Texas Project Expansions Mark LNG's 'Second Wave'
Wed, May 23, 2018
The Freeport LNG project is currently authorized to build three LNG "trains," each of which could liquefy up to 500 million metric tons per year (mtpa) of natural gas and sell them into world markets.
In a notice to be published today in the Federal Register, the company seeks authorization from the Department of Energy to export the output of a fourth 500-mtpa train.
The Energy Department has authority over LNG exports, which it can allow to either just U.S. free-trade partners or to non-free-trade nations, as well. Construction and siting of projects is overseen by the Federal Energy Regulatory Commission, which accepted Freeport's construction application last year.
Freeport's first three trains are expected to be brought into commercial service late this year and early next year.
"Following closely on the heels of our successful development of the initial three trains of the Freeport Liquefaction Project, Train 4 will position Freeport LNG to supply the next wave of U.S. Gulf Coast LNG," the company said in a statement when it began the construction review with FERC.
There are currently two LNG export plants operating in the U.S., Cheniere Energy Inc.'s Sabine Pass LNG and Dominion Energy Inc.'s Cove Point LNG, and four others under construction, plus ongoing expansion work at Sabine Pass.
Many industry analysts have said that since the first wave of export plants were approved several years ago and have gone into construction, markets and financing conditions have become tighter and could make it difficult for the next round of projects to get off the ground.
Among the challenges they point to are a shift toward spot and short-term markets that have reduced buyer interest in the 20-year, long-term contracts that have traditionally underpinned financing for the costly projects (Energywire, May 18).
As global LNG markets shift in response to the growing availability of LNG, some analysts say smaller projects are more likely to pull together the necessary financing to go forward. Brownfield projects like Freeport's that expand on existing — or almost-existing — capacity to control costs may also have an advantage.
Another LNG export project announced yesterday that it would also add capacity.
Cheniere said it had decided to proceed with a third train of export capacity at its under-construction Corpus Christi plant. That project eventually envisions up to five LNG production trains, but the final investment decisions are being made incrementally. It is reportedly the first new U.S. capacity to get a financial green light since 2015.
Other large projects continue to advance, though. In addition to those projects, FERC lists 11 import-export terminals as proposed and pending approval. Four other projects — Lake Charles LNG, Magnolia LNG and Cameron LNG in Louisiana, and Golden Pass in Texas — have been approved by FERC but are not under construction.