The most crucial prospects for US LNG exports

Susan L. Sakmar's picture
Susan L. Sakmar, Independent consultant, author and adjunct law professor, University of Houston Law Center
Comments: 0

Recent global economic conditions, including the steep drop in the price of oil, have created uncertainty for a number of US LNG projects. For example:

  • Earlier this month, Excelerate Energy asked the US Federal Energy Regulatory Commission (FERC) to pause the regulatory process while the company evaluates the economics of the project.
  • More recently, BG Group announced it would delay taking final investment decision (FID) on its proposed 15-mtpa Lake Charles LNG project in Louisiana, pushing a decision back to 2016.

Despite this recent spate of bad news for US LNG projects, most projects already in the regulatory queue seem destined to move forward with the US DOE and FERC having already granted a number of regulatory approvals. Moreover, most of the large US LNG projects are already fully subscribed with approximately 15 Bcf/d under contract. This obviously bodes well for these projects moving forward over the long term although there are likely to be project delays unless current market conditions change.

Considering the full list of pending US projects, here are my views on 6 key US LNG projects under contract.

  • The first US export project in line is Cheniere’s Sabine Pass Liquefaction project which is on track to ship the first LNG cargo from the lower 48-states in early 2016 from Train 1. Cheniere’s Trains 2-4 are expected to come on-line on a 6-9 month staggered basis starting in early 2016 and extending to early 2018. Cheniere is also planning two more two more trains (T5&T6), which are partially subscribed and awaiting final regulatory approvals but are expected to come on-line in 2018-19.
  • Following closely on the heals of Cheniere are two more US Gulf Coast projects that took FID in 2014 and are already under construction - Cameron LNG and Freeport LNG. These projects are expected to come on-line in 2018-2019.
  • The fourth major US LNG project, which has secured all regulatory approvals, is Dominion’s Cove Point LNG, located in Maryland. Dominion began construction-related activities in late 2014 and is expected to be in service in 2017.
  • Cheniere’s Corpus Christie project is partially subscribed and assuming it continues to move forward, could be the first US Greenfield export project.
  • Golden Pass LNG, located in Sabine Pass, Texas, is a joint venture between Qatar Petroleum (70%), ExxonMobil (17.6%) and ConocoPhillips (12.4%). Already among the largest import terminals in the world, Golden Pass is now proposing to add export facilities. Project shareholders for the export project include affiliates of Qatar Petroleum International (70%) and ExxonMobil (30%). Golden Pass expects to make a decision on FID once all regulatory approvals are secured so this project is likely to be a longer-term project.

Based on this snap-shot of some of the more advanced US LNG export projects, with the caveat that projects that are currently unsubscribed will likely face challenges and delays until market conditions improve, the overall outlook for US LNG projects remains positive with the US expected to become one of the world’s largest LNG exporters by 2025. -Article end-

What do you think? Will oil majors continue to cut spending on US LNG export projects due to uncertainty around the price of gas? Let us know your views below.

To meet Professor Susan Sakmar and discuss how falling oil prices and US LNG exports are affecting the global gas industry, attend Gastech Singapore this OctoberFollow the banner below to find out how you can get involved.

gastech Singapore

This article came courtesy of Susan L. Sakmar - Professor Sakmar is licensed to practice law in California and has over 20 years of experience working in a variety of legal, corporate and academic settings. She is currently an independent consultant and adjunct law professor at the University of Houston Law Center where she teaches a course on Shale Gas & LNG. She also is the author of the most recent book on LNG, ENERGY FOR THE 21ST CENTURY: OPPORTUNITIES AND CHALLENGES FOR LIQUEFIED NATURAL GAS (LNG).