Last week Cheniere Energy Inc. said it was launching another project to liquefy and export domestic gas. This came only days after it said it had signed the third contract for its first liquefaction and export project.

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.”

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.

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.

Also last week, it was announced that Cheniere Energy Partners LP’s Sabine Pass Liquefaction LLC and Gail (India) Ltd. have struck a liquefied natural gas (LNG) sale and purchase agreement (SPA). Gail has agreed to buy 3.5 million metric tons per year from train four of the Sabine Liquefaction project in Cameron Parish, LA.

“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 (see related story).

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

Meanwhile at the Sabine Pass project, Gail will join BG Group and Gas Natural Fenosa as a foundation customer. “Gail is India’s leading natural gas company and its largest shareholder is the government of India,” Souki said. “We are building a strong portfolio of customers, consisting of energy companies engaged in the natural gas, LNG and power markets with operations spanning the globe.

Before the fourth train comes online, Gail is to buy bridge volumes of about 0.2 million metric tons per year once the second train of the project is completed. Sabine Liquefaction recently said it had reached its targeted annual contract quantity of 7 million metric tons per year for the first phase of the project and is advancing toward a final investment decision for the development and construction of two liquefaction trains (see NGI, Nov. 28).

In September Gail acquired its first shale gas assets in the United States through its wholly owned Gail Global (USA) Inc. The unit, which has an office in Houston, struck agreements with Houston-based Carrizo Oil & Gas Inc. for a joint venture (JV), acquiring a 20% interest in Carrizo’s Eagle Ford Shale acreage. The JV has 20,200 gross acres, out of which Gail would have 4,040 net acres spread over four counties in Texas.

The SPA with Gail represents the first contract for the second phase of the project, which would also include two liquefaction trains with combined production capacity of 9 million metric tons per year. The project at the Sabine Pass LNG terminal would include up to four trains capable of producing up to 18 million metric tons per year. Sabine Liquefaction is targeting selling approximately 14 million metric tons per year of the capacity under long-term SPAs.

Under the SPA, Gail is to buy LNG on a free on board (FOB) basis for a price indexed to the monthly Henry Hub price plus a fixed component. LNG would be loaded onto Gail’s vessels. The SPA has a term of 20 years starting on the date of first commercial delivery, and an extension option of up to 10 years.

Delivery of the bridge volumes is to occur with the commencement of operations of train two of the liquefaction project, which is expected in 2016. Deliveries from train four are to occur upon commencement of its operations, which is expected as early as 2017.

“The SPA with Cheniere will help Gail to ensure long-term gas supply for the growing demand in the Indian market,” said Gail (India) Chairman B.C. Tripathi. “This will be in addition to other initiatives being undertaken by Gail, which includes building captive LNG facilities in India and augmenting its transmission capacity from 175 MMcf/d to over 300 MMcf/d over the next two years. With an office established in Houston, Gail has acquired shale gas assets in Carrizo’s Eagle Ford Shale acreage and is further looking for shale gas assets in the U.S.”

The Indian company’s Gail Global (Singapore) Pte. Ltd. unit has operations in Singapore for sourcing LNG, trading LNG and petrochemicals and managing overseas investments.

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