The six projects comprising the first wave of US LNG exports are scheduled to be fully operational in 2020, culminating a massive $63bn buildout over the last several years that has revolutionized the global gas industry.
The prospects for an expected second wave of US LNG exports should become clearer later this year when a number of proposed projects are expected to make funding decisions for projects that would come on line in the early- to mid-2020s.
The ongoing US-China trade war will make it more difficult to fund second-wave projects if it is not resolved, as China is expected to be the fastest-growing LNG market in the foreseeable future. An interim agreement announced in last month did not include reductions to the 25pc tariff that China imposes on US LNG and propane, although Beijing said it would buy more US energy commodities "if needed" and based on "market principles."
Cheniere Energy first proposed exporting LNG from the contiguous US in June 2010 from its existing Sabine Pass LNG import terminal in Louisiana, as it faced potential bankruptcy because the US shale gas boom had virtually eliminated demand for LNG imports. The move was met with widespread skepticism, but this year the US became the world's third-largest exporter behind Qatar and Australia, surpassing Malaysia.
Combined feed gas to US LNG export plants averaged 7.68 Bcf/d (217mn m³/d) in December, about 8.1pc of the record US dry-gas production of 95 Bcf/d reached in October. US output is forecast to remain near those levels throughout the winter. Combined gas feed has averaged 8.31 Bcf/d so far in January.
Sabine Pass started exporting in February 2016 and is now the largest US gas consumer, processing an average of 3.89 Bcf/d in December and 4.04 Bcf/d so far this month.
All six US facilities are producing and exporting LNG, with Cameron LNG in Louisiana, Freeport LNG in Texas and Elba Island LNG in Georgia scheduled to bring their respective final first-wave liquefaction trains on line in 2020. When that process is complete, US baseload liquefaction capacity will be equivalent to 8.8 Bcf/d of gas and peak capacity will be equivalent to 10.4 Bcf/d.
Some second-wave projects have already been funded and are in construction, while others are expected to be funded in 2020. Cheniere is building two additional 5mn t/yr trains, one at Corpus Christi, Texas, scheduled to come on line in 2021, and the other at Sabine Pass, scheduled to start operating in the first half of 2023. In addition, in 2019 Venture Global funded its $7.1bn, 10mn t/yr Calcasieu Pass LNG project in Louisiana, scheduled to come on line in 2022.
The first wave of US projects significantly changed global contracting by selling supplies at Henry Hub-based prices with a flat liquefaction fee of about $3/mmBtu, rather than the traditional model of linking long-term LNG contracts to oil prices.
Cheniere hopes to in 2020 fund a seven-train, 11.45mn t/yr expansion at Corpus Christi that would be partly financed by US Permian basin producers.
Tellurian plans to finance its $15.2bn, 27.6mn t/yr Driftwood LNG project in Louisiana by selling customers equity at $500mn for offtake of 1mn t/yr, which Tellurian claims could lower free-on-board costs to $2.85/mmBtu with cheap Permian gas at $1/mmBtu.
NextDecade plans to fund this year its 27mn t/yr Rio Grande LNG project in Texas with a combination of contracting based on oil, Henry Hub and western European gas hub pricing.
Other projects that planned to make investment decisions in early 2020 include the 5mn t/yr Freeport LNG train 4 in Texas, the 6mn t/yr Annova LNG project in Texas, the 4mn t/yr Texas LNG facility, Venture Global's 20mn t/yr Plaquemines project in Louisiana, Sempra's 2.5mn t/yr Energia Costa Azul project in northwest Mexico that would use US gas, and Sempra's 13.5mn t/yr Port Arthur LNG project in Texas.
By Ron Nissimov
