Cheniere Energy Inc. beginning next year plans to provide customers with greenhouse gas emissions data for each liquefied natural gas (LNG) cargo loaded at its U.S. export terminals in yet another sign of environmental scrutiny across global energy markets.
CEO Jack Fusco said Wednesday the decision represents the first time a major LNG producer has announced a provision to track emissions associated with every cargo it produces. The announcement follows recent decisions by major global players to track LNG emissions delivered under certain contracts or to provide carbon-neutral cargoes.
“Our product is already helping our customers by meeting their energy requirements and improving air quality by reducing traditional pollutants and particulate matter,” Fusco said. “The cargo emissions tags will help our customers further by enabling them to better manage their emissions profiles and maximize the benefits of buying our LNG.”
The carbon emissions tags, as Cheniere has labeled them, would utilize the company’s proprietary life-cycle analysis model, which was built using frameworks developed by the U.S. Department of Energy. The tags would utilize publicly available data from value chain participants, as well as operational data from Cheniere’s Sabine Pass and Corpus Christi liquefaction facilities. Emissions estimates would be provided from the wellhead to cargo delivery point.
“As one of the largest consumers of natural gas on a daily basis in the U.S., and one of the largest producers of LNG worldwide, Cheniere is ideally positioned to collaborate with domestic and international value chain participants to provide improved transparency and advance the global transition to a lower-carbon future,” Fusco said.
Management discussed the emissions tags Wednesday during a call to discuss fourth quarter results. The period capped a tumultuous year in which the pandemic, record low LNG market prices and two major hurricanes along the Gulf Coast disrupted operations.
Fusco also said last week’s freezing cold along the Gulf Coast, which forced the company to curb power and gas consumption at its export terminals, did not have a “material” impact on its infrastructure.
The company exported 391 LNG cargoes in 2020, down 9% from 2019. Low prices and weak demand caused by the pandemic prompted well over 100 U.S. cargoes to be canceled over the summer, but the market has since tightened following a buying spree among Asian and European end-users who worked through historically cold weather this winter.
Cheniere exported 130 cargoes during the fourth quarter, flat from the year-ago period.
“With peak winter demand requirements largely satisfied and prices moderating, we believe more stable market conditions will prevail for the rest of the year,” said Chief Commercial Officer Anatol Feygin.
“In addition to improving demand patterns, the market will also be supported by tapering product supply additions as the current project construction cycle comes to an end,” he added. “…We expect continued LNG demand improvements as the Covid-19 vaccine is distributed and global economic activity continues to strengthen.”
Fusco said the company managed to take advantage of the strengthening global gas market in the fourth quarter by inking a series of deals to provide more than 4 million metric tons/year of LNG to various buyers with contract terms of five to 11 years.
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He added that the company plans to focus this year on entering into both medium- and long-term contracts to firm up economics on its portfolio capacity and support a stage three expansion at the Corpus Christi terminal in South Texas.
The company remains on track to bring its third train online at Corpus Christi by the end of March. It also has exported 22 TBtu of commissioning cargoes since December. In addition, the company remains on track to finish a sixth train at the Sabine Pass terminal in Louisiana by the second half of 2022.
Cheniere reported a fourth quarter net loss of $194 million (minus 77 cents), compared with net income of $939 million ($3.70) in the year-ago period. The loss was primarily related to decreased operating income and decreased income tax benefits.
The company also reported a full-year net loss of $85 million (minus 34 cents), compared with net income of $648 million ($2.53) in 2019. Last year’s loss was attributed to a variety of factors including increased tax expense, interest expense and higher losses on equity method investments. Overall revenue slipped to $9.4 billion last year, compared with $9.7 billion in 2019.
The company also earned $38 million in revenue for canceled cargoes during the fourth quarter, bringing the full-year total to $969 million. The bulk of Cheniere’s production is under long-term, take-or-pay contracts that generally allow customers to cancel cargoes up to 60 days before they are loaded in exchange for a fee.
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