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Eagle Ford Production Targeted for LNG Export

The backers of multiple U.S. projects to liquefy and export domestic gas have all pointed to robust production coming from shale plays as the reason for their plans. The latest proposal by Cheniere Energy Inc. singles out the Eagle Ford Shale as a source of gas to be liquefied.

Cheniere, which has been developing domestic gas liquefaction and export capability on the Gulf Coast in Louisiana, said Friday it is seeking to do the same in Corpus Christi, TX, with a facility that would be primarily supplied with gas from the Eagle Ford Shale in South Texas.

Thanks to the liquid-rich characteristics of the play, the Eagle Ford Shale is the fastest growing U.S. unconventional development over the last year. According to NGI's Shale Daily Unconventional Rig Count for the week ending Dec. 16, there are 225 rigs actively drilling for oil and gas in the play. While that represents a 1% decline from the 228 rigs operating the previous week, it marks an 84% increase over the 122 rigs that were in operation one year ago.

Cheniere's Corpus Christi Liquefaction LLC is developing a liquefied natural gas (LNG) export terminal at one of Cheniere's existing sites that was previously permitted for a regasification terminal. The site is in San Patricio County, TX. The Eagle Ford is about 60 miles northwest of Corpus Christi, Cheniere noted.

Cheniere said its project would be "underpinned by the significant resources" in the Eagle Ford Shale. "U.S. Geologic studies commissioned by Cheniere estimate recoverable oil and gas resources in the Eagle Ford Shale at over 180 Tcfe, or 30 billion boe," the company said. "There are approximately 200 rigs currently drilling in the Eagle Ford Shale, with increasing emphasis placed on development of the play's oil and condensate reservoir window, where significant quantities of associated natural gas rich in NGL content can be produced."

The Corpus Christi Project is being designed for up to three trains capable of producing in aggregate up to 13.5 million metric tons per year of LNG. The project is the company's second bid to liquefy U.S. gas and send it abroad on behalf of producer/end-use customers. Last Monday Cheniere announced the third customer for its Louisiana liquefaction project at Sabine Pass in Cameron Parish, LA (see Shale Daily, Nov. 10). The Sabine Pass Project is expected to include four liquefaction trains capable of producing up to 18 million metric tons of LNG per year.

"Given the strong customer interest for capacity at the Sabine Pass Project, we have decided to initiate the development of our next liquefaction project," said Cheniere CEO Charif Souki. "With our newly proposed project, we will be able to provide up to an additional 13.5 [million metric tons per year] of liquefaction capacity in the Gulf of Mexico. We believe this is a very attractive project for global LNG buyers given its proximity to the Eagle Ford Shale, one of the most prolific shale discoveries in recent history, and look forward to discussions with interested parties."

The Corpus Christi site consists of 664 acres, including 212 acres owned by Cheniere, 52 acres under a lease option and 400 acres of permanent easement. The site is on the La Quinta Channel on the northeast side of Corpus Christi Bay in San Patricio County and is about 15 nautical miles from the coast. Depending on feasibility and market interest, the Corpus Christi Project is expected to be constructed in phases, with each LNG train commencing operations approximately six to nine months after the previous train.

Abundant supplies of domestic gas from shale plays have virtually eliminated the need for LNG imports to the United States and turned gas industry thinking about LNG on its head. Once considered far-fetched, to say the least, the idea of exporting domestic gas as LNG is now seen by many as a certainty.

Cheniere has begun the Federal Energy Regulatory Commission's National Environmental Policy Act pre-filing review for the Corpus Christi Project.

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