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U.S. Lower 48 liquefied natural gas (LNG) first-mover Cheniere Energy has been positioning itself for the next wave of demand, securing additional acreage at existing terminal sites and planning for a “mid-scale” liquefaction project, analysts following the company were told Wednesday.
With the sixth train at the Sabine Pass terminal in Louisiana fully permitted, Cheniere has acquired rights to an additional 524 acres adjacent to the east side of the Sabine Pass site, giving it space to “approximately double,” existing capacity, according to presentation slides from the company’s analyst day.
Meanwhile, at Cheniere’s Corpus Christi terminal in Texas, the third train has been fully permitted and partially commercialized while the permitting process has begun for the fourth and fifth trains. Here Cheniere also has acquired additional acreage: 404 acres up upland and waterfront property adjacent to the existing site, again giving it space to “approximately double” its existing capacity.
Analysts also hear more about Cheniere’s thinking on a “midscale” LNG project, for which front-end engineering design (FEED) has been initiated. A consortium of KBR, Siemens and Chart Industries Inc. has been approved to continue with the full FEED with an engineering, procurement and construction proposal to be completed in September.
According to the presentation slides, the midscale project evaluation began in early 2016; however, a midscale project was being weighed by the company before then. In June 2015 Cheniere said it was contemplating four midscale liquefaction trains to be located at two sites in Louisiana. That was when Charif Souki was still running the company. After Souki’s ouster from Cheniere, he and partner Martin Houston formed a company to pursue an LNG development in Louisiana.
Cheniere is now considering a midscale project that would have up to seven trains “that could leverage existing sites and infrastructure,” the company said in a presentation slide.
“Modular design would provide 1.4 mtpa [million ton per annum] of expected LNG production capacity per train, for a total expected capacity of 9.8 mtpa if all seven trains were built.” The footprint for the facilities would be comparable to that of two large liquefaction trains, the company said.
Cheniere’s talk of expanding LNG liquefaction capacity comes at a time when many -- but not all -- are bemoaning a global glut of LNG. Like others, Cheniere foresees an approaching LNG supply gap as final investment decisions on new liquefaction projects have been delayed. New supply will be needed to fill this approaching gap, analysts were told.
Besides underlying market growth for LNG, there will be about 90 mtpa of recontracting demand, and as a low-cost provider, Cheniere said it is poised to capture some of that.
The company’s estimated delivered LNG cost to Asia from its expansion trains is competitive compared with other newbuild projects in Asia, Canada, Australia and Africa, the company said. This is thanks largely to cheap and abundant U.S. natural gas and U.S. liquefaction project costs that are lower than those in the rest of the world, the company said.