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Cameron LNG export terminal 'very close' to startup: project officials

Highlights

Facility could be ready for production in few weeks

Storage tanks already cool from decade-oil import

Hackberry, Louisiana — Sempra Energy's Cameron LNG export terminal is "very close" to startup and could be ready to begin producing LNG in the next few weeks, project officials said Wednesday.

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The US is on the verge of becoming a much bigger global player in the supply of LNG produced from shale gas, with as many as three terminals expected to start up this year in addition to the three currently operating. Total US feedgas demand is expected to rise to nearly 6.1 Bcf/d in 2019, an 80% build compared with 2018, S&P Global Platts Analytics data show.

At the Cameron LNG facility in Hackberry, south of Lake Charles, Train 1 is 99% complete, officials said. While the exact timing for first LNG production and first export is unclear and could be pushed into the second quarter that begins in April, as the operator continues to test equipment, Cameron LNG will be able to move somewhat quicker than some of its peers.

That's because its storage tanks already have a sizable amount of LNG in them that was left over from when the facility was an active receiving terminal a decade ago. The tanks are cooled down, making it unnecessary for Cameron LNG to bring in an import cargo for that purpose, as Cheniere Energy did when it started up Sabine Pass and Dominion Energy did when it started up Cove Point.

"We feel like we're very close," Project Director Jamie Gray said during a briefing and tour of the Louisiana facility.

The current posture is a positive sign for Cameron LNG. The $10 billion project -- a joint venture of affiliates of San Diego-based Sempra, France's Total, Japan's Mitsui and a company jointly owned by Japan's Mitsubishi and NYK -- faced delays in late 2017 and early 2018. As many as 11,000 workers were on site last summer as contractors McDermott International and Chiyoda pushed to get the project back on track. Sempra's goal is to have trains 2 and 3 producing LNG by the end of the 2019.

In an interview, Cameron LNG CEO Farhad Ahrabi, a former BG executive with more than three decades of commercial experience, said the company met with customers last month to set an operating schedule for the facility for the rest of the year. Ahrabi said the number of commissioning cargoes that are shipped before commercial service begins could range from one to six or seven, depending on customer needs. Tenaska is arranging the feedgas supply needed for commissioning, he said. The destination of the first cargo has not been decided. Cameron LNG operates a tolling model under which the buyer of the LNG is responsible for securing its own feedgas and deciding where the cargoes are delivered.

"At this stage, sitting here today, we don't know," Ahrabi said. "In terms of the market, China is taking a lot of volumes. What happens in the nuclear industry in Japan is anyone's guess. I wish I had a crystal ball."

EXPORT COMPETITION

With the startup of Cameron LNG, Sempra, a major player in the regulated electricity and natural gas markets, will be making a major push into LNG, with an ultimate goal of supplying up to 45 million mt/year to global destinations from the Louisiana facility and two other export facilities it is developing -- Port Arthur LNG in Texas and Energia Costa Azul, which was originally designed as a receiving terminal, in Baja California, Mexico.

Sempra is targeting a late 2019 final investment decision for the Mexico project and a late 2019 or early 2020 FID for Port Arthur LNG, officials said. For now, the focus is on getting Cameron LNG online, as US export competition builds with Kinder Morgan's Elba Island LNG export terminal in Georgia expected to start up by the end of March.

"In the next few weeks, we will be seeing the first ships arriving to load up the cargoes and really connect this community we call Hackberry to the four corners of the world," Ahrabi said during the briefing.

A company spokeswoman later backtracked slightly on Ahrabi's remarks about the timing of the first vessels arriving, saying in an email that what Sempra anticipates is that it will be commencing startup activities in the next few weeks.

-- Harry Weber, Harry.Weber@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com