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Kinder Morgan's Elba liquefaction in US exports 1st LNG cargo

Kinder Morgan Inc.'s Elba liquefaction terminal in Georgia shipped its first export cargo on Dec. 13, five months after production began at the smallest of the six major U.S. LNG facilities.

The Greek-owned Maran Gas Lindos tanker finished loading at about 8 a.m. ET, almost a week after docking at Elba, near Savannah, Ga. It waited until the early evening to depart so it could hit the high tide to make the transit down the Savannah River easier, according to market sources reached by S&P Global Platts. The departure, at about 7:30 p.m. ET, was shown by vessel-tracking data made available on the website of Savannah Pilots, which guides tankers through the channel that serves the terminal.

The cargo was expected to go to Pakistan, according to market sources, who noted that final destinations can change based on market factors. Port Qasim in Karachi is served by floating storage and regasification units, or FSRUs, owned by Excelerate Energy LP and BW Group Ltd.

U.S. Gulf Coast LNG netbacks from the Platts JKM, the benchmark price for spot-traded LNG in Northeast Asia, continued to trend up this month, rising to roughly 88 cents per MMBtu so far in December, a 55-cent per MMBtu build over last month, S&P Global Platts Analytics data showed. Netbacks from the Dutch Title Transfer index, or TTF, have also strengthened this month, but to a smaller degree, reaching 73 cents per MMBtu in December, a 16-cent per MMBtu improvement over November.

In recent days, however, TTF netbacks have begun to turn down as bearish sentiment in the European markets has outpaced weakness at the U.S. Henry Hub, indicating that Asia is now the clear premium market, Platts Analytics data showed.

Elba joins Cheniere Energy Inc.'s Sabine Pass in Louisiana and Corpus Christi liquefaction in Texas, Sempra Energy's Cameron LNG in Louisiana, Dominion Energy Inc.'s Cove Point in Maryland and privately held Freeport LNG Development LP in Texas in exporting LNG.

Backed by a 20-year offtake agreement with Royal Dutch Shell PLC, Elba will have a capacity of 2.5 million tonnes per year when all 10 trains planned for the facility are completed in the first half of next year. Kinder Morgan is the majority owner in a joint venture that holds the terminal, while investment funds managed by EIG Global Energy Partners have a 49% stake.

The terminal — originally built to import LNG and later converted to handle exports after the U.S. shale revolution utilizes Shell's movable modular liquefaction system design. Shell eventually plans to have these types of small-scale units deployed across North America.

Loading of the first export cargo at Elba was slow, in part because it was the first one, market sources said. There were several minor issues during loading, including a valve not working at the terminal at one point and several onshore valves at another point shutting down as a result of a rapid pressure increase and activating an emergency system, according to log records reviewed by Platts. The tanker shifted from one jetty to another on Dec. 9.

Officials at Kinder Morgan and Shell declined repeated requests for comment in the run-up to Elba's first export, including on Dec. 13.

The terminal experienced several startup delays before production from the first liquefaction train began July 17. Additional trains have come online since then.

Normally, it could take as long as 100 days for each of the trains at Elba, with nameplate capacity of around 33 MMcf/d, to fill a standard LNG cargo, Platts Analytics data showed. By comparison, a single train at Sabine Pass could fill a standard LNG cargo in just under six days. From the day Kinder Morgan confirmed production had begun to the Dec. 13 departure of the first cargo, some 149 days had passed.

Harry Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.