Louisiana Energy Bridge Prepares to Receive First LNG Cargo in February
North America's first new liquefied natural gas (LNG) import terminal in 20 years is scheduled to receive its initial LNG cargo in about three months. Kathleen Eisbrenner, CEO of Woodlands, TX-based Excelerate Energy LLC, said in an interview with NGI that although the company's Louisiana Energy Bridge deepwater port is nearly complete, the first of its three specially designed Korean LNG vessels has been delayed by about one month and should be launched on Jan. 14.
From Korea, the 138,000-cubic-meter cargo ship, which has been specially modified with an onboard regasification and delivery system that will connect to its Gulf of Mexico buoy, will pick up a spot LNG supply cargo most likely in Australia, Malaysia or the Middle East. Delivering the cargo will take about 30 days along with a couple days for cool down, so Eisbrenner said she is expecting commerical delivery some time in late February.
The deepwater port, which was approved by the Coast Guard in January, will be located 40 miles offshore Louisiana. The regasification and delivery system is expected to have a peak sendout capacity of 0.5 Bcf/d and will deliver the gas into the Gulf Coast pipeline grid via connections with Sea Robin and Tennessee Gas Pipe Lines's Bluewater pipeline system.
However, Excelerate has not yet signed any LNG supply agreements. "We are looking for spot cargoes," said Eisbrenner. "Our sponsor prefers a short-term strategy," she said, referring to owner Oklahoma oil billionaire and philanthropist George B. Kaiser. "We are really trying to create more of an LNG spot market and add liquidity to the global gas industry. So right now we are looking for a first cargo and we're looking for 2005 cargoes, but not really anything necessarily longer than that."
Eisbrenner would not predict how much LNG would make its way into the U.S. market via the Louisiana Energy Bridge in its first full-year of operation. Although she expects the nascent LNG spot market to become "very active," Excelerate appears to be at least several months early with its new terminal, she noted.
"We were about six months early as compared to the ideal time in the LNG market. But now...our ship has been delayed a month so we are about five months early," she said. "The good news is that we're a private company so we don't have a need for good or bad press or information. That's the luxury."
The first wave of new liquefaction capacity is due to come online in late 2005. There are two to three additional LNG supply trains that will come onboard in Egypt in the next 12-14 months, two additional trains in Nigeria and then another large LNG train plus a debottlenecking process in Trinidad, Eisbrenner said. "That's about an additional 3 Bcf/d of additional LNG supply."
Although all of that LNG supply is being produced under long-term agreements, Eisbrenner expects Excelerate to capture at least some of that LNG for the U.S. market via its Louisiana Energy Bridge. "Contractually, all the gas is sold to all the BGs, BPs and Totals and Shells of the world, but they are all looking to do whatever makes the most economic sense. We'll have to see. A lot of them are banking on accessing the U.S. market, and that's value we think we can [provide]."
She noted that many of the LNG suppliers have monthly auctions and sell spot cargoes to the highest bidder. "Nigeria has been selling about one cargo a month on an FOB [spot] basis with their existing trains. I don't know whether that will go up or not with trains four and five coming online, but presumably it might [go up]. But we'll be an active bidder in that monthly process.
"Similarly there are almost monthly bids that take place for cargoes out of Trinidad. There are three new trains in Egypt. All are interesting trains from our perspective, so we are talking to folks that have the marketing rights to those. It's purely a negotiation process unless the particular project has a formal process."
Eisbrenner also said that Excelerate plans to exercise its option "any moment" to complete its purchase of the Louisiana Energy Bridge project and concept from El Paso Corp. The company announced the purchase last year and was the project sponsor through the regulatory process until the Energy Bridge was authorized by the Coast Guard as the second LNG deepwater port in January.
"We will pay $1 and own the Gulf of Mexico port," said Eisbrenner. "Had we not exercised the option, then we would have tolled the facility from El Paso on a long-term basis so that they did not have any commercial or financial exposure to the facility."
Excelerate also has taken the Energy Bridge concept to the New England gas market with a proposed Northeast Gateway terminal, offshore Gloucester, MA. The $200 million Northeast project would be located about 10 miles offshore and would deliver up to 400 MMcf/d into Duke Energy's Hub Line pipeline in Massachusetts Bay.
Excelerate is planning to file an application for the Northeast Gateway with the Coast Guard by the end of the first quarter of 2005 and the terminal is expected to be operational by the end of 2006. The company recently signed an agreement under which Duke Energy would built the 12-mile, 24-inch diameter pipeline from the deepwater port to the HubLine pipeline system.