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LNG Project Tracker: New Cheniere trains gear up as rival projects advance

Cheniere Energy Inc. ramped up operations in the first months of 2019 at the third liquefied natural gas terminal in service in the Lower 48, and as many as three other export ventures could join the facility in what might be a record-setting year for U.S. LNG exports.

It may also be a record year for LNG project developers reaching final investment decisions, as they seek to start building in time to supply the LNG that market analysts said is needed to avoid a supply crunch in the mid-2020s. There have been encouraging signs for developers of this second generation of U.S. LNG export projects, including progress on the regulatory front and new supply deals.

The following is a compilation of updates to major U.S. LNG export projects over the past few months.

Cheniere: 2 new trains cleared for commercial service

The Federal Energy Regulatory Commission on March 1 authorized Cheniere to start commercial service at Corpus Christi's first natural gas liquefaction train. On March 12, FERC allowed a fifth train at the Sabine Pass terminal to start service.

Both trains had already produced LNG and shipped cargoes during the commissioning process that precedes service. Now the first commercial deliveries from the new terminals loom. Cheniere expects the first commercial delivery from the Corpus Christi train in June. The first commercial delivery from the fifth train in Sabine Pass is scheduled for August. Like the previous four trains at Sabine Pass, the new trains each have the capacity to produce 4.5 million tonnes per annum of LNG, or about 0.7 Bcf/d of gas.

A key priority for Cheniere in 2019 is reaching a final investment decision on a sixth train at Sabine Pass, a milestone the company is targeting by midyear.

On March 11, FERC approved a request from a Cheniere unit to introduce feedgas to the second 4.5-mtpa train of its Corpus Christi terminal, a significant step toward bringing that facility online in the second half of 2019.

Elba Island: Startup nears despite delay

Kinder Morgan Inc.'s Elba Island LNG terminal in Georgia received FERC approval March 6 to begin introducing feedgas to the facility as the first train advances toward startup. But the project has also faced construction delays, with commissioning activities expected to stretch beyond Kinder's anticipated in-service date and into the second quarter, according to March regulatory filings.

Kinder had said when it released its fourth-quarter 2018 earnings results on Jan. 16 that it expected to place the first unit in service at the end of the first quarter of 2019, with the remaining nine units to come online throughout 2019. The roughly $2 billion export project will be capable of producing about 2.5 mtpa of LNG once all of its 10 modular liquefaction units are online.

Cameron LNG: 1st LNG imminent

The Sempra Energy-led Cameron LNG export terminal in Louisiana has also faced delay, but the first train is close to exporting LNG.

Sempra executives said during a Feb. 26 earnings call that the company plans to introduce feedgas to the terminal in the first quarter and complete its performance testing in the second quarter.

The $10 billion first phase of the project includes three trains expected to be able to export 12 mtpa of LNG, or about 1.7 Bcf/d. Sempra anticipated completing the second train by the end of 2019 and the third train by the end of the first quarter of 2020.

Another Sempra LNG project, the proposed Port Arthur LNG in Texas, cleared a final environmental review by FERC in late January, which could help advance the project toward a final investment decision. The terminal has a targeted export capacity of 11 mtpa.

Sempra is also aiming to commercially sanction a third LNG project in late 2019 that would give export capability to the Energía Costa Azul import terminal on the west coast of Mexico. The first phase has a planned export capacity of about 2.4 mtpa.

Freeport LNG: 1st cargo could ship in July

The Freeport LNG Development LP terminal in Texas could be ready to ship its first export cargo in July, nearly two years after flooding from Hurricane Harvey contributed to a delay.

Freeport expects to begin flowing feedgas in April or May, with first LNG ready to load in July, CEO Michael Smith said in a March 11 interview on the sidelines of the CERAWeek by IHS Markit in Houston. Several commissioning cargoes would follow before commercial deliveries that are expected to begin in September.

The second and third trains are slated to start up in 2020. The $13 billion venture will be able to produce 15.3 mtpa once all trains are in service, and the developer is also seeking approval for a fourth train expected to add 5.1 mtpa of liquefaction capacity.

"We're cautiously optimistic that they're going to meet the current schedule, based on the progress they've made to date," Smith said. "There's still a lot to do. And I would not ever say there isn't a risk that it be delayed."

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Golden Pass: Different route to final investment decision

In February, the more than $10 billion Golden Pass LNG terminal in Texas was commercially sanctioned by majority-owner Qatar Petroleum and partner Exxon Mobil Corp. The facility is expected to add about 16 mtpa of LNG export capacity to the Gulf Coast when it starts up in 2024.

Golden Pass is in a similar situation to LNG Canada, a roughly $31 billion export project in British Columbia commercially sanctioned in October 2018 by a group of investors led by Royal Dutch Shell PLC. Both projects were sanctioned by deep-pocketed backers without first announcing long-term supply contracts with LNG buyers. But such deals remain important for other developers, which use them to secure financing for their projects.

Calcasieu Pass: All major permits

Even though Venture Global LNG has yet to announce a formal final investment decision for its Calcasieu Pass terminal, the proposed Louisiana facility is considered one of the front-runners among U.S. LNG projects headed for commercial sanctioning in 2019.

Venture Global now has all major federal regulatory permits in hand for Calcasieu Pass, which would be capable of producing 10 mtpa. Venture Global has also lined up long-term supply deals that support the project.

On Feb. 21, FERC authorized the construction of Calcasieu Pass, marking the first time in more than two years the agency signed off on a new LNG export terminal. The U.S. Department of Energy later authorized LNG exports from the facility.

Venture Global said it expects to receive final authorization from FERC in August to build its larger Plaquemines LNG terminal in Louisiana, capable of producing 20 mtpa. The company expects to start construction this year.

On March 14, Venture Global announced plans to double the total LNG production capacity of its facilities to 60 mtpa.

Driftwood: Tellurian works to finalize deals

Tellurian Inc. is working to finalize deals with equity investors in its proposed Driftwood LNG project in Louisiana ahead of a targeted final investment decision for the 27.6-mtpa project in the coming months.

"We are still driving everyone for our first half of 2019 [final investment decision]," Tellurian CEO Meg Gentle told S&P Global Market Intelligence in a March 11 interview at CERAWeek.

Tellurian's model for Driftwood relies on equity partners that would buy stakes in the terminal and get LNG from the U.S. Gulf Coast that they could use for their own purposes or resell. Tellurian revised the financing structure in recent months in an effort to entice investors, cutting down equity buy-in to $500 per tonne from the previous $1,500 per tonne.

Gentle said Tellurian expects between four and eight customers, accounting for an average 2 mtpa each, to support the first phase. The company expects to start construction soon after a final investment decision and begin operations in 2023.

FERC staff signed off on the terminal project on Jan. 18 in a final environmental review that marked a major step toward federal authorization.

Rio Grande, Texas, Annova: Brownsville projects move along in FERC review

The three export terminals that developers have proposed building around the same time near Brownsville, Texas, are moving through the permitting process at FERC. In the meantime, the developers continue work to build commercial support for the projects.

NextDecade Corp.'s Rio Grande LNG facility would include six trains capable of producing a total of 27 mtpa of LNG. Exelon Corp.'s Annova LNG terminal and Texas LNG LLC's proposed facility are smaller, at 6 mtpa and up to 4 mtpa, respectively.

Texas LNG on March 15 received the final environmental review it needed from FERC, bringing the project closer to a final decision. Rio Grande LNG and Annova LNG both cleared draft environmental reviews. The companies developing the three projects have said they do not expect to face permitting delays.

Magnolia, Lake Charles, Delfin: Investment limbo

The three projects have all major regulatory permits in hand but have not received final investment decisions. Their developers work to sign long-term contracts that will help attract financing.

Alaska LNG: Decision on feasibility approaches

Alaska Gasline Development Corp. is closing in on a decision about the feasibility of the $43 billion project, for which the state has teamed up with BP PLC and Exxon Mobil, Gov. Mike Dunleavy said March 15 at CERAWeek.

"We should know within 60 days if the current project is economical," Dunleavy said. "If the state's going to be a partner, there has to be a return. It's the same, obviously, for investors … It has to pay off for everyone."

Dunleavy's remarks followed comments weeks earlier by the new head of the state corporation that called the viability of the project into question.

Jordan Cove: Target deadline nears for landing supply deals

Canada's Pembina Pipeline Corp. is approaching its targeted date at the end of March to secure off-take agreements to support building its proposed Jordan Cove LNG export terminal in Oregon. Jordan Cove has faced permitting challenges at the local, state and federal level.

On Feb. 28, FERC pushed back the deadline for its environmental review of the proposed project to Oct. 11 from Aug. 30. The move could delay the Canadian developer's effort to get federal authorization by over a month. FERC expected to issue a final order by Jan. 9, 2020.

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