With final investment decisions (FID) imminent for three Gulf Coast developments, North America should lead the next wave of global liquefied natural gas (LNG) project sanctions in 2019, Wood Mackenzie analysts said.
In a quarterly update issued Tuesday, the Wood Mackenzie team predicted three U.S. projects would reach FID before the end of June: Cheniere Energy Inc.’s Sabine Pass Train 6, Golden Pass sited in Sabine Pass, TX, and Calcasieu Pass under development in Cameron Parish, LA.
"With FID imminent on three US Gulf Coast LNG projects, North America is set to lead an expected record year for LNG project sanctions,” said Wood Mackenzie’s Alex Munton, principal analyst, Americas LNG. “With at least two other Gulf Coast projects -- Freeport Train 4 and possibly Driftwood LNG -- also not far behind, the first half of 2019 will be an especially busy one for the U.S."
Earlier this month Wood Mackenzie said uncontracted demand by the world’s seven largest LNG buyers -- all based in the Asia Pacific -- may quadruple to 80 mmty by 2030. The seven buyers, which together account for more than half of the global gas export market, are China National Offshore Oil Corp., aka CNOOC, Taiwan’s CPC Corp., Japan’s JERA Corp. Inc., Korea Gas Corp., PetroChina Co. Ltd., China Petroleum & Chemical Corp., aka Sinopec, and Tokyo Gas Co. Ltd.
Investments in LNG projects overall stalled this year, but North America’s market is springing back to life, analysts said.
Since September, Cheniere Marketing LLC (CMI), Venture Global LNG Inc., Sempra Energy, Tellurian Inc., Freeport LNG Development LP and Woodfibre LNG each have announced long-term agreements with offtakers, they noted. Woodfibre is to be sited on the coast of British Columbia and would be the only project not in the Lower 48 set for sanctioning in North America next year.
"2018 was a stellar year for sales of North America LNG, and U.S. LNG in particular," Munton said. "Renewed confidence in the outlook for LNG, combined with the choice, flexibility and competitiveness the U.S. market offers facilitated this surge in interest."
Constructing and expanding three Gulf Coast LNG facilities, totaling up to 30 mmty of capacity, also would inject billions of investment dollars into the region. According to Wood Mackenzie,$20 billion could be invested in the three projects over the next four years.
"While the Gulf Coast remains the key growth region for North America LNG, projects in Canada and Mexico are also progressing and attracting interest," Munton said. "Additional West Canadian capacity could help further open Canadian supply to global markets, and we are now seeing momentum around Mexico as an alternative export route for U.S. production."
According to the analysis, Woodfibre LNG could reach FID in 2019, contingent on executing an engineering, procurement and construction (EPC) contract.
Mexico's Costa Azul Phase 1 LNG export terminal underway by Sempra still needs to finalize an EPC contract, binding offtake agreements, permitting and financing arrangements. However, progress is being made, and it too could reach FID in 2019, researchers said.