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CERAWEEK: Cheniere eyes start of LNG output from ninth train by end of 2021

Highlights

China goal could support 'three more Cheniere's': CEO

Emissions reduction targets on minds of US exporters

Houston — Cheniere Energy hopes to be producing LNG from its ninth and, for now, final liquefaction train by the end of this year, as construction remains ahead of schedule, CEO Jack Fusco said March 1.

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The biggest US LNG exporter is betting on a lift to its commercial efforts from the rebound in global markets following a challenging 2020, demand from major Asian consumers and plans to make its carbon footprint more transparent.

During a panel discussion at the annual CERAWeek by IHS Markit energy conference, Fusco said that when Sabine Pass Train 6 in Louisiana goes online at the end of 2021 and begins commercial service during the first half of 2022, Cheniere will have completed the company's already sanctioned LNG infrastructure. It also operates three trains at its Corpus Christi Liquefaction facility in Texas; the third is preparing to begin commercial service.

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Looking forward, Cheniere hopes to be able to build sufficient commercial support to sanction an up to 10 million mt/year mid-scale train expansion at the Texas facility. Demand from China and India could help in that effort. The additional investment is critical to Cheniere and other North American developers achieving their goals.

"We see huge demand growth potential in Asia," Fusco said.

China's five-year energy plan that sets the country's latest outlook for natural gas demand growth is a positive signal for adding new US liquefaction capacity.

"If they are successful, that could be three more Cheniere's," Fusco said. "We want to continue to grow and continue to meet the needs of our customers. We've been very innovative in our contracting structures. I would expect us to continue to do so."

China's natural gas demand is expected to set a new record in 2021 as its economy emerges from the pandemic faster than most countries and it remains on track to meet its long-term environmental protection targets, according to data from S&P Global Platts Analytics and state-owned Sinopec's research arm.

China's average annual increase in natural gas demand is expected to exceed 20 Bcm in the 14th Five-Year Plan (2021-2025) and reach 430 Bcm in 2025. That would be slower than the average annual growth of 11.1% seen during the 13th Five Year Plan.

Asia demand growth is important given the shifting market dynamics in Europe.

Amid the energy transition to greater use of renewables and cleaner burning fuels, France's Engie said in November 2020 that it had halted talks with NextDecade about a supply deal tied to the developer's proposed Rio Grande LNG facility in Texas. With strict carbon emissions goals, European utilities are being pressured to shy away from signing new deals for importing US shale gas.

Emissions data

For Cheniere's part, the company said Feb. 24 it plans to give its LNG customers emissions data associated with each cargo it produces at its two US export terminals, starting in 2022. While Engie's reported decision did not drive the carbon emissions data initiative that Cheniere announced, Cheniere's effort at transparency is aligned with Europe's goals.

"We are already looking at a whole variety of things that we can do internally, and then we can help with our suppliers to clean up our emissions profile, so that's the next stage," Fusco said at CERAWeek. "But I also believe you have to walk before you can run."

In 2020, the company began issuing an annual report that outlines practices for a range of sustainability issues, including climate-related risks.

"The road to a cleaner energy mix for the world is going to be long, and it is going to take everything," Fusco said. "When we look at LNG and natural gas, we think it's a perfect complement to renewables."

Besides being the biggest LNG exporter in the US, Cheniere is on some days the country's biggest individual physical consumer of natural gas.

Some market observers believe buyers in energy-thirsty Asian markets might not show the same level of hesitation over supply chain emissions as their European counterparts. Instead, these customers may place greater priority on security of large quantities of LNG with a focus on price and reliability.

Fusco said that ultimately the company hopes "to make everyone comfortable, at least with Cheniere's LNG."