The Department of Energy (DOE) has approved Freeport LNG's request to export 511 Bcf of liquefied natural gas (LNG) annually to more than two dozen foreign countries with which the United States has free trade agreements involving natural gas and LNG.
The DOE order gives Freeport LNG the green light to export LNG from its terminal to 15 nations -- Australia, Bahrain, Singapore, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Chile, Morocco, Canada, Mexico, Oman, Peru and Jordan -- over a 25-year term beginning on the date of the first export or five years from the date the authorization is granted by DOE (Feb. 10, 2016).
Freeport LNG is a wholly owned subsidiary of Freeport LNG Development L.P., which has its principal place of business in Houston.
Freeport LNG began providing service from its terminal on Quintana Island, about 70 miles south of Houston, in July 2008 (see Daily GPI, July 2, 2008). The terminal is located near two large gas trading hubs (Katy and the Houston Ship Channel) and is adjacent to large local industrial gas consumers.
The Freeport terminal was built during the construction frenzy, when it was believed that LNG imports would be the key to supplementing domestic gas supply. That was before shale gas entered the picture. Because of discoveries of vast additional US natural gas reserves, primarily shale gas, the U.S. now has more than 100 years of supply.
Further, due to increased production, gas prices have fallen to the point that exporting natural gas is economically attractive, and these relatively low prices are expected to continue. As a result, Freeport LNG is developing an expansion of its terminal to enable liquefaction and export of approximately 1.4 Bcf/d of U.S. natural gas in the form of LNG. The terminal will still be able to import LNG if needed for the domestic market, Freeport LNG said.
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