 6 "upon …entering into an EPC contract, entering into acceptable commercialarrangements, and obtaining adequate financing." (CP11-72, CP13-2)

Moody'srecently upgradedratings on Sabine Pass Liquefaction and Sabine Pass LNG, citing"construction accomplishments."

CFO SimonHenry also praised Sabine Pass during the company's May 4 earnings conferencecall. "The good news is, in our view, that it'sthe lowest-cost LNG that is available from the North American continent,"he said.

, which completedits merger with Shell in February, has a long-term offtake contract with thefacility.

Construction on trains 1 and 2 at Cheniere's Corpus Christiproject near Corpus Christi, Texas, were approximately 32.5% complete as ofMarch 31, with both expected to reach substantial completion in 2019.