U.S. LNG project advancements and their developers' ambitions took center stage at this year's Gastech conference in Houston, as companies continued working toward final investment decisions and project contracts as well as bouncing back from technical difficulties.
Joint venture partners, Total SA and Sempra Energy, said on Sept. 19 that its first liquefaction train at the Cameron LNG LLC export terminal in Louisiana will likely remain 65% to 70% of its operational capacity until November after last month's compressor station failure.
Details about the glitch, which the executives said has not prevented the facility from meeting its contracts and lifting schedules, came as the annual Gastech conference was wrapping up.
Both San Diego-based Sempra and France's Total, which are partners in Cameron LNG but competitors on other projects, have big ambitions in the North American LNG sector. They have pinned their goals to cheap feedgas options in the U.S. and growing consumption in Asia, Europe, the Middle East and Latin America.
Sempra and Total are fighting Cheniere Energy Inc. for LNG industry market share. Cheniere executives at the conference said it wants to sell as much of its capacity as possible before moving forward with its proposed midscale liquefaction expansion at a Texas export terminal, though it sees two recent gas producer agreements as a positive first step.
During a news briefing with a small group of reporters on the sidelines of the conference, CEO Jack Fusco said Sept. 17 said that Cheniere does not want to be overly exposed to volatile commodity prices and will continue to seek innovative ways to market its volumes.
Cheniere remains on track to make a final investment decision on the up to 9.5 million tonnes per annum Stage 3 expansion by the first half of next year, he said. The biggest U.S. LNG exporter, like its competitors, has had to be more creative finding buyers for new trains and terminals because of the ongoing trade war between Washington and Beijing, which has effectively cut off U.S. deliveries to China.
Two other LNG developers, Exxon Mobil Corp. and Qatar Petroleum, are looking to lock down long-term off-take contracts for their LNG export terminal being built in Texas after going some time without them, an Exxon executive said in an interview.
The approach, described by Alex Volkov, Exxon's head of global LNG marketing, reflected the company's strategy of separating the rationale for a final investment decision for natural gas liquefaction projects from the ultimate execution of those projects, something its financial flexibility as an integrated major allows it to do. Volkov spoke with S&P Global Market Intelligence and S&P Global Platts on Sept. 17.
When a positive final investment decision, or FID, was reached in February on the over $10 billion project to convert the Golden Pass receiving terminal into an export terminal, Exxon and Qatar Petroleum went ahead without announcing any long-term agreements. It was a relatively novel approach in the North American market — one also taken by Royal Dutch Shell PLC-backed LNG Canada project in British Columbia in October 2018. Most developers rely on take-or-pay contracts that last 15 to 20 years to allow them to secure billions of dollars in financing.
While Cheniere, Sempra, Total and Exxon are big players in the industry, smaller companies are still working their way into the burgeoning US LNG scene. India's Petronet LNG Ltd. will invest in the Tellurian Inc.-led Driftwood LNG export project in Louisiana for up to 5 million tonnes per annum of supply, according to a Sept. 20 report from Reuters citing unnamed sources.
Petronet and Tellurian will sign a memorandum of understanding for a $2.5 billion investment deal on Sept. 21, the report said. The LNG supply would be provided over the lifespan of the project, Reuters reported.
Tellurian CEO Meg Gentle earlier said Petronet is still identifying the volumes it would take as part of its proposed investment in the project. The company expects to make a final investment decision by year-end, but the project currently has an incremental investment decision.
LNG Ltd.'s top executive said it could be 2020 before the Australia-based company builds enough commercial support for its proposed Magnolia LNG LLC export terminal in Louisiana to reach a final investment decision.
In an interview with S&P Global Market Intelligence and S&P Global Platts, CEO Greg Vesey cited the ongoing trade war between the U.S. and China as one factor that could move the decision back. China is expected to become the world's biggest importer of LNG within a decade. Vesey also pointed to a warmer-than-average winter and depressed LNG prices, including in Europe.
"Could it happen this year? Yes," Vesey said in a Sept. 18 interview at Gastech. "If I'm a betting man, it's probably going to spill over into next year, because I just don't think things will get settled that quickly."
