A major liquefied natural gas (LNG) player last week increased its planned offtake from a proposed liquefaction facility in Louisiana while another recently won a local approval in Texas for a new liquefaction facility on the Gulf Coast.

A unit of BG Group plc has agreed to additional purchases of LNG from the proposed Sabine Pass Liquefaction LLC facility on the Gulf Coast, Sabine Liquefaction parent Cheniere Energy Partners LP said. Separately in Texas, the governing board of the Port of Brownsville approved a lease option for 500 acres of port property for the potential development of a liquefaction and export facility by Gulf Coast LNG Export LLC, an affiliate of Freeport LNG Development LP, which also has an export project in the works.

BG Group’s BG Gulf Coast LNG will take an additional 2 million metric tons per year of LNG, bringing its total contract quantity with the project to 5.5 million metric tons yer year. BG is to purchase 3.5 million metric tons per year with the commencement the project’s first train and will purchase a portion of the remaining commitment amount as each of trains two, three and four begin operations, Cheniere said.

Terms of the revised agreement are essentially the same as the deal struck by the companies in October (see NGI, Nov. 7, 2011). At the time the agreement was the first to export U.S.-sourced LNG from the Gulf Coast. BG is to pay Sabine Liquefaction a fixed charge for the contracted quantity and would pay a contract sales price for LNG indexed to the Henry Hub. The fixed sales charge will increase ratably in order to account for the increased fixed sales charge on the additional volumes, Cheniere said.

Cheniere CEO Charif Souki said there was a “trade-off” in deciding whether to sell the additional volume to BG or in the open market.”Contracting a portion of the additional volumes adds further certainty to the long-term cash flows of the project and preserves the opportunity for additional upside,” he said.

The project is slated for the existing Sabine Pass LNG regasification terminal site and is expected to include four liquefaction trains capable of producing up to 18 million metric tons per year of LNG.

Sabine Liquefaction is seen as the front runner among a pack of projects that would export U.S. gas as LNG from the Gulf Coast. It was the first to announce a project and the first to get approval to export to countries that are parties to a free trade agreement (FTA) with the United States.

More significantly, Sabine Pass is the only project to be granted U.S. Department of Energy (DOE) authorization to export to non-FTA countries. While other projects are seeking this authorization as well, the DOE is expected wait until it completes a review of the potential impact of LNG exports on domestic gas prices before it authorizes further non-FTA exports (see NGI, Jan. 23).

“There is little doubt that the North American resource base has the geological potential to support the needs of at least a few liquefaction terminals,” analysts at Barclays Capital said in a note last week. “But the most challenging link to these projects is lining up the right buyers and sellers to put forth a financeable deal.”

The Barclays analysts said they expect 2 Bcf/d worth of LNG exports from North America by 2017. Analysts at Tudor, Pickering, Holt Inc. praised the deal as a hedge against BG’s U.S. volumes.

So far, Sabine Liquefaction has entered into three LNG sale and purchase agreements: the BG agreement, an agreement with Gas Natural Fenosa (see NGI, Nov. 28, 2011) and an agreement with GAIL (India) Ltd. (see NGI, Dec. 19, 2011). Sabine Liquefaction expects to sell an additional 3.5 million metric tons per year of LNG under an agreement that would take effect with the start of train three. This would bring total contracted volumes to 16 million metric tons per year, or about 90% of the project’s expected volumes.

Meanwhile in Texas, Gulf Coast LNG’s application was recently filed with the U.S. Department of Energy (DOE) seeking authorization to export LNG out of a proposed facility located at the Port of Brownsville (see NGI, Jan. 2). While authorization has not been granted by DOE, Gulf Coast LNG Export and Port officials are highly optimistic due to the significant demand for U.S. LNG and Gulf Coast’s sound business model, the port said.

“We believe the Port of Brownsville is in a strategic geographic location to assure the success of this project, and we envision this to be a long-term relationship with the Port,” said Michael Smith, CEO of Gulf Coast LNG Export.

Smith is also CEO and founder of Freeport LNG Development LP. Freeport LNG owns and operates a 2 Bcf/d LNG receiving and regasification facility near Freeport, TX, and is planning to expand that facility to add liquefaction and export capability (see NGI, Feb. 21, 2011).

The partnership between the Port of Brownsville and Gulf Coast LNG is to include a multi-billion dollar direct investment by Gulf Coast LNG Export, of which the majority will go toward the development of the liquefaction facility and LNG export terminal located on Port property, in addition to infrastructure improvements necessary to support the business.

Once DOE export approval is secured for the project, Gulf Coast LNG plans to initiate the review process with the Federal Energy Regulatory Commission to receive authorization to site, construct, and operate the terminal at the port. The project is expected to be operational in 2018 and could bring thousands of jobs during the construction phase and hundreds of jobs once the facility is operational, the port said.

“This project falls in line with our mission of bringing more quality jobs to the region, and it also allows us to continue to diversify the type of cargo handled at the Port, while opening up a new industry for us,” said Port CEO Eduardo A. Campirano.

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