Jordan Cove chief courts buyers, landowners as LNG venture tries again
Elizabeth Spomer joined Jordan Cove Energy Project LP as CEO in November 2014 after more than 30 years in the energy industry. The Oregon natural gas liquefaction and export venture, led by Alberta-based Veresen Inc., is again seeking authorization from FERC after the commission denied a rehearing of its original March 2016 rejection of the project application. S&P Global Market Intelligence spoke with Spomer over the phone. The following is an edited transcript of the conversation.
S&P Global Market Intelligence: The associated pipeline was the main reason FERC rejected the project. What is different this time around? Has Pacific Connector received more commitments for transportation service?
We just didn't know we were under a timeline. That was kind of the process problem. We were working with JERA Co. Inc. and ITOCHU Corp. We had finally reached an agreement with JERA and had finally gotten a date set for signing. We were going to announce it on March 22, 2016. The denial was on March 11, 2016. We just ran out of time.
Asia no longer US LNG's biggest potential market amid low prices, analyst says
With LNG prices sagging lower than expected and Asia less certain as a driver of demand for U.S. LNG, much of the commodity could stay in the Americas or go to the Middle East and Europe, an analyst said.
Exporting to Asia amid the prevailing low price environment "doesn't really make much sense anymore," Max Gostelow, an S&P Global Platts pricing analyst for LNG, said March 22 at the Philippines Energy Forum in Manila. The spread between Asian and U.S. spot prices has narrowed over the past five years, making Asian buyers less motivated to partake in U.S. LNG.
Traditional buyers used to buy as much LNG as they could, regardless of the price, Gostelow said, but that is changing as these buyers, especially the ones in Japan and China, have become overcontracted. In this scenario, security of supply is giving way to flexibility of contracts, such as a destination-free trading clause, and diversified portfolios as they look to off-load much of their contracted volumes.
Global LNG glut seen persisting through early 2020 but could find new demand
New global LNG demand centers are expected to emerge over the next five years, just as demand from traditional buyers shows signs of uncertainty and new liquefaction capacity goes online to add to an already oversupplied market.
Speaking at the Philippines Energy Forum in Manila on March 22, S&P Global Platts analyst Max Gostelow said the global LNG market has shifted from being tight a few years ago to being well-supplied. Over this time, rising supply has been met with stalling demand from traditional buyers.
Platts sees a continuation of the supply glut over the medium term as it projects global liquefaction capacity to reach over 460 million tonnes by 2021 and 2022. Emerging demand is expected to contribute to growth in global LNG demand, which is expected to reach 360 million to 380 million tonnes. Although forecast to remain oversupplied, the global LNG market could rebalance much quicker than expected. "[Supply] can be absorbed potentially quicker depending on how quickly [buyers] get access to the market," Gostelow said.
Asian LNG buyers form alliance to push for flexible contracts
Three of the world's largest LNG buyers are teaming up to push for more flexible contracts, taking advantage of a buyer's market formed by a global oversupply of LNG and low oil and gas prices.
JERA Co. Inc. said March 23 that the company had signed a memorandum of understanding with Korea Gas Corp. and China National Offshore Oil Corp. (CNOOC) for "investigating ways to gain even greater flexibility in procurement."
While many industry observers see the LNG supply glut shrinking over the next decade, the oversupplied market has tipped the scale in favor of buyers, which increasingly demand contracts free of destination restrictions.
Steelhead LNG gets approval from BC First Nation for new export project
The Huu-ay-aht Nation in British Columbia voted for Steelhead LNG's proposed Sarita LNG export project, allowing the First Nation and the company to proceed with a comanagement agreement for the project.
"This is a first in [British Columbia] and Canada and creates a significant degree of certainty early in the project for not only Huu-ay-aht and Steelhead LNG, but also for government, investors and customers," Steelhead LNG CEO Nigel Kuzemko said in a March 26 news release.
The proposed Sarita LNG facility, which is in the preliminary engineering and conceptual design stage, received unanimous support from the First Nation's hereditary chiefs and elected executive council. The First Nation's citizens voted 70% for the project March 25, according to the news release. "Our co-management arrangement to this project is ground breaking and, by approving such a world-leading approach, Huu-ay-aht is continuing to be a leader among First Nations," said Robert Dennis Sr., Huu-ay-aht's chief councilor.
Cheniere gets permission to start commissioning 4th LNG train at Sabine Pass
Cheniere Energy Inc. affiliates were given permission to begin commissioning the fourth liquefaction train at the Sabine Pass LNG export terminal in Louisiana.
FERC on March 24 granted Sabine Pass Liquefaction LLC and Sabine Pass LNG LP's request to introduce fuel gas to train 4 days after the commission approved the companies to put in service train 3, which had been undergoing commissioning activities since September 2016.
MARAD approves Delfin LNG for offshore portion of export project
The U.S. Department of Transportation's Maritime Administration approved, with conditions, the Delfin LNG LLC application to build and operate the offshore portion of its deepwater LNG export project.
Delfin LNG must now accept conditions set out in the decision, which include obtaining FERC authorization for the onshore facilities and mitigating impacts to the surrounding land and water.
"Once those conditions are met, MARAD will issue the license," said Kim Strong, a spokeswoman for the agency, who added that a timeline had not been set. "It is really dependent on the applicant and how quickly they respond." The March 13 decision, signed by MARAD Executive Director Joel Szabat and recently made public, found that the Delfin LNG deepwater port would be in the national interest and would not "unreasonably interfere" with international navigation or pose other threats to vessel traffic.
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