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New Cheniere Projects Would Grow Its LNG Capacity by 46%

Undaunted by headwinds in the global liquefied natural gas (LNG) marketplace, U.S. export first-mover Cheniere Energy Inc. Thursday announced potential projects that could add 19 million tonnes per annum (mtpa) of production capacity to its future capabilities, giving it aggregate capacity of 60 mtpa by 2025.

"Our latest LNG development projects include two additional liquefaction trains adjacent to our Corpus Christi liquefaction site and four mid-scale liquefaction trains to be developed at two sites located in Louisiana," said Cheniere CEO Charif Souki.

"We expect that these liquefaction trains could be funded from internally generated cash flows, which would allow us to continue to be one of the lowest-cost suppliers of LNG in the market and give us more flexibility in terms of contracting and selling volumes on a more tailored basis to meet the individual needs of global LNG buyers."

Cheniere is developing 9 mtpa of capacity through the addition of two liquefaction trains adjacent to the existing site of the Corpus Christi liquefaction project, which would increase the project's expected capacity to 22.5 mtpa. Cheniere has made a pre-filing request for the project at the Federal Energy Regulatory Commission (see Daily GPI, June 5). Export approvals from the U.S. Department of Energy for free trade agreement (FTA) and non-FTA countries would be expected by 2017, Cheniere said.

Also on Thursday, Cheniere said it has agreed in principle to partner with Parallax Enterprises LLC, to develop up to 10 mtpa of LNG production capacity through Parallax's two mid-scale projects, Live Oak LNG and Louisiana LNG (LLNG).

Live Oak would be located on the Calcasieu Ship Channel in southwestern Louisiana (see Daily GPI, Feb. 3), and LLNG would be located on the Mississippi River about 40 miles from New Orleans (see Daily GPI, April 28). Both projects are expected to have two liquefaction trains designed for LNG production capacity of 2.5 mtpa each, utilizing liquefaction process technology and modular equipment developed by Chart Industries Inc. The facilities are being engineered by Bechtel Oil, Gas, & Chemicals Inc.

Parallax was founded last year by former BG Group executive Martin Houston (see Daily GPI, Oct. 24, 2014).

Cheniere said the project developments announced Thursday could be under construction as early as 2017, subject to regulatory approvals and final investment decision. The projects would be targeted to begin production as early as 2021, with all 19 mtpa of capacity online by 2025.

"We continue to market long-term contracts for Train 3 at Corpus Christi [see Daily GPI, May 12] and Train 6 at Sabine Pass [see Daily GPI,April 7], and plan to finalize the sale of approximately 3 mtpa of capacity under 20-year agreements before we make a positive final investment decision on each train, reaching a total of approximately 32 mtpa of LNG under long-term third-party contracts out of a total of 40.5 mtpa by 2020," Souki said.

"We think we can continue to grow this platform at 10% per year until 2025, and reach approximately 60 mtpa of expected total nominal LNG production capacity with our new projects while remaining a low-cost global LNG supplier."

While the collapse in global oil prices and decreasing demand for LNG are seen as near-term hurdles for liquefaction and export projects, it’s the long-term outlook that counts, Berkeley Research Group's Christopher Goncalves told NGI recently.

"With a lot of these projects aiming to come online in the time period of 2018 to 2022, around the end of the decade, what really matters to them and their economics is the long-term outlook for prices in the next decade," he said (see Daily GPI, April 20).

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