Export Projects Update (July 2015)

LNG Allies Member Companies

Delfin LNG (Fairwood LNG). Fairwood LNG announced (Jul. 01) that Enbridge (NYSE: ENB) has made a 5% equity investment in the company, entered into a joint development agreement for the Delfin LNG offshore LNG production facilities in the Gulf of Mexico, and taken a seat on the Fairwood board. Fairwood also announced (Jul. 16) that the Maritime Administration (MARAD) and U.S. Coast Guard have begun formal review of the Delfin application under the procedures of the Deepwater Port Act. According to Federal Register notices, a final public hearing must be held no later than 240 days after the application (Mar. 12, 2016) and a final decision 90 days after that (Jun. 10, 2016). Details about the onshore, offshore, and pipeline elements of the Delfin project: Federal Register Notice. Delfin also noted (Jul. 29) that the two agencies would prepare an environmental impact statement (EIS) for the project. Delfin plans four floating liquefaction vessels, which will be procured from Höegh LNG and are slated to begin producing an initial 8 mtpa of LNG in 2019.

Texas LNG Brownsville. Texas LNG continued community outreach in South Texas (Jun. 19) with sessions at the South Padre Island Economic Development Corporation as well as the Point Isabel Independent School District. Texas LNG plans to build their project at the Port of Brownsville in two 2.0 mtpa phases, with the first phase planned to begin commercial operations in 2020. The company is partnered with Samsung Engineering, with additional funding by Third Point. A Texas LNG news release (Jun. 15) said Samsung had completed approximately 50% of the front-end engineering and design (FEED) work, contributing some 77k man-hours.

Projects Under Construction

Cameron LNG (Sempra and Partners). Cameron LNG reported in its June 2015 Newsletter that the first phase of its project has been under construction for six months and after “clearing, excavating and soil stabilization work, rigs have started drilling the first of 18,000 production piles on which the first three production trains of the liquefaction facilities will be built.” Cameron has received its FERC and DOE licenses for the first three of five planned liquefaction trains. The company filed applications for trains four and five in Feb. 2015.

Cheniere Corpus Christi (Trains 1-3). Cheniere Marketing International said (July. 30) that it has entered into an LNG sale and purchase agreement with Central El Campesino (CEC) under which CEC would purchase about 0.6 mtpa of LNG for 20 years beginning in 2019. According to a press release, the LNG would be delivered, stored and regasified at a proposed floating storage regasification unit (FSRU), the Penco Lirquén LNG Terminal, for use at a 640 MWe gas-fired combined-cycle power plant being developed by CEC in Chile.

Cheniere Sabine Pass. A news release (Jun. 30), by Cheniere Energy Partners (NYSE: CQP) said that its board had made a positive final investment decision (FID) for Train 5 of the Sabine Pass project in Cameron Parish, Louisiana, and had issued a notice to proceed with construction to Bechtel Oil, Gas and Chemicals, Inc. The Sabine Pass project is being designed for up to six liquefaction trains, each with nominal production capacity of approximately 4.5 mtpa. Train 5 is expected to commence operations as early as 2018. An earlier release (Jun. 29) provided details about the Train 5 debt financing stating that 18 financial institutions had been “engaged to act as Joint Lead Arrangers to assist in the structuring and arranging of up to approximately $5.8 billion of debt facilities, including approximately $4.6 billion of credit facilities and an approximately $1.2 billion revolving credit facility.”

Cove Point LNG (Dominion Resources). Dominion’s Cove Point LNG facility won a legal decision (Jun. 12), when the U.S. Court of Appeals for the D.C. Circuit issued an order denying an emergency motion for a stay of FERC orders authorizing construction of its export terminal at Lusby, Maryland. The court ruled that the plaintiff (Earthjustice) had “neither satisfied the stringent requirements for a stay pending court review … nor articulated ‘strongly compelling’ reasons justifying expedition.”

Projects in Formal FERC Review

Elba (Island) Liquefaction (Kinder Morgan). Kinder Morgan, Inc. (NYSE: KMI) announced (Jul. 15) that it will purchase 100% of Shell’s equity interest in Elba Liquefaction Co., owner of the Elba Liquefaction Project, which is proposed to be constructed and operated at the existing Elba Island LNG terminal near Savannah, Georgia. KMI currently owns 51% percent of the joint venture and Shell the remaining 49%. (Shell controls 100% of the liquefaction capacity.) Kinder Morgan’s expected incremental investment resulting from the transaction is ~$630 million, bringing its total incremental investment there to about $2.1 billion. When the project begins LNG exports in 2017, Shell will control about 2.5 mtpa in capacity. FERC has not yet set a date for release of the final EIS for the project.

Golden Pass Products (ExxonMobil, Qatar Petroleum). Golden Pass Products received a Notice from FERC (Jun. 26) setting out the schedule for release of the final EIS for the Golden Pass Products export project located on the Sabine-Neches Waterway in Jefferson County, Texas. According to the notice, the final EIS will be released on Mar. 04, 2016, with federal agencies given until Jun. 02, 2016, to submit their comments to FERC. Owned by affiliates of Qatar Petroleum (70%) and ExxonMobil (30%), the export project will be located next to and incorporate the existing LNG import terminal on the site. ConocoPhillips owns partial interest in the existing terminal, but is not involved in the export project. When completed, Golden Pass will be capable of exporting 15.6 mtpa of LNG.

Gulf LNG (Kinder Morgan and Partners). Gulf LNG filed with FERC (Jun. 19) its formal application for a license to build an LNG export terminal at the site of the existing import terminal located in Jackson County, Mississippi, near Pascagoula. According to the Kinder Morgan (KMI) News Release, some $8 billion in capital will be required for the project: $5 billion for a single LNG train in phase one (Q4 2020) and $3 billion for a second train in phase two (Q4 2021). When complete, the project will have a capacity of 15.1 mtpa, which is equivalent to 1.5 bcf of LNG per day. A subsidiary of KMI owns 50% of the Gulf LNG project, and affiliates of The Blackstone Group, Arc Logistics Partners, and Lightfoot Capital Partners (among others) own the other 50%.

Jordan Cove (Versen). FERC (Jun. 11) released a Revised Schedule for its environmental review of the proposed Jordan Cove LNG export terminal at Coos Bay, Oregon, and the Pacific Connector Gas Pipeline, the interconnected pipeline in response to a U.S. Bureau of Land Management request for additional information regarding an alternative pipeline route affecting its lands. FERC pushed back the date for issuance of its Final EIS from to Sept. 30, 2015. Other federal agencies now have until Dec. 29, 2015 to complete their review.

Magnolia LNG (LNG Ltd.). Magnolia LNG announced (Jul. 23) that it has signed a liquefaction tolling agreement (LTA) with Meridian LNG for firm capacity rights for up to 2 mtpa at Magnolia LNG’s proposed liquefaction and LNG export terminal at Lake Charles, Louisiana. According to the Magnolia News Release, Meridian LNG intends to deliver the LNG to Port Meridian, its Höegh LNG operated floating re-gasification terminal in the [United Kingdom] with the gas delivered to E.ON Global Commodities under a 20-year gas sales agreement. President of Magnolia LNG, Maurice Brand said, “Financial close for the Magnolia project is planned for first quarter 2016. The Magnolia project remains on schedule to provide first LNG in December 2018 with full LNG supply of 8 mtpa completed in 2019.”

Projects in FERC Pre-Filing Stage

Freeport LNG (Train 4). Freeport LNG filed an Application with FERC (Jun. 15) to amend its existing authorization to increase the total LNG production capacity of its liquefaction project under construction on Quintana Island, in Brazoria County, Texas, from the currently authorized 1.8 bcf/day to 2.14 bcf/day. Freeport said that 2.14 bcf/day is the maximum peak day combined LNG production capacity of the three authorized liquefaction trains under optimal operating conditions. No new facilities are proposed.

Port Arthur LNG (Sempra). Port Arthur LNG received Notice (Jun. 24) that FERC intends to prepare an EIS for Sempra LNG affiliate Port Arthur LNG’s proposed liquefaction and export terminal project and interconnected pipeline near Port Arthur, Texas. As proposed, the liquefaction facilities will consist of two liquefaction trains with a total production capacity of up to 1.38 bcf/day of LNG.

Rio Grande LNG (NextDecade). A Rio Grande LNG News Release (Jun. 15) announced that Valinor Management and Halcyon Energy Investors, have joined certain funds managed by York Capital Management Global Advisors and its affiliates in providing NextDecade with an additional $85 million in order to take the proposed Rio Grande LNG export terminal and Rio Bravo Pipeline project to FID, and to fund the NextDecade’s continued development of Pelican Island LNG in Galveston, Texas. According to the press release, the terms of the transaction include options for NextDecade’s three strategic investors to invest the requisite FID equity sufficient to commence construction of the Rio Grande LNG project.

Plaquemines LNG (Venture Global). FERC notified (Jul. 02) Venture Global Plaquemines LNG that it could begin FERC pre-filing review for the proposed 2.8 bcf/day liquefaction and export terminal to be located near river mile marker 55 on the west side of the Mississippi River, in Plaquemines Parish, Louisiana, The project would include 20 liquefaction trains, four LNG storage tanks, and three marine loading berths for ocean-going vessels. FERC Notice.

Canadian Projects Using US-Sourced Gas

Bear Head LNG (LNG Ltd.). A Bear Head LNG News Release (Jul. 20) revealed that DOE had granted the company permission to export up to 440 bcf/year of natural gas from the United States to Canada and up to 8 mtpa of LNG to FTA nations. DOE must still issue a license to Bear Head to export LNG from US-sourced natural gas to non-FTA nations. FERC now recognizes the project as “approved,” since Bear Head has obtained the last of the ten initial federal (Canadian), provincial and local regulatory approvals needed to construct the facility located on the Strait of Canso in Nova Scotia.

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