Cheniere Train 2 ramps up: US LNG crosses the Panama Canal to Asia

Theodore Michael's picture
Theodore Michael, LNG Analyst, Genscape
Comments: 0

Image: "Genscape Vesseltracker:  Maran Gas Apollonia from Sabine through the Panama Canal"

Cheniere Sabine reaches record LNG production: Cheniere’s Sabine kicked into high gear last week with both Trains 1 and 2 running at full capacity.  Feed gas volume on the terminal pipelines Creole Trail and the NGPL line combined to reach 1 bcf/d. In the IR image below Train 1 is running at full capacity, Train 1 is in Pre-commercial status. Commercial production will begin in December with handover to capacity holder Shell.  In the image below it is now confirmed Train 2 is temporarily running at full capacity as well, as all 6 stacks are “hot”.

Image: Sabine’s LNG Train’s 1 and 2 from Genscape’s IR Monitor

All of Cheniere’s liquefaction trains employ the ConocoPhillips Cascade process.  Each 4.5 mtpa train has a pair of methane, ethylene and propane stacks for a total of 6 per train.  Train 2 is currently running in commissioning status. The commissioning status is followed by the Start Up.  The commissioning process involves around the clock testing. The following Start Up will see nominations on the terminal pipelines feeding Sabine reach 1.3 Bf/d as both 4.5 mtpa trains run at full capacity.  Train 2 Pre-commercial phase will end when Gas Natural Fenosa takes capacity delivery sometime around September 2017.

First US LNG cargo crosses Panama Canal to Asia: The Maran Gas Apollonia was the first LNG ship to pass through the newly expanded Panama Canal. The 19th export from Cheniere’s Sabine continues the interlinking of US LNG production with Asian markets.

More than 20 mtpa (3 bcf/d) of US LNG export capacity resides in the hands of Asian utilities.  However, Asia may not be their destination.  It is entirely feasible that Asian capacity holders will sell US cargos into the Atlantic Basin and source supply in the spot market in Asia.  Some capacity holders have already swapped US capacity for capacity in Asia.  Some utilities such as Osaka Gas with a 2.3 mtpa capacity position at Freeport have sold capacity to European utilities. Such as the 0.8 mtpa sale to E.ON.

The $5 Fukushima differential between ocean basins is gone.  In the future, Qatar and Australia will both target North Asia.  Trans-Pacific shipments are unlikely short of temporary winter arbitrages.  Low charter rates and low fuel rates will challenge the economics of canal use.  US LNG ships are now bypassing the Suez Canal for the South Atlantic rather than paying tariffs. The Panama Canal transit will face similar economic challenges.  Never the less, the expanded Panama Canal will act as a balancing point, allowing Asia and the Atlantic basin to trade on a tighter basis going forward.

Join the Conversation: How will the newly expanded Panama Canal change the dynamics of the global LNG trade? Leave your comment below.

Subscribe to our Newsletter  & Follow us @GasInteract.

Are you interested in speaking at Gastech 2017? Submit an abstract on “Gas & LNG Project Progress & Updates” in order for our Governing Body to review and then vote on the successful chosen papers. Gastech 2017 takes place at the Makuhari Messe Chiba, Tokyo in Japan from 4 to 7 April 2017.

More on US LNG: