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Cheniere: First LNG export facility to start in late 2015

BY BEN LEFEBVRE

HOUSTON -- Cheniere Energy has reiterated that it will be ready to begin producing liquefied natural gas at its terminal in Sabine Pass, La., in late 2015, a step that will lead to the first exports of natural gas extracted in the contiguous U.S.

The announcement underscores how Cheniere, the only company to possess the necessary government permits to export natural gas to countries not in free-trade agreements with the U.S., is on schedule with its first two processing units while government regulators pore over about two dozen permit applications from competing projects. Cheniere said construction was about 20% complete on the first two Sabine Pass LNG processing trains.

Estimated completion dates for the two trains are running according to Cheniere' s advanced schedule, with the first expected to begin LNG production in late 2015, the company said. Cheniere in October 2011 signed a 20-year contract to sell 4.2 million tonnes of LNG a year from Train 1 to a subsidiary of BG Group.

Cheniere was among a handful of companies that built LNG import terminals in the last decade, as the U.S. was expected to become a major natural gas importer due to declining production. But hydraulic fracturing helped energy producers unlock natural gas from shale formations, leading to an unexpected supply glut that has crashed prices and opened up the possibility of exports. Cheniere moved before others to turn its idle Sabine Pass LNG import terminal, sitting in a deep water shipping channel less than four miles from the Gulf of Mexico, into an export facility.

Overall, Cheniere has signed contracts to sell 16 million tonnes a year from four process units at Sabine Pass to customers including Gas Natural Fenosa, Korea Gas and GAIL (India). Cheniere has also agreed to sell 2 million tonnes a year to Total at a proposed fifth processing train at Sabine Pass.

U.S. natural gas prices have fallen 76% since June 2008, making them among the lowest in the world and attractive to buyers in Asia and Europe. Exxon Mobil, Freeport LNG and other would-be LNG exporters are still waiting for government approval to ship natural gas to countries not in a free-trade agreement with the U.S., a group that includes lucrative markets such as Japan.

But as the company makes headway in constructing its terminal, rising costs caused Cheniere and its Cheniere Energy Partners unit to post wider fourth-quarter losses. Cheniere Energy reported a loss of $94.3 million, compared with a loss of $57.8 million a year earlier. Revenue dropped 7.1% to $67.4 million.

Dow Jones Newswires

02/22/2013

 

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