April 2016, Vol. 243, No. 4
Features
Domestic Gas Growth Fuels LNG Export Terminal Development
The first export shipment of LNG produced in the Lower 48 states and exported from Cheniere Energy’s Sabine Pass Liquefaction Project in Sabine Pass, LA, Feb. 24 is a milestone reflecting a decade of natural gas production growth that has put the United States in a new position in worldwide energy trade.
With the rapid growth of supply from shale gas resources over the past decade, U.S. natural gas production has grown each year since 2006. The resulting decline in domestic natural gas prices has led to rising natural gas exports, both via pipeline to Mexico and, since last week, to overseas markets via LNG tankers.
The U. S. is a net importer of natural gas, and gross imports represented nearly 10% of total supply in 2015, based on data through November. The U. S. imported 7.5 Bcf/d of natural gas, mostly from Canada by pipeline, and exported 4.8 Bcf/d, mostly to Mexico by pipeline. For years, Alaska has exported LNG, mostly to Pacific Rim countries, but these volumes have been small. In addition to the Sabine Pass terminal that was the source of the first LNG shipment, four other LNG export terminals are under construction.
Although most of the LNG terminals fall under FERC jurisdiction, the U.S. Maritime Administration regulates deepwater terminals. Only one deepwater export terminal has been proposed, and if approved, would be located 50 miles south of the Texas-Louisiana border in the Gulf of Mexico.
Cheniere Energy’s Sabine Pass Liquefaction Project in Sabine Pass consists of six different liquefaction units, or trains, the first of which began service in February after many delays. The other trains are in various stages of development and permitting. Total permitted capacity by FERC is 4.16 Bcf/d.
Four LNG export terminals are under construction:
- Dominion Energy’s Cove Point LNG facility in Cove Point, MD is scheduled to bring one train totaling 0.82 Bcf/d online near the end of 2017.
- Corpus Christi LNG, another Cheniere project, is under construction in Corpus Christi, TX. The terminal is scheduled to begin service in 2018, with total permitted capacity at 2.14 Bcf/d.
- Sempra Energy’s Cameron LNG terminal, located in Hackberry, LA, is under construction and is scheduled to bring three trains online in 2018. A total of 1.7 Bcf/d has been permitted.
- Freeport LNG’s terminal planned for Freeport, TX, has three trains under construction totaling 1.8 Bcf/d. The first two are scheduled to begin service in 2019, and the third in 2020, respectively.
Another terminal, Southern Union’s Lake Charles, LA-LNG facility, has been approved by FERC but is not yet under construction. Lake Charles also has an LNG import terminal. Several more LNG export terminals, mostly on the Gulf Coast, have been proposed or have pending applications with FERC.
Source: U.S Energy Information Administration, based on Federal Energy Regulatory Commission information.
The new terminals are expected to take advantage of natural gas produced in the Appalachian Basin, particularly the Marcellus and Utica regions. The Sabine Pass Liquefaction project has secured 300 MMcf/d of natural gas from the Texas Gas Transmission Ohio-Louisiana Access Project, which facilitates additional flows of Marcellus and Utica natural gas to the southern U.S.
Additionally, Cheniere’s Corpus Christi Liquefaction project will receive 385 MMcf/d from the Natural Gas Pipeline Co. of America’s Gulf Coast mainline pipeline system. Dominion’s Cove Point (which began operating as an import terminal in 1978) already has a dedicated pipeline with a link to three interstate pipelines that operate in the Marcellus area.
Market conditions have changed since many LNG export projects in the U.S. were initially proposed. Proposed LNG terminals in the U. S. face not only increased competition from other domestic and foreign terminals that have been completed, but they also face uncertainty in global LNG demand.
“Market conditions have changed since many LNG export projects in the United States were initially proposed,” the EIA wrote in its March 4 report. “Proposed LNG terminals in the United States face not only increased competition from other domestic and foreign terminals that have been completed, but they also face uncertainty in global LNG demand.”
The agency cited falling demand last year from China, Japan and South Korea, the world’s three largest LNG importers. This marked the first time demand had dropped since 2009, the height of the global financial crisis.
Australia, already a major LNG exporter, plans to expand its LNG export capacity in the coming years. In late 2015, two new terminals began service, Gladstone LNG and Australia Pacific LNG, both located on Australia’s East Coast.
According to the EIA, all the U.S. export terminals that are either finished or under construction have the capacity to export more than 10.5 Bcf/d. In 2014 that would have placed the U.S. second worldwide for LNG exports, slightly behind Qatar.
Source: U.S Energy Information Administration, based on Federal Energy Regulatory Commission Information. Principal contributors: John Krohn, Nicholas Skarzynski, Katie Teller, EIA
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