<

LNG exports boost U.S. natural gas producers

Part 5
LNG exports boost U.S. natural gas producers (Part 5 of 5)

Must-know: Proposed liquefied natural gas export facilities

Cheniere Energy’s proposed project

Cheniere Energy (NGL) is also developing a second natural gas liquefaction and export facility near Corpus Christi, Texas. The proposed Corpus Christi Liquefaction liquefied natural gas (LNG) terminal would be designed for up to three trains, three LNG storage tanks, and two docks that can accommodate vessels with a capacity of up to 267,000 cubic meters. The projects haven’t received final approval from the Department of Energy (or DOE) and the Federal Energy Regulatory Commission (or FERC).

 

 

Cheniere Export VolumeEnlarge Graph

El Paso Pipeline’s project

El Paso Pipeline (EPB), a subsidiary of Kinder Morgan Energy and a unit of Shell, will develop an approximately $1.5 billion LNG liquefaction export project at the Elba Island LNG re-gasification terminal. In late 2013, Shell gave notice to EPB’s Elba Liquefaction Company joint venture to move forward on a second phase of the project. The total project is expected to have liquefaction capacity of about 2.5 million tons per year of LNG or about 350 million cubic feet per day of natural gas. EPB is a subsidiary of Kinder Morgan Energy. EPB’s Southern Liquefaction Company unit owns 51% of Elba Liquefaction Company.

KMP LNG ExportEnlarge Graph

Kinder Morgan’s management views

On the company’s growth prospects in LNG exports, Steven J. Kean, the President and Chief Operating Officer of KMP, commented in the conference call of 3Q13 earnings, “But looking ahead, we added to our project backlog in this segment, primarily in EPB and overall we continue to identify and capture opportunities for expansion driven by export opportunities in LNG, Mexico, and even Canada, and on the need to transport gas out of the shale plays primarily Eagle Ford and Marcellus.”

Dominion Energy’s export project

Dominion Energy (D) imports and stores LNG at Cove Point and transports re-gasified LNG to the interstate pipeline grid and mid-Atlantic and Northeast markets. In September, 2013, the DOE conditionally authorized Dominion to export LNG from Cove Point to non-free trade agreement countries. Subject final FERC and Maryland Commission approval, the Cove Point facility is authorized to export at a rate of 770 million cubic feet of natural gas per day. Dominion has plans to convert the operation of Cove Point to a bi-directional facility. If it clears all regulatory hurdles, Dominion would import LNG, vaporize it as natural gas, and liquefy natural gas and export it as LNG, all through Cove Point. The facility is expected to begin production from 2017.

Dominion Energy’s management views

Dominion also looks to float a separate midstream MLP consisting of the assets of Cove Point. Mark F. McGettrick, the executive Vice President and chief financial officer of Dominion Energy, said in the conference call of 1Q14 earnings, “On March 28, we filed an S-1 registration statement with the Securities and Exchange Commission for an initial public offering of common units representing limited partnership interests in Dominion Midstream Partners L.P. a master limited partnership (or MLP) whose initial asset will be a preferred equity interest in Cove Point.”

Exxon Mobil’s LNG export plans

In May, 2013, ExxonMobil (XOM) signed an agreement with Qatar Petroleum International that would add a LNG export terminal to the existing Golden Pass import terminal in the Port Arthur community of Sabine Pass. XOM plans to sell up to 15.6 million metric tons of LNG per year through their existing networks and arrangements in Europe and elsewhere. The estimated cost of the project is ~$10 billion. The pre-fling process for submission to the FERC is on-going for the project.

Higher LNG exports would be positive for the energy companies active in the business of liquefaction of natural gas. Government regulatory approvals for LNG exports have benefited companies like Sempra Energy (SRE) and Cheniere Energy Inc. (LNG). Energy Transfer Partners (ETP), El Paso Pipeline Partners (EPB), Dominion Energy (D), and Exxon Mobil (XOM) are some of the other companies that will also benefit if their pending applications are approved by the DOE and FERC. SRE is a component of the Utilities Select Sector SPDR (XLU) and Cheniere Energy is a part of the Vanguard Energy ETF (VDE). EPB is a component of the MLP ETF (MLPA).

The Realist Discussions