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US LNG exports expand global reach as Cheniere ships 1st cargo at Corpus Christi

Cheniere Energy Inc.'s LNG export terminal in Corpus Christi, Texas, shipped its first cargo, adding to the United States' continued growth in liquefaction capacity. The U.S. is set to become the third-largest LNG exporter in the world by 2019.

The cargo is a major development for the project. It occurred as the facility undergoes commissioning to test systems before it can begin commercial operations. The Corpus Christi terminal produced its first LNG nearly a month ago, becoming the third large-scale LNG export facility to start up in the Lower 48 and the first built from the ground up instead of adapted from existing infrastructure.

A Liberian-flagged ship named Maria Energy left the export facility the morning of Dec. 11; it arrived at the Texas facility Dec. 1, according to ship-tracking website "This milestone further reinforces Cheniere's position as the leader in U.S. LNG, with a world-scale liquefaction platform that provides significant competitive advantages as we continue to execute on our growth strategy," Cheniere President and CEO Jack Fusco said in a statement.

Including the Corpus Christi facility, total LNG export capacity of the U.S. is expected to climb to 8.9 Bcf/d by the end of 2019 as the country overtakes Malaysia to become the third-largest exporter of the commodity in the world, the U.S. Energy Information Administration said.

The EIA projection reflects a major ramp-up for a budding U.S. industry that is on track to more than double the LNG export capacity of 3.6 Bcf/d that was reached when Dominion Energy Inc.'s Cove Point LNG in Maryland came online early in 2018. U.S. capacity is expected to end the year at 4.9 Bcf/d because of two new gas liquefaction trains being commissioned at Cheniere's Sabine Pass and Corpus Christi export facilities.

Actual exports of LNG from the U.S. will grow from an average 2.9 Bcf/d in 2018 to 5.2 Bcf/d in 2019 as new liquefaction trains are commissioned and build up to full capacity, the EIA said in a Dec. 10 "Today In Energy" article. The expected growth in export capacity would leave the U.S. only behind Qatar and Australia in terms in LNG exports to world markets.

Working toward that, daily natural gas flows to U.S. liquefied natural gas plants hit a record high in November. Total average gas deliveries to Cheniere's Sabine Pass and Dominion's Cove Point terminals reached more than 3.9 Bcf/d in November, compared to less than 3.3 Bcf/d in October, S&P Global Market Intelligence pipeline-flow data showed. The November figure topped the previous all-time record high of 3.5 Bcf/d set in April.

On the other side of the equation, LNG demand that is not covered by supply contracts among the world's seven biggest buyers could grow fourfold to about 80 million tonnes per annum by 2030, according to a report from consulting firm Wood Mackenzie.

As large Asian LNG buyers seek variety in their contracts, they will consider factors in addition to price, such as contract flexibility and indexation, supply diversity, upstream participation and seasonality, Wood Mackenzie said.

"Market liberalization and uncertainty on longer-term demand in more mature markets, such as Japan, South Korea and Taiwan, will mean more room for spot and short-term purchases," research director Nicholas Browne said.

The projection of demand reflected the fact that Asia is a key market for the LNG industry, even as a U.S.-China trade war creates uncertainty for U.S.-based exporters. The forecast also highlighted the need for commercial sanctioning of LNG export projects around the world at a time when energy market experts warn of a supply crunch by the mid-2020s.