Front-runner US LNG projects nearing FID

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It is looking increasingly likely that as many as five US LNG export projects could reach final investment decision (FID) by this time next year, taking the total LNG production capacity under construction in the US to around 69 mtpa. Most of that production would then be starting up around the turn of the decade – making the US one of the top three LNG producers alongside Qatar and Australia.

Until this month, the only project to have won approval from the Federal Energy Regulatory Commission (FERC) for siting, construction and operation was Cheniere Energy’s 18 mtpa Sabine Pass plant, which is on track to begin operations next year.

Cameron LNG in pole position: The second such approval came on 19th June when Sempra Energy announced that its subsidiary Cameron LNG had “received authorisation from the FERC to site, construct and operate a natural gas liquefaction and export facility at the site of the company's LNG receipt terminal in Hackberry, Louisiana”. The FERC permit is one of the last major regulatory approvals required to start construction on the project , which is expected to cost $9-10 billion.

The approval puts the project in pole position to be the next to reach FID after Sabine Pass. Together the two projects would have export capacity of 30 mtpa.

The authorisation approves the development of a three-train liquefaction facility with total capacity of 12 mtpa of LNG, or 1.7 Bcf/d of gas.  FERC also authorised construction of a 21-mile, 42-inch natural gas pipeline expansion of the Cameron Interstate Pipeline, a new compressor station and ancillary equipment to supply gas to the plant. 

Cameron LNG already has conditional approval from the Department of Energy (DoE) to export LNG to non-free-trade-agreement (non-FTA) countries.

"We are pleased to . . . be one step closer to starting construction later this year," said Octavio M.C. Simoes, president of Sempra LNG.

Subject to FID, finalisation of permits and project financing, Sempra Energy will have an indirect 50.2% ownership interest in Cameron LNG. The remainder will be owned by GDF Suez, Mitsubishi Corporation, through a related company jointly established with Nippon Yusen Kabushiki Kaisha (NYK), and Mitsui & Co., each with 16.6%.

EPC contractors applaud: The approval was welcomed by CB&I and Chiyoda, who together in a joint venture called CC JV have been awarded the engineering, procurement and construction (EPC) contract for the plant. They now expect to access the site and begin construction later this year.

Another project edging closer to an FID, probably in the autumn, is Freeport LNG. Like Cameron LNG, it already has conditional approval from the DoE to export LNG to non-FTA nations. The capacity of both projects is already committed to buyers.

The final Environmental Impact Statement (EIS) for the project was issued in June, which means final approval to site, construct and operate the plant could come as soon as September. Freeport LNG CEO Michael Smith is insisting that construction will begin before the end of this year.

The final EPC contract with CB&I and Zachry to construct the first two trains of the liquefaction project was executed in December 2013. It included a limited notice to proceed on engineering and procurement services while the project awaits its final FERC approval. “The third-train EPC contract is expected to be executed by the end of 2014,” said the company.

Freeport LNG would add another 13.2 mtpa of capacity, taking the total under construction to 43.2 mtpa.

More Cheniere ventures: Two other projects hoping to begin construction either later this year or early next are both Cheniere Energy ventures: the two-train 9 mtpa expansion of Sabine Pass and the three-train Corpus Christi project, the first phase of which will consist of two 5 mtpa trains (no dates have yet been set for development of the third). Neither project yet has DoE non-FTA export approval, but these approvals are likely to be granted soon after the FERC gives its final go-ahead, assuming the DoE goes ahead with proposed changes to the approvals process.

The other project with a good chance of getting final FERC approval over the coming twelve months is Dominion’s Cove Point Liquefaction Project, which will have a single 5.25 mtpa liquefaction train.

Six other project have submitted formal applications to the FERC, but the dates of their approvals are still uncertain because the FERC has yet to issue scheduling notices for them. Another three projects have begun the pre-filing process that projects have to go through, for at least six months, before they can make a formal application.

By Alex Forbes