The US is Transforming LNG Market as a Global Energy Hub

Cheniere Energy (NYSEMKT: LNG) celebrated loading its 100th LNG export cargo recently to around 20 countries from Sabine Pass in Louisiana. This was the first facility in the contiguous U.S. The U.S. is poised to export around 10-12 Bcf/d of LNG, or around 15-17% of the total current gas demand, with over 2 Bcf/d and five additional export terminals which are expected by 2020.

This is reported to be a quantum leap from the zero being exported in January 2016. At 85% complete and with an expected online in Q4, the Dominion Cove Point in Maryland would reportedly be the first LNG export facility on the East Coast. An FEFC for approval was asked by Dominion, in order to introduce fuel gas at the plant. With around 20-year terminal service agreements which are fully subscribed the $3.8 billion Cove Point would have the capacity to export around 0.8 Bcf/d.

It is reported that Sabine Pass can reach any major import terminal within 25 days, even with the Panama Canal’s expansion in June 2016. Sabine Pass’ fourth train is already in the commissioning process and would be completed in the second half of the year, and it already has three fully-operational LNG trains. Over the next few years, fifth and sixth trains would come online.

Sabine Pass has already contributed to a significant change in the global LNG market. The gas from the Montney shale play in western Canadian would reportedly reach the U.S. Gulf for export to the world. The LNG export from Canada off the BC coast is expected around 2022.

The number of years it takes to commission makes it a good time to add LNG export capacity, even with the LNG market being oversupplied. The U.S. would raise over 13 other exporters by 2019 with exporting around 1-2% of the world’s LNG and also become the 3rd largest LNG exporter behind Qatar and Australia.

The U.S. is leading the way towards a destination-free and flexible LNG. It is also reported that Korea Gas, China’s CNOOC, and Japan’s JERA have signed an MOU to meet the demands for flexibility in procurement. Meanwhile, FLNG and FRSU are lowering costs in order to expand the market.

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